Nintendo has announced better than expected Switch performance in its FYQ2 results (sales up to the end of September) as the company overcame its supply chain issues for the console allowing more stock into the market. Nintendo confirmed that it significantly under forecasted demand for the Switch prior to launch, was taken by surprise by demand and has been trying to catch up ever since.
It has taken several months for Nintendo to negotiate access to increased volume of key components, and, in some cases, convince its supply-chain partners to open up more manufacturing capability to satiate demand. The increase in manufacturing volume has prompted Nintendo to increase its FY Switch sell-in forecast by 40 percent from 10m to 14m.
The FYQ2 results posted Switch sell-in to retail of 7.63m since launch. IHS Markit estimated sell-through (to consumers) to be 6.2 million within the same end of September 2017 timeframe. As such there was significant stock in channel of around 1.4 million consoles across the World. For a console that has been in heavy demand, around 18 percent stock in channel is a significant surplus. This bodes well for holiday quarter console availability.
As a result of the freeing up of stock availability and Nintendo’s subsequent increase in its forecast, IHS Markit has increased its 2017 sell-through forecast to 11.7 million from 9.8 million. New fiscal year expectations will lead to further upgrade of the five year outlook, which will filter through to the client databases during the next service update.