|Bid||43,520.00 x 0|
|Ask||43,670.00 x 0|
|Day's Range||43,530.00 - 44,460.00|
|52 Week Range||31,880.00 - 47,270.00|
|Beta (5Y Monthly)||0.76|
|PE Ratio (TTM)||20.05|
|Earnings Date||Jul 28, 2020 - Aug 03, 2020|
|Forward Dividend & Yield||1,090.00 (2.49%)|
|Ex-Dividend Date||Mar 30, 2020|
|1y Target Est||50,050.00|
With lockdowns yet to be lifted completely and many staying at home on fears of the coronavirus spreading, there is not much entertainment other than video games.
Here we discuss some gaming ETFs that are well poised to gain as an increasing number of people are resorting to in-house entertainment modes like video games amid the lockdown measures.
The Zacks Analyst Blog Highlights: Nintendo, Activision Blizzard, Glu Mobile, Capcom and DouYu International
Amazon has a big-budget game, another in the works, and a secretive cloud gaming service in the making. All of that could prove to be a problem for the industry's old guard.
(Bloomberg) -- Amazon.com Inc. faces a crucial test on Wednesday with the release of its first original big-budget video game. The reception from homebound gamers will signal whether the company can become a force in a $159-billion global industry dominated by the likes of Microsoft Corp. and Activision Blizzard Inc.Crucible is a free-to-play PC game in which teams hunt down opponents and creatures on a distant planet. Amazon plans to start selling another game in August. Called New World, it will put players on a mysterious island where they will battle one another and hunt. The company is also working on The Lord of The Rings game and some unannounced projects.Crucible will make money by selling digital merchandise as well as seasonal battle passes. New World should fetch $40 for a standard edition and $50 for a deluxe version, including additional in-game items and a digital art book.“There’s tremendous room for invention in games,” says Mike Frazzini, the vice president of Amazon Games. “We’re just getting started.”If the first two titles are well received, Amazon’s gaming division could attract talent and shed a reputation for fits and starts. Popular games could also help build momentum for the company’s widely expected launch of a game-streaming service to rival Google Stadia, which lets users play a bunch games from any compatible device, without needing to download or update them. “There is much riding on the success of Crucible and New World,” says Billy Pidgeon, an analyst at Go Play Research.Amazon has been selling games from independent as well as the world’s largest publishers for decades, and its Amazon Web Services and tools support development of other companies’ games. It entered game publishing in 2012, partly to give consumers another reason to sign up for its Prime subscription, which along with free shipping offers a variety of entertainment options including television shows and movies. Early efforts that focused on mid-tier games, including some designed for Amazon's Fire TV streaming devices, didn't make a splash.Amazon constructed its game strategy from various pieces. In 2014, the Seattle-based company purchased Twitch, where people stream themselves playing such games as Fortnite and Valorant. Two years later, Amazon launched Twitch Prime, which gives game-playing Prime subscribers extra perks for no additional cost.The company began working on its own titles by hiring famed designers like Kim Swift. But Amazon has struggled to retain key talent, including Swift, who left for Electronic Arts Inc. and now works at Google. In 2018, Amazon canceled a game called Breakaway, in which teams tried to move a ball to their opponent’s goal. Last summer, the gaming news publication Kotaku reported that the company had laid off dozens of game developers and shelved some unannounced titles. Even the Crucible and New World release dates have been pushed out; Amazon blamed fallout from Covid-19.There’s plenty of competition. Microsoft, Sony Corp. and Nintendo Co. all have their own hardware—often an advantage because consoles enable advanced features. Facebook Inc., meanwhile, offers games like FarmVille on its social network, and its Facebook Gaming live-streaming service has been stealing share and streamers from Twitch. Amazon is also competing with established game publishers such as Activision and EA, which are constantly improving their existing games and coming up with new hits.Amazon has called in some extra help to push its games across the finish line. In 2017, former EA veteran Bing Gordon left Amazon’s board to help guide the division as a consultant. He has advised on marketing strategy and even played some games and offered feedback. Gordon is renowned for leading EA’s product development and creating an innovative pricing strategy for its online games.His initial agreement to consult for Amazon’s games division was extended and runs for about another year, according to a person familiar with the matter. A company spokesperson confirmed Gordon is advising the division. His involvement with Amazon’s game unit was previously reported by the tech news site The Information. Gordon is also on the board of mobile game maker Zynga Inc.“Amazon Game Studios is still finding its way,” says Susan Eustis, president of Wintergreen Research. But one hit game could provide a huge lift, she adds, and Amazon's 150 million paid Prime members globally represent a big market advantage.Launching a product in the midst of a pandemic may seem counter-intuitive. But gaming has become a go-to entertainment choice for people hunkered down at home—a captive audience if ever there was one. Players have been flocking to new releases like Animal Crossing: New Horizons, as well as rediscovering old favorites like Fortnite. Still, as the lockdowns ease, the recent surge in game playing could abate. Whether people keep paying for games amid skyrocketing unemployment remains to be seen.Amazon’s new games are likely to get a bump from Twitch, which can help publishers market new releases. Twitch’s players and streamers have been involved in the development of Crucible from early on. The game itself is specifically adapted to show well on the service: Characters are easily recognizable from a distance. It’s fast-paced from the get-go, an effort to make it exciting to watch. Twitch has said that ads on the platform to promote EA’s Apex Legends game helped it get 25 million unique users in a week.“One of the things that we hear most often from people who try Crucible is that it feels unique,” Frazzini says. “There are elements and gameplay mechanics that feel familiar, but they’re combined in a way that’s different from anything else they’ve played.”But making a blockbuster game is not easy, for anyone. Some reviewers who got an early peek at the two games liked them; others have not.“The buzz on these games has not been that great,” says David Cole, founder of DFC Intelligence, which tracks digital entertainment. “They are ambitious, but the market changes fast and both products already look passe now.”There have been plenty of naysayers with many titles that have gone on to become a success. Ultimately, it’s the players who will decide whether Amazon will become a gaming powerhouse.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The rapid rise in video game sales has been boosted by coronavirus-led lockdowns and technological breakthroughs.
Video gaming veteran Nintendo (OTC: NTDOY) just announced the first Mario game of 2020. Paper Mario: The Origami King will be launched for the Nintendo Switch console on July 17, in keeping with the roughly four-year cadence of new titles in the Paper Mario series. The game will see Mario chase new super-villain King Olly, whose evil ambition is to fold the entire world.
(Bloomberg) -- Nintendo Co. is struggling to procure some essential components for its popular Switch console due to government-imposed lockdowns in Malaysia and the Philippines, likely limiting its production this year, according to people familiar with its operations.Malaysia is Nintendo’s source for printed circuit boards while the Philippines provides passive components that attach to those PCBs. Both nations have had to limit business operations and travel as part of their efforts to curb the spread of the novel coronavirus. Malaysia officially relaxed its lockdown on May 4, opening up for most forms of economic activity, however states delayed easing rules due to lack of preparation while companies struggled to get all their workers tested before resuming work.A Nintendo spokesperson declined to comment.Read more: Philippines Mulls Selective Lockdown in Capital After May 15The restrictions will make it difficult for Nintendo to exceed its forecast of 19 million Switch unit sales in the current fiscal year, a disappointing projection that triggered a slide in its stock on Friday. The Switch is out of stock in many markets around the world after the record-breaking success of Animal Crossing: New Horizons, the biggest gaming hit of the coronavirus era.Nintendo’s forecast would mean a decline in Switch sales from the 21 million consoles it sold in the last fiscal year, despite the device’s soaring popularity. Restoring full production capacity will largely depend on how the pandemic situation develops, and Nintendo may have to delay the release of some games and services if things don’t improve, President Shuntaro Furukawa said on its earnings call on Thursday.“We expect the Covid-19 impact on our production to go away by summer,” Furukawa said.Rivals Microsoft Corp. and Sony Corp. plan to introduce new iterations of their consoles later this year, putting pressure on Nintendo to capitalize on the Switch’s popularity before the competition arrives. The Xbox and PlayStation teams source components from other countries and are therefore not affected by these particular lockdowns.The PCB and passive components shortage is now Nintendo’s most pressing supply constraint, after it previously had to also contend with a production bottleneck in China. Limited access to DRAM, for which Nintendo has to compete with smartphone makers, could also have an impact in the latter half of the year.“The inventory may recover in the summer, but we may see shortages again toward the year-end because Nintendo wouldn’t be able to produce enough units for the shopping season,” said Hideki Yasuda, an analyst at Ace Research Institute.Philippines President Rodrigo Duterte is considering reducing some of his country’s lockdown measures from May 15, a spokesman said last week, while the Malaysian government has decided to continue what it terms a relaxed lockdown until June 9.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Never have toys and games been so entertaining for investors.Since March 15, when the Centers for Disease Control and Prevention said that events of 50 or more people should be postponed for at least two months, demand for leisure-activity products like jigsaw puzzles, knitting gear and Nintendo has driven the biggest eight-week rally for companies keeping so much of the population preoccupied, if not entirely amused, during the coronavirus pandemic.As dozens of retailers, transportation and energy firms struggle to avoid bankruptcy with businesses collapsing under the weight of social distancing, shares of the five global toy-and-game manufacturers gained 31% since mid-March, beating 68 major industries for the first time since 2007, according to data compiled by Bloomberg.Back then, rising toy sales were part of the worldwide economic boom, with the International Monetary Fund projecting the 5.2% growth rate to rise in 2008 amid few signs of the looming financial crisis. Video games such as Halo 3, Wii Play and Call of Duty 4 captured new customers on four continents before the Great Recession, beginning in December 2007, deflated the euphoria and put toys in a bear market that didn’t hit bottom until 2015, according to data compiled by BloombergEven after this year's record rally, toys and games have the cheapest valuation since 2010, based on the forward-looking price-to-earnings ratio, which means that earnings in the months ahead are likely to be greater than every other industry on a relative basis, according to data compiled by Bloomberg. While analysts constantly adjust their recommendations — sales forecasts for S&P 500 companies have been reduced 8.4% so far this year — they are more optimistic about toy-and-game makers than at any point during the past five years.Hasbro Inc., the Pawtucket, Rhode Island maker of G.I. Joe, Play-Doh, Nerf balls, Scrabble, Monopoly, Trivial Pursuit and trading cards including Magic: The Gathering and Dungeons & Dragons, appreciated 72% over the six weeks starting March 15 as the S&P 500 and the Bloomberg World Index were gaining 21% and 16%, respectively. Not since its initial public offering in 1968 has Hasbro seen such a markup, and analysts say they expect the company's 2020 revenue to grow 20%, the most since 1999. Hasbro suddenly looks like a unicorn in the consumer discretionary group of companies, whose revenues are projected to rise only 3% this year, according to data compiled by Bloomberg.Shares of Japan-based Nintendo have a similar halo, increasing 44% in the same six weeks as the Nikkei 225 index advanced 12%. The last time Nintendo came so far so fast was the summer of 2016 when it launched the reality mobile game, Pokemon Go, and this year analysts predict Nintendo's sales will increase 11%, almost four times the growth for the consumer discretionary group of firms.As it compiles analyst recommendations, Bloomberg assigns a score of one to five to each company, with five representing the strongest consensus for bullish share performance. The score for toy-and-game makers in the U.S. surged to a record 4.3 this year from 4 in 2015, widening the gap between the industry and the rest of the stock market. The S&P 500 fluctuated between 3.7 and 3.9 during the past five years.To be sure, the pandemic has created challenges for some of the strongest-performing companies. Nintendo acknowledged that it is struggling to keep up with demand for its best-sellers, Animal Crossing: New Horizons and Nintendo Switch. But this is the kind of problem every company would welcome right now. When Microsoft Corp. reported quarterly earnings on April 29, it said revenues were 4% greater than analyst estimates because its PC games business is getting an extra boost from so many people working from their homes.Governments across the globe already have made toys and games an essential service as efforts to slow the spread of Covid-19 shuttered most economic activity. Weeks before it eased many restrictions, Italy made sure its stores catering to babies would be open.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Matthew A. Winkler is Co-founder of Bloomberg News (1990) and Editor-in-Chief Emeritus; Bloomberg Opinion Columnist since 2015; Co-founder of Bloomberg Business Journalism Diversity Program in 2017. During his 25 years as Editor-in-Chief, Bloomberg News was a three-time finalist and winner of the Pulitzer Prize for Explanatory Reporting and received numerous George Polk, Gerald Loeb, Overseas Press Club and Society of Professional Journalists and Editors (Sabew) awards.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The video game Animal Crossing: New Horizons has become a sensation in short order. Released on March 20 for the Nintendo Switch console, ACNH allows players to explore a small island and make it their own. That includes seemingly mundane tasks like pulling weeds, catching bugs or chopping wood.You might think a video game about chores sounds weird. And ... well, it is. However, the ability to explore a virtual island has been a healthy escape for millions amid the coronavirus pandemic. Shut-in gamers eager for the latest entry in this already popular series racked up 5 million digital downloads of the title in March alone - a record for the most digital copies sold in a single month.Besides, chores are just a means to an end. The real appeal isn't spending 20 minutes catching a dozen sea bass. It's selling those fish for bells - a currency you can use to customize the island and its appearance. You can build bridges, add rooms to your house and even design your own clothes. The sky is the limit, as long as you have the bells to fund your creative vision.That means it's important to practice good financial discipline if you want to build your best life.And believe it or not, the personal finance lessons learned in Animal Crossing: New Horizons translate pretty well to how you can practice good behaviors in the real world. Read on as we look at nine solid pieces of financial and investing advice you can reap from this blockbuster title. SEE ALSO: 10 Money Mistakes Millennials Should Avoid (No. 10's a Shocker)
Japanese shares advanced on Friday, in line with Wall Street's gains, as news of top trade representatives of China and the United States holding a phone talks calmed investors worried about simmering Sino-U.S. tensions, with cyclicals leading the rally. On the domestic front, hopes for a potential lifting of Japan's state of emergency in some areas before the nationwide deadline of May 31 also supported investors' risk appetite, said traders. Top U.S. and Chinese trade representatives discussed their Phase 1 deal over the phone on Friday, with China saying they agreed to improve the atmosphere for its implementation and the United States saying both sides expected obligations to be met.
(Bloomberg) -- Nintendo Co. warned that its profit and sales may decline in the current fiscal year in part because of the coronavirus, sending its shares tumbling despite strong financial results in the last quarter.The Kyoto-based game maker forecast a 15% decline in operating profit, a drop in Switch console sales to 19 million and a fall in software sales to 140 million. Its shares dropped as much as 5.6% on an intraday basis on Friday, while the Tokyo market rose.In the last quarter, helped by global home confinement enforced by the virus, Nintendo’s operating profit tripled to 89.5 billion yen ($842 million) while its Animal Crossing: New Horizons title soared to 13.4 million sales in its first six weeks on sale. That helped Nintendo sell 21 million Switches in the year ended March, beating its own estimate and Morningstar Research’s expectation of roughly 20 million units.Nintendo joined other tech corporations in sketching out a cautious outlook for the year ahead, largely because of uncertainty over the Covid-19 pandemic’s impact on production and services. The company continues to wrestle with component shortages for its console but now expects disruptions to fade away over the summer, President Shuntaro Furukawa said.“We expect the Covid-19 impact on our production to go away by summer, and our 19 million sales forecast is based on that. But we will revise the forecast if the virus impact is set to persist longer than we currently expect,” Furukawa told analysts on a call. “There’s a risk that we may need to delay releases of the games we plan for this fiscal year. But, at this point, we don’t expect any major delays,” he added.Read more: Nintendo Dips as Risk of Profit Peak Looms After Switch Boost“The stock is falling because of bad guidance and comments by management indicating delays to game schedule,” said David Gibson, chief investment adviser at Astris Advisory Japan. “I estimate they are assuming only one AAA title for the fiscal year, plus users buy one older title, meaning two games per Switch owner.”For now, Nintendo is riding the surging popularity of Animal Crossing: New Horizons, which helped propel a 40% rally in the company’s shares since their low in March, adding more than $16 billion to the Japanese firm’s market value. Arriving at a time when people were looking for ways to connect with friends while staying at home, the marquee title -- in which players adopt cartoon avatars to interact with each other and set up their own isles -- has proven a haven from the outbreak.Read more: Nintendo’s Animal Crossing Is the Biggest Hit of the LockdownFurukawa said the game’s momentum took even Nintendo by surprise, catching on first among younger women who were early franchise devotees before spreading to a much wider audience via word of mouth.Animal Crossing’s popularity has made the Switch hard to find almost everywhere in the world. The company asked suppliers to boost Switch production to about 22 million units for the current fiscal year, Bloomberg News reported in April.Rivals Sony Corp. and Microsoft Corp. plan to launch new consoles for the holiday season. Nintendo, which launched the more affordable Switch Lite in September, said earlier this year it doesn’t plan to release any additional new hardware in 2020.Nintendo has struggled in past years to take full advantage of the global smartphone gaming boom and has yet to communicate a clear strategy for competing in the online sphere. On Thursday, Nintendo’s Furukawa signaled the company would focus on developing revenue from existing mobile games rather than refilling its pipeline with regular new titles. That marks a shift from its previous indications that it would release two to three new mobile games each year. Nintendo said revenue from mobile games and licensing loyalties combined was 51 billion yen in the past fiscal year.“Nintendo’s results are impressive but management is implying that the Switch has peaked,” Serkan Toto, CEO of Kantan Games Inc. said. “What is really strange is that Nintendo expects less software sales despite a massively expanded install base. So either Nintendo is being comically conservative, or they expect Covid-19 to have a massive impact on demand or their internal software pipeline.”(Updates with market reaction from first paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Japanese stocks rose on Friday, in line with Wall Street's gains, as news about top trade representatives of China and the United States holding a phone call calmed investors worried about simmering tensions, with cyclical shares leading gains. Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin agreed to strengthen macroeconomic and public health cooperation along with creating a favourable environment to implement the Phase 1 trade deal, China's commerce ministry said. On Thursday, Bloomberg reported that top trade negotiators from the United States and China will hold a phone call as early as next week, citing sources.
As many parts of the world started to shut down to slow the spread of Covid-19, Animal Crossing: New Horizons became the fastest-selling game on the Nintendo Switch console.
(Bloomberg Opinion) -- In these days of sheltering in place, music fans looking for live entertainment in a concert or large-group setting are pretty much out of luck. The best many can hope for are at-home performances of their favorite entertainers beamed through Zoom or on TV. In late April, though, followers of rapper Travis Scott became the exceptions, thanks to Epic Games Inc.’s Fortnite.The video game — most of the time a battle-royale style contest where 100 players face off against each other in deadly combat on an island — was transformed into one of the world’s biggest concert venues, with the platform presenting new material from the rapper in a psychedelic show, “Astronomical.” Performing as a giant-sized avatar, Scott appeared in outlandish space and undersea scenes, with gamers able to simultaneously fly, swim or dance around him. In all, nearly 28 million people found mental refuge attending the concerts inside the game.The scale of this type of new virtual-world mass experience and the popularity of rebooted old favorites such as Nintendo’s “Animal Crossing” point to what is now becoming possible on the back of the latest technology advances in gaming, including cloud-computing, more powerful semiconductors and game programming engines. And with video-game usage soaring as one of the main options for in-home entertainment amid the pandemic, these innovations come at the perfect time to spark the next level of growth for the industry.Life in lockdown has certainly given the gaming sector a boost: According to the NPD Group, U.S. video-game industry sales rose 35% in March with only two weeks of the shelter-in-place benefit, versus monthly declines during the first two months of the year. And April is likely to be even better. KeyBanc Capital Markets’ internal card spending data for the category shows weekly year-over-year revenue growth rates ranging from 70% to 90% last month. Late Tuesday, the two largest independent U.S game publishers — Activision Blizzard Inc. and Electronic Arts Inc. — confirmed they saw accelerating business momentum in the last month, following the lockdown orders. These latest growth rates are much higher than the 9% sales rise for the 2020 global games market projected by research firm Newzoo.In many ways, Epic Games is at the forefront in driving this next gear for the industry. Not only does it make Fortnite, it also has created the market-leading Unreal game engine that is widely used by other development studios to enable similar mass multi-player experiences. And investors are noticing Epic’s wild success. Last month, Bloomberg News reported the game maker is in talks to raise a new round of funding that is now expected to come at a significantly higher valuation than its last round, done at $15 billion in 2018.This gaming surge could be the catalyst for a series of strong growth years for the industry. While there has always been a hard-core, steady audience for industry’s online multi-player games, the influx of new gamers may be more durable due to several factors. First, new habits are being formed as the beginners get exposed to the social communities inherent in today’s online multi-player games. As they build relationships with others inside these virtual worlds, it engenders long-term stickiness to the hobby. Second, the rising interest comes at the perfect moment, right before Microsoft Corp. and Sony Corp. are about to launch their next-generation gaming consoles for the first time in seven years. The cutting-edge technologies inside the two hardware devices that are slated to launch this holiday will enable even more immersive worlds and addictive photo-realistic experiences. And in this more uncertain environment, gaming makes economic sense, too. In March, I wrote about the record-breaking sales of the latest version of the multi-player “Animal Crossing” and how retailers couldn’t keep the three-year-old Nintendo Switch console in stock because of rising demand for the title. At first blush, buying a $299 console to play a virtual life-simulation may seem like a big splurge. But the reality is, gaming is one of most inexpensive forms of entertainment on a per hour basis. Consumers can literally get hundreds of hours of playing time from one title.Read more: Nintendo's Animals May Be a Covid-19 Netflix Moment: Tim CulpanTo be sure, the industry won’t be totally immune from the negative aftereffects of the virus. There will likely be some delays as developers face challenges creating games and art assets from their home offices. Moreover, the initial manufacturing volumes for the new consoles could be reduced in the event of component shortages from supply-chain difficulties. But any short-term disruptions are less important compared to the larger long-term secular opportunity.Eventually, the pandemic will wane and people will return to spend time on their favorite outdoor activities. But most gamers — new and old — are likely to keep coming back to the hobby because of the enjoyment it provides. Yes, there’s never been a better time to be a gamer and this could be the start of a new golden era for the industry.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Nintendo earnings soar 41% and Activision Blizzard posted a beat on its earnings report. Yahoo Finance’s Tech Editor Dan Howley breaks down the latest video game earnings results.
Japan's Nintendo Co Ltd <7974.T> said on Thursday its fourth-quarter profit soared 200% due to surging demand for its Switch games console, and that title Animal Crossing: New Horizons shifted a record 13.4 million units in its first six weeks. Nintendo has defied scepticism over its ability to draw in consumers beyond a hardcore base in the Switch's fourth year with the runaway success of Animal Crossing: New Horizons, which has become the console's fastest-selling title since launching on March 20. The appeal of the title among consumers looking for escapism in coronavirus-hit economies around the world underscores Nintendo's games-maker credentials at a time when investors have been frustrated by the company's conservative management, which includes what many regard as a half-baked foray into mobile gaming.
The runaway success of Nintendo Co Ltd's <7974.T> island life simulator Animal Crossing: New Horizons has overshadowed an uncomfortable fact for fans of the Switch console - it lacks upcoming titles. Nintendo on Thursday said Animal Crossing, which has become an escapist hit for players locked down by the coronavirus, is one of 27th Switch titles to shift more than a million copies, following games populated with characters such as Italian plumber Mario and sword-wielding fighter Link. Rival Sony Corp <6758.T> has already been forced to announce delays to major titles such as The Last Of Us Part II as the coronavirus impacts production.
Thanks to shelter in place orders, Nintendo (OTC: NTDOY) is seeing huge demand for its Switch game console, selling 21 million units during the quarter and blowing past its own projections for its more than three-year-old device. For its fiscal year ending on March 31, the Japanese gaming company said sales of Switch increased 24% from 16.95 million units shipped in its last fiscal year to 21 million units. Nintendo had previously forecasted it would sell 18 million Switch units.
(Bloomberg Opinion) -- Nintendo Co. is getting a boost from the Covid-19 lockdown thanks to its smash-hit new game, “Animal Crossing: New Horizons.” But the unexpected boon of a captive audience differs markedly from the one being enjoyed by Netflix Inc., and the Japanese company’s success needs examining for how well it can keep gamers addicted.“Animal Crossing” is helping Nintendo push software sales and sell out of its Switch hardware console. The game itself sold 11.8 million units, the second-highest quarterly figure behind “Pokemon Sword/Shield,” which was released in the pre-Christmas peak. That helped the company ship 3.3 million units of the Switch, closing out the fiscal year to March with sales of 21 million, ahead of its own 19.5 million forecast. Yet the longer-term value may be in keeping the handheld games machine relevant. That’s not so clear.Quarantined consumers around the world have turned to digital entertainment to keep themselves, and their kids, occupied. For Netflix, that means more people signing on for subscriptions. If it’s lucky, the purveyor of streaming video will keep collecting monthly revenue even after lockdowns are lifted, because many consumers will never bother to cancel. Nintendo doesn’t enjoy that kind of forgettable revenue stream. “Animal Crossing” is a $59.99 one-time buy. The game puts players in a virtual world, starting with their own island upon which they can design a house, grow food, fish in the sea or visit friends. It’s become a social phenomenon and the family-friendly play has made it a godsend for stressed-out, work-from-home parents trying to keep kids occupied.After the initial purchase, it’s possible that players will want to sign up for a Switch Online subscription, giving Nintendo as much as $20 extra per year, but that’s not guaranteed, nor is it necessary to keep playing. Of course, the console (from $199.99) itself is needed and “Animal Crossing” has spurred such demand for the hardware that suppliers haven’t been able to keep up.What will be valuable to Nintendo is the reminder to Switch owners that they even have the device. Launched three years ago, it’s a hybrid handheld-cum-console that allows gamers to play on a connected TV, or to pick up and go — hence the name. It’s likely that millions now sit in drawers, alongside old phones and USB thumb drives. Such dust collectors don’t create any further revenue for Nintendo. And, as my colleague Tae Kim noted recently, Microsoft Corp. and Sony Corp. have shinier new consoles coming later this year.The technological upmanship is less important than game quality and experience. The beauty of “Animal Crossing” is that it doesn’t need leading-edge graphics chips or high-speed internet connections. It’s simple and accessible to the whole family. But Nintendo does need to keep people engaged, not only with the game but with the idea that the Switch is a fun device that will hold their interest in the face of more exciting new hardware options. With Nintendo releasing new games and upgrades to existing titles in coming months, one of the most powerful marketing tools will be the device already in consumers’ hands and their desire for something fresh. While the World Health Organization notes that gaming can be a health measure — keeping people at home instead of going out — others note that addiction is also likely to rise. For parents, though, the fare offered by Nintendo makes almost any title a safe choice for keeping kids occupied, and perhaps even educated.Netflix also knows the value of helping people while away hours stuck inside. It added a record 15.8 million subscribers during the quarter. Yet it also warned investors not to expect such growth to continue. By contrast, Switch may offer longevity that streaming video doesn’t: The device is portable and its games are innately social.Which means that in coming months, Nintendo may discover that a Switch in hand is worth two in the drawer.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.