Analysis: Animal Crossing fuels record profits for Nintendo, even with Xbox X|S and PS5 launches – GeekWire

Any other video game company might have pulled out a big gun or two for November, when the PlayStation 5 and Xbox Series X|S were about to launch. Nintendo, however, simply didn’t do anything.

Now, looking at its internal numbers, it’s clear why — it didn’t think it needed to, and it was right.

Nintendo’s latest financial highlights covers its software and hardware sales for the nine-month period that ended on Dec. 31. It has a few surprises to offer, including new sales milestones for the Switch and several of its first-party games.

Nintendo’s profits surged to an all-time high of 376.6 billion yen ($3.6 billion), up from 196 billion from the same period in 2019. We’d known Nintendo did well out of 2020, but not “nearly doubling its profits” well. Overall, its sales surged worldwide to 1.4 trillion yen ($13 billion).

Nine months after its release, Nintendo’s life simulator is on track to become the best-selling game on the Switch, with 31.18 million units sold. While the current No. 1 game, Mario Kart 8 Deluxe, is still a perennial favorite among Switch fans (it sold 8.64 million units internationally last year, for a total of 33.41 million), New Horizons has sold almost as many copies in nine months as Mario Kart 8 has in almost four years. Sooner or later, that gap’s going to close.

While Animal Crossing has been a reliable favorite on Nintendo’s systems since the GameCube, it got a big spike in audience interest due to the COVID-19 pandemic. It turns out that when everyone’s stuck indoors all day, a deliberately escapist, non-violent game about moving away to an isolated desert island, where you can still hang out with your friends, is exactly in tune with the worldwide zeitgeist. If anything, the next Animal Crossing game is going to have problems with living up to New Horizons’ example, unless it manages to luckily coincide with another major disaster.

Other hits for Nintendo in 2020 included the newest entry in the Paper Mario series, The Origami King, which moved 3.05 million units, and Pikmin 3 Deluxe, which sold 1.94 million units. Super Mario 3D All-Stars, a compilation title which provides high-definition ports of Super Mario 64, Super Mario Sunshine, and Super Mario Galaxy, sold 8.32 million units as part of the ongoing 35th anniversary celebration of the Super Mario Bros. franchise.

Overall, Nintendo reported selling 176.10 million software units last year, a 43% increase over 2019, with digital sales making up roughly 41% of that.

What’s strange about this, and what defied a lot of analyst predictions, is that 2020 was a relatively slow year for Nintendo. While the Switch might have the best lineup of third-party games since the Super Nintendo, due in no small part to Nintendo’s embrace of the independent developer community, any Nintendo system lives or dies on the strength of its first-party lineup.

In 2020, after New Horizons, Nintendo had very little on the table. Hyrule Warriors: Age of Calamity is an action game for a relatively niche audience, and Paper Mario got some people’s attention, but much of Nintendo’s game plan for the back half of 2020 was new releases of old games. Even the viral/streamer hit Super Mario 35, which turns a random selection of stages from 1986’s Super Mario Bros. into an endurance challenge for up to 35 players, is a remix of a decades-old classic.

The Switch console tells most of the story of Nintendo’s year. It hit a milestone in November when it became the No. 1 best-selling console in the U.S. for a full two years running, and did so despite the launches of the Xbox Series X|S and the PlayStation 5.

Now it’s officially shipped 79.87 million units, officially overtaking Nintendo’s defunct 3DS for lifetime sales. Of the Switches sold to date, 13.53 million of them are the portable-only Switch Lite; this means that the Lite, by itself, is just about to surpass the overall lifetime sales of Nintendo’s ill-fated Wii-U.

With nearly 80 million Switches in circulation and just over 31 million copies of New Horizons out there, that means New Horizons has an attach rate to its system of nearly 39%. Unless there’s a solid number of people who have a copy of New Horizons just to have it, we can assume that just over a third of all the Switch owners on the planet also have a copy of New Horizons. It’s the kind of attach rate that any other console manufacturer would give its eyeteeth for.

Like much of the rest of the games industry, the question right now is whether or not Nintendo — or anyone else — can replicate this kind of success. 2020 was a unique window of time, where the entertainment supply was low at a point where demand skyrocketed, and much of the games industry reported record sales and new customers. Nintendo may have come out of the year in a strong position, but as more people get vaccinated and the rest of the world begins to reopen, the question is whether this is a new normal or a bubble.

If it is a bubble, however, Nintendo is arguably in a better position to weather it than most of its competition. The Switch, after all, is also a portable system, which means it’s always got that niche where people will want one for long car rides or plane trips. It also isn’t dealing with the supply chain disruptions of Sony or Microsoft, both of which can’t keep their next-generation systems on the shelf. There’s a non-zero chance that by the time the average consumer can simply walk into a store and pick up a PS5 or Xbox Series X|S, it’ll be mid-summer and they’ll suddenly be competing with the rest of the world again.

It’s an interesting commentary on reversals of fortune. Ten years ago, Nintendo was in one of the weakest positions in its history, saddled with the slow-selling 3DS and Wii-Us, and up against strong competition from the Xbox 360. It had a few lean years before the success of its Amiibo project — collectible toys which could also be used with compatible games — revived its fortunes. Now it’s managed to carve out a stronger place for itself than it’s had since the ’90s, in the face of what on paper should be its fiercest competition.

Looking forward to the rest of 2021, Nintendo’s early game-of-the-year candidate remains Capcom’s Monster Hunter Rise in March. As the newest installment in the best-selling Monster Hunter franchise, an open-world game about tracking down mythical beasts so you can make them into a series of truly unfortunate-looking hats, Rise is likely to do well in the Americas and Europe, but will absolutely conquer Japan on day one. It’s planned to release alongside a special tie-in model of the Switch, which will bundle a digital copy of Rise with all of its bonus content and a Switch with a Monster Hunter-themed paint job.

Feb. 12 will also see the debut of Super Mario 3D World + Bowser’s Fury, which ports yet another Mario game from the late, lamented Wii-U, but augments it with an expansion pack.