Nintendo's Financial Results Briefing for Fiscal Year Ended March 2021 Q&A Analysis!

By LUDWIG VON KOOPA - We get to check up on the guy who always asks about China.

At the end of the Nintendo's Results For Fiscal Year Ended March 2021 article, I said that once the “investor/analyst question & answer session” gets translated, I'd write a commentary on it. ...Well, a few days after that actually happened, here we are! And here is the link to the session. Maybe you should briefly read through the eight questions and answers so you know what I'm commentating on. ...Though it's kinda boring, so I wouldn't blame you if you just wanted my fun notes on it below.

This was attended by Nintendo's President Shuntaro Furukawa and Executive Officer Hajime Murakami. Who is Murakami? It doesn't matter, since he just stood there and let Furukawa answer all of the questions. (He's in charge of Finance.)

Question 1: What's your rationale for selling 22.50 million additional Nintendo Switch consoles by the end of March 2022?

The guy asking the question wants to know if it's feasible that Nintendo would sell more than 22.50 million. By comparison, over the past year Nintendo sold 28.83 Nintendo Switch consoles, and the year before that, 21.03 million. So they're on an upward trend, so why isn't it still going up? Furukawa explained that 22.50 million is still a LOT, and while the Nintendo Switch is very popular, this IS year five. Consoles normally end their lifecycles altogether a year from today.

Nintendo assumes that supply shortages won't be a problem throughout the year, although they've given no reasoning for why they believe they'll be immune from those.

Question 2: How many players are actively using their Nintendo Switch?

My interpretation is that this caller wants Nintendo to avoid the trap they got caught into during the Wii era: Nintendo was smashing sales records with the Wii, but as they got closer to the end of the Wii's lifespan, no one was really playing on it anymore because many of those purchasers were fad buyers who wanted to waggle their Wiimote, and then they put it in a closet.

Furukawa spoke in relative terms, saying Animal Crossing: New Horizons increased the active user base, then it fell... then it went up again with the holidays, and all is currently good and happy and momentum isn't fading, thanks to strong titles like Monster Hunter Rise. I think it's a good question and a suspicious answer.

Question 3: Chinese Communist Party Virus... and maintaining good sales?

I'm pleased everyone is admitting that the Chinese Communist Party Virus helped Nintendo's sales tremendously, and the guy asking the question seems worried that Nintendo's sales will go down once the Virus is vaccinated from existence.

Furukawa explained that Animal Crossing players, still at home, are finally buying other games like Ring Fit Adventure (deemed a “main driver” of revenue!) and lots of first-party titles that all have Mario's name in them besides Splatoon 2 and The Legend of Zelda: Breath of the Wild. Furukawa says the forecast wasn't made assuming that COVID-19 would get any worse and they aren't relying on it as a crutch for 2021–2022. It's based on new titles and more sales of existing ones.

Question 4: Why are Research & Development costs going up?

Furukawa explained R&D expenses are going up because software development costs keep going up. It's more expensive to make games, and Nintendo is paying other companies to make games too. (Outsourcing.) Nintendo is also ramping up all kinds of other secret projects, including their next hardware iteration. Dumb gaming journalism websites will be all, OMG NEXT NINTENDO CONSOLE IN THE WORKS CONFIRMED! ...But Nintendo's always working on the next big things.

Question 5: Why don't you buy back stocks? How about a stock split?

Furukawa literally answered about Nintendo's philosophy on stock buybacks three months ago (see link at the bottom of this article.) It turns out Nintendo hasn't changed their philosophy in such a short time. They haven't ruled out share buybacks or stock splits, but you can tell that's not what they really want to do with their money. Nintendo likes keeping a giant reserve of cash (they're notorious for how much cash they keep on hand versus other companies) because they need to be able to not get bankrupt and pwned if some of their big bets fail, like the Wii U or the Nintendo Labo.

Furukawa also suggested that having cash is good for acquiring other companies. KoopaTV readers and people who generally pay attention may remember when Nintendo acquired Next Level Games at the beginning of the year. Nintendo must feel that they can have better value for Nintendo stockholders by doing things like that than buying back stocks.

Question 6: Please explain why net sales and sales volume are decreasing at different rates?

The guy asking this question probably thinks that he found some kind of major flaw in Nintendo's financial forecasts, like Nintendo is hiding material information and now they're being EXPOSED. Instead, and without needing to turn to the finance guy next to him, Furukawa explained that Nintendo's products are offered at different prices, and Nintendo might be forecasting those products to have different demand trends.

Therefore, a higher priced item (like the Nintendo Switch or Ring Fit Adventure) that's projected to sell less next year will have a greater effect on net sales as defined by currency than a lower priced item (like the Nintendo Switch Lite or Clubhouse Games: 51 Worldwide Classics) that's projected to sell less next year will. But in terms of sales volume, measured in units, a unit is a unit. One Nintendo Switch console is counted as one unit, and one Nintendo Switch Lite is also counted as one unit. ...Makes sense to me, and I hope it does to you. If it doesn't, I'll explain it further in the comments or I'll edit in a diagram or something here.

Question 7: What are the regional demand trends? And why do you plan to sell less software this year than the year you just finished?

This guy is asking two unrelated questions when he's supposed to only ask one. Hmph.

Furukawa cites the SUEZ CANAL blockage as hurting European sales due to Switch supply being stuck, but demand is strong overall and there aren't big regional differences.

Furukawa admits forecasting sales numbers, especially those of third-party publishers, is really difficult to do a year out, so cut him some slack because he gave a really high forecast of 190 million software titles. (A number matched only by the Wii in 2009/2010 in the past 20+ years of Nintendo history. Possibly ever.)

Question 8: “Do you have an update on the spread of Nintendo Switch in China?”

This is the only question where I'm going to quote the guy directly in the question heading, because I love the verb choice of “spread.” You know, like “spread of the disease.” Which is fitting, since China is well-known for SPREADing the Chinese Communist Party Virus across Earth.

Anyway, Furukawa gave the same answer as when this was asked three months ago, which is that the Chinese really like Ring Fit Adventure. I can at least confirm that Hong Kong adores Ring Fit Adventure, based on KoopaTV page traffic I can't confirm China based on the same metric, since KoopaTV is banned from there.

Nintendo's question and answer read-out doesn't give us the names of the people asking the questions, but my head canon is that the guy who asks about China every quarter is actually the same person each time. I don't know his ulterior motive. I don't trust him.


Did you have a different interpretation to the questions/answers from Ludwig's? If so, share it in the comments section! Maybe share your theory on if the China questioners are the same person or not.


Many of these questions appeared in the investor-analyst question and answer session three months ago, including China guy.
If you want GOOD questions, then come to the Q&A session at the 81st Nintendo Annual General Meeting of Shareholders.
How about next year's seven-question March 2022 (taking place May 2022) Q&A analysis?