Nintendo has explained why they did not include the Switch’s successor in their earnings forecast to investors.
Nintendo just published their latest Q&A with investors, with official translations so that both the meaning of the investors’ asking questions, and Nintendo’s answers, are clearly understood. On question 7, Nintendo was asked about a choice they made in communicating to investors.
To put it in plain English, Nintendo has to give a forecast of how much money they think they will make for the coming year, at the end and start of each fiscal year. Last March, Nintendo explained that the figure they gave does not account for what they think they will make from the Switch 2, or whatever name they will give the successor to the current console, the Nintendo Switch.
Nintendo President Shuntaro Furukawa gave this answer on why they made this choice:
“Our basic policy for IR activities is to disclose information to shareholders and investors in a fair, timely, and appropriate manner. However, in our business, it is important to surprise our consumers in a positive way.
Sharing specific product information or sales strategies in advance would diminish the surprise. For that reason, we are often unable to disclose such information when announcing our earnings forecasts, and we find it challenging to announce earnings forecasts at that stage.
On the other hand, we also think we need to communicate our business outlook to shareholders and investors as much as possible, so we believe it is appropriate to announce our full-year earnings forecast, at least for now.
Previously, we also announced interim earnings forecasts, but we no longer disclose those since even a slight difference in the timing of a software release can significantly change the numbers.”
Although Furukawa makes it sound friendly, by referring to it as a ‘surprise’ for consumers, this is really a defense for protecting business information from competitors. Even if Sony, Nintendo, and Microsoft are more cooperative now than in previous years, it is true that they still compete.
To be more specific, even if consumers are known to buy a Nintendo Switch alongside a PlayStation or an Xbox, if Nintendo’s plans leak out to Sony or Microsoft, either of their competitors can use that information to their advantage, and even hurt Nintendo’s ability to sell their consoles.
But it is also a reminder that Furukawa made a promise that they would reveal that next console before the end of this fiscal year, which will be on March 31, 2025. As Furukawa said about software, if Nintendo makes even a small change to their schedule for that next console, it could change stock numbers from rampant speculation overnight.
Nintendo simply does not want to give their own investors the proverbial rope to hang them with, so like everyone else, they have to wait for when Nintendo has locked everything in.
