by on Jan 17, 2017

Pachter gives his Nintendo Switch verdict

Nintendo Switch faces an uphill battle because of its “problematic” $299 price point and an “underwhelming” slate of launch titles, Wedbush video games analyst Michael Pachter has said.

“Priced at $300, Switch is not a more affordable alternative to the PS4 and Xbox One. Initial pricing is likely to be problematic given an underwhelming slate at launch and the fact that the PS4 and Xbox One are consistently discounted at retail below their starting prices of $300 with a free software pack-in,” believes Pachter.

“While Nintendo clearly relies upon the unique gameplay offered by the new device, it will need to convince a large audience that its newest device is more substance than gimmick in order to drive better long-term adoption than the Wii U saw.”

Pachter says Switch hardware sales will reach one million in financial year 17, which ends March 31, although Nintendo has stated it will ship two million units in March. The following year Pachter forecasts Switch sales of five million units.

Beyond this, Pachter feels third-party support will be a key driver for continued Switch sales.

“Sales beyond the first year will be affected by third party software support; the underpowered Switch is unlikely to attract much,” he explained.

“A solid first party release slate is promising, but limited third party support will likely limit hardware demand later in the year. Zelda , Mario, and Splatoon titles are expected in 2017, but only a handful of new games are expected at launch. The cost of accessories is surprisingly high, and Western third party support appears limited to ports of Xbox 360 and PS3 games. We think that hardware sales will be limited without substantially greater third party support.

“Should Switch start slowly, we expect third-party publisher support to begin to wane as it did with the Wii U previously. Among the notable games, EA announced that FIFA 17 will be launching later this year, and Bethesda Softworks’ The Elder Scrolls V: Skyrim will be available at some point. We expect many publishers to take a wait-and-see approach in terms of their financial commitment beyond the first one or two games, especially if porting costs are high.”

Nintendo Switch launches March 3, with many retailers already selling out of their launch allocations.

Source: Wedbush Equity Research