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Nintendo Unveils Cheaper Version of Switch Gaming Console

Yuki Furukawa and Yuji Nakamura

(Bloomberg) -- Nintendo Co. introduced a cheaper version of its portable Switch gaming console, as the Japanese company seeks to expand the potential market for games.

The Switch Lite will retail for $199.99, or $100 less than the original device, in time for the all-important holiday shopping season. The new console will be released Sept. 20 and comes in yellow, gray and turquoise, the company said in a statement. Nintendo’s shares climbed as much as 4.5% in Tokyo.

Nintendo shares have rebounded this year on optimism that the cheaper Switch, a stronger pipeline of games and a potential entry into China will help overcome last year’s missteps and broaden Nintendo’s customer base beyond dedicated fans. Still, analysts have struggled to understand how much a lower priced device will expand the Switch’s market. In April, Nintendo gave a muted financial forecast that stunned investors and analysts, sending shares sliding.

“The sooner-than-expected launch suggests the new handheld console is highly likely to steadily capture year-end commercial season demand,” Citigroup analysts Minami Munakata and Yui Shoji said in a research note. “That said, we doubt the new device is likely to significantly change overall (fiscal 2020) shipments, given that some gamers, particularly in Japan, have been delaying Switch purchases.”

The original Nintendo Switch, which launched in March 2017, allows people to play in three different modes -- handheld, tabletop and television-- while the Switch Lite is designed for handheld mode.

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When the hybrid console originally debuted, it was seen as classic Nintendo — a new gadget that broke the norms of conventional video games. Equipped with a built-in screen and hypersensitive controllers, the Switch was billed as a worthy successor to the Wii, Nintendo’s rule-breaking blockbuster console.

The goal was to make the gaming experience as seamless as possible, while letting people use the product in new ways, such as turning it into a virtual piano or motorcycle. But so far, the Switch has struggled to find customers beyond a core fan base. The company shipped 17 million Switch consoles last fiscal year and forecast 18 million for the current period, less than analyst projections for 18.5 million.

The cheaper Switch is aimed at expanding the market so more people will buy the company’s games. Characters like Super Mario, Luigi and Donkey Kong are among the most recognized in the industry.

In April, with the new console in the works, analysts were baffled by Nintendo’s forecast that it will sell 125 million new software titles, significantly below market expectations for 161 million and lower than all but one of 10 projections tracked by Bloomberg.

Japanese companies including Nintendo are known for making conservative estimates at the start of each fiscal period. But even by those standards, President Shuntaro Furukawa’s projection stood out amid a blockbuster games lineup this year and expectations for stronger hardware growth, which drives software sales. The company may be wary of repeating last year’s mishap, when it issued bullish guidance and then had to cut it later.

“Adding Nintendo Switch Lite to the lineup gives gamers more color and price point options,” Nintendo of America President Doug Bowser said in the statement. “Now consumers can choose the system that best suits how they like to play their favorite Nintendo Switch games.”

(Updates with share action and analyst’s comment from the second paragraph.)

To contact the reporters on this story: Yuki Furukawa in Tokyo at yfurukawa13@bloomberg.net;Yuji Nakamura in Tokyo at ynakamura56@bloomberg.net

To contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Robin Ajello

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