Nintendo's Game Plan to Level Up Switch Production

By Takashi Mochizuki Features Dow Jones Newswires

Nintendo Co. plans to pick up the production pace for its hit Switch game console next year, people with direct knowledge of the matter said, showing the company's deepening confidence in the success of the device.

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The Kyoto-based company is sketching out a plan to make 25 million to 30 million units of the Switch in its next fiscal year, which begins April 2018, and has begun informing business partners about it, the people said. They said the plan is still in its early stages and Nintendo could aim higher depending on sales during this year's holiday season.

The Switch went on sale globally on March 3, 2017. Between that date and Sept. 30, Nintendo said it sold 7.63 million units. The company said at its quarterly earnings announcement in October that it planned to sell an additional 9.1 million units by March 2018, meaning total sales by that date would reach nearly 17 million.

Expectations for the Switch were low ahead of the launch because of its $300 price and what analysts saw as the product's uneasy positioning between smartphones, which are more portable, and rival game machines such as Sony Corp.'s PlayStation 4, which are more powerful.

However, consumers have been drawn to the product's hybrid nature--it can be used both as a living-room console and as a portable hand-held machine. A Nintendo survey of Switch owners found they viewed the device more as a hand-held than a console, opening room for it to become a one-per-person item rather than one-per-household. Suppliers said an AC adapter is one of the best-selling Switch accessories, suggesting people are using it in their bedrooms.

Some people in the industry say the Switch could surpass the original Wii, which set the record for Nintendo's best-selling console with more than 101.6 million shipped. Nomura Securities analyst Junko Yamamura forecast cumulative sales of 115.8 million units by March 2023.

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At the earnings announcement, Nintendo Chief Executive Tatsumi Kimishima predicted demand would keep growing even after the holidays and said assemblers working on Nintendo's behalf have added work lines to make more Switch units. Such a step by assemblers usually requires a commitment by the buyer to keep purchasing the product for a certain period because the assemblers need to hire and train new workers.

Any aggressive boost in production carries the risk that sales fall short of expectations, leaving the company with excess inventory.

Ace Research Institute analyst Hideki Yasuda said software sales data so far suggest casual gamers haven't been buying the Switch in big numbers, leaving room for further growth since Nintendo has traditionally been strong at attracting such customers. Nintendo's Mr. Kimishima said the company would release more games for casual users next year.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com

(END) Dow Jones Newswires

November 10, 2017 00:29 ET (05:29 GMT)