By Dr. Serkan Toto – On Japan's Game Industry

Switch Lite Sales: The Bloomberg-Citi Disaster


I am German, and as such (I hope) a rather analytical and sober person.

Based out of Tokyo, I have been consulting to financial institutions for almost a decade, both buy-side and sell-side.

I am an economics PhD and have a solid understanding of how investment banks, investors and “the market” work, and I know many strange things happen in this industry.

But only one time, I would like to point what I think is at least questionable behavior out.

What I mean is the Switch Lite sales report disaster that unraveled over the last 24 hours.

On the morning of September 24, 2019 US time, Bloomberg reported that according to Tokyo-based research firm Media Create, the new Switch device “only” sold 114k units in its first three days on sale in Japan:

The reaction: stock in Nintendo, a US$50 billion bluechip, fell around 4% within minutes in the US ($NTDOY).

All of this is a big joke at best and a scandal at worst.

What explains the drop?

Bloomberg combined the Media Create numbers with a comment from Citi, according to which Switch Lite sales are “soft”, as they missed Citi’s estimates.

Citi estimated Switch Lite sales to hit 300k – in three days and in Japan alone.

So what’s the problem?

The problem is that Citi’s “estimates” are totally detached from reality.

Citi: Lite Sales Would Match Switch Debut In 2017 – Sheer Insanity

In its first days after release back in March 2017, Nintendo sold 330k Switch units in Japan.

So Citi’s “analysis” says the Lite would almost match the initial volume the original device moved in its first week – an estimate that’s what I called “intentionally insane” on Twitter.

Sorry, but why would a follow-up device even be close to matching the week-1 number of the original console?

When in the history of the industry has this ever happened?

Why would the Lite sell around 4-6x the amount of what the original model typically sells in Japan?

For anybody who has at least a shred of understanding of the gaming market, this makes absolutely no sense.

Especially since there are already 9.2 million original Switches on the market in Japan – more than the PS4 and in over three years less, by the way.

To make it worse: the 300k units that Citi made up of course would come ON TOP of the number of units the original continues to sell.

If I wasn’t such a sober person, I would add 5 LOL emojis here.

So in my view, Citi intentionally threw out that number, well knowing there is no way for Nintendo to actually reach it.

Citi Contradicts Itself

It gets better.

Citi says: “Casual gamers that could be drawn to the new console are unlikely to rush to buy the console immediately after…launch”.

So after making up a fairytale number for week 1, the same bank says that the casual user base is unlikely to rush out to immediately buy the device.

While this is correct, I am not really sure if Citi understands they are contradicting themselves: if you think so, why do you provide such a sky-high, unprecedented estimate?

Once again, this makes no sense whatsoever.

Bloomberg Corrects Itself With A 41% Miss

Again, I understand this is finance, and behavior like this (by media and investment banks) is not uncommon.

But it gets even better.

One day later, on September 25 Japan time, Bloomberg suddenly “corrects” the Media Create number from 114k to 161k, like so:

“Oops, we were off a mere 41% because the numbers were only preliminary and caused a drop of 4% in a US$50 billion company” is Monty Python-level “reporting”.

I could go on and on here, but I think I made my point.

This happens regularly, but it’s really breathtaking how Bloomberg and Citi have been spinning this, especially because they were so successful with setting the narrative.

As a final note, Japanese video game magazine Famitsu today published their weekly numbers, according to which Lite sales reached 178k in sales in three days.

Nintendo hasn’t publicly stated their own expectations, but in my view, this range is a great success and clearly exceeds expectations of investment banks that provide actual analysis based on common sense.

About the author

Dr. Serkan Toto

I am the CEO & Founder of Tokyo-based Kantan Games Inc., an independent consultancy focused on Japan’s game industry.

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By Dr. Serkan Toto – On Japan's Game Industry