Is Nintendo Approaching the End of the Switch Cycle?

Japanese gaming giant Nintendo reported results for the first quarter of its fiscal year ending March 31, 2024 on Thursday. Thanks to the success of its latest Zelda game and "The Super Mario Bros. Movie", the company's revenue and profit jumped sharply compared to the previous year, as "The Legend of Zelda: Tears of the Kingdom" was sold 18.5 million times since its release on May 12 and the Super Mario movie became one of the most successful animated movies of all time.

There were still signs of weakness, however, as sales of the company's flagship console, the Nintendo Switch, remained below 4 million units for the quarter, despite the push of the new Zelda game. Nintendo sold roughly 18 million Switch units last year and expects to sell 15 million this fiscal year, which is down almost 50 percent from fiscal 2021, when sales had peaked at almost 29 million units.

Following the disastrous spell of the Wii U, which ended in its early retirement, Nintendo took a huge gamble with its follow-up console. Once again, the company didn't try to copy the successful recipe of Microsoft's Xbox or Sony's PlayStation business, but went with its own approach instead. Little more than six years after the Switch's release in March 2017, it can safely be said that the gamble to make it a hybrid between home and handheld console paid off.

Not only was the Switch a return to form after the Wii U disaster, but it even ended up overtaking the Wii as Nintendo's most successful home console ever in terms of sales. With almost 130 million units sold, the Switch is not only Nintendo's greatest hit, but also the second most successful console of all time, trailing only the PlayStation 2, of which Sony sold 155 million units over its lifetime.

And while the Switch still has some life left in it, the end of its lifecycle is on the horizon. As the following chart shows, every console cycles comes to an end eventually, and none of Nintendo's previous consoles have managed to turn things back around once sales had started to decline.