Investors must not be liking reports that the successor to Nintendo’s Switch is being delayed to early 2025, as shares of the Japanese game maker fell as much as 8.8% on Monday.
Though the company has not publicly commented on plans for a successor for its soon to be seven-year-old Switch, it has previously said before that it was working on new hardware and software, which is often taken as a reference to a “Switch 2”. Nintendo did not immediately respond to Fortune‘s request for comment on the reported delay of an updated version of its console.
Some of Nintendo’s partners were advised not to expect a new console until March 2025 at the earliest according to a Bloomberg report. Sales of Nintendo’s switch peaked in its fourth year on the market at 28.83 million units and it’s now projected to sell just slightly over half of that figure this year, with Nintendo forecasting sales of 15.5 million units of its Switch for its fiscal year ending March 2024.
Nintendo makes more money from software than hardware but Serkan Toto, a Tokyo-based analyst, said to Bloomberg that it’s unlikely Nintendo will release new entries of its biggest franchises like Legend of Zelda before the release of next-generation hardware.
Tough times in gaming
The drop in Nintendo’s shares is just the latest sign of a chill in the gaming sector for the past few months.
Sony’s shares dropped as much as 8.4% on Wednesday after the company lowered its forecast of Playstation 5 sales. Sony now expects to sell 21 million units for the year, down from its previous estimate of 25 million. Sony’s fiscal year also ends in March. According to a Bloomberg report, Sony’s senior vice president Naomi Matsuoka also acknowledged that the PS5 will “enter the latter stage of its life cycle” and Sony will be emphasising profitability over unit sales, and therefore the pace of sales of PS5 units to start falling from the next fiscal year.
And beyond slower sales of video gaming consoles, there is a mass layoff that’s afflicting the industry. At least 6,000 people across the gaming sector have been laid off so far according to a tally compiled by Kotaku.com.
Acquisitions could one reason for some layoffs. Microsoft said in late January that it was cutting 1,900 employees in its gaming division just over three months after it completed its $69 billion purchase of the video game maker Activision Blizzard. But there is also a sense that the mass lay-offs are pandemic-related as studios, which increased their headcount during the pandemic, must now come to terms that consumers who are not subject to lockdowns anymore are choosing to spend their money elsewhere.
Data released by the Entertainment Software Association and Circana showed U.S. consumers spent $57.2 billion on video games last year, only 1% higher than 2022’s figure of $56.6 billion and lower than 2021’s $60.4 billion which was driven by the pandemic.
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