Nintendo recently released figures for its production costs over the past three years, and spending on hardware parts and development have risen dramatically.
Nintendo’s spending trends since 2015 can tell the story of when the company is developing new products. Costs for hardware development skyrocketed in 2019 and 2021 the years that the Switch Lite and Switch OLED released respectively. In fact, hardware development costs were at an all time high for the company in 2021, costing ¥3.7 billion (approximately $27 million) compared to 2020’s ¥19 million (a mere $140,000).
What is also interesting about Nintendo’s spending is the increase in costs for ‘Raw materials and supplies’. This cost usually increases preceding the development of new hardware. For reference the cost of materials was stable from 2015 – 2017 at around ¥2 billion ($15 million) every year.
However, this cost has risen substantially since 2018, with 2022’s costs estimated at ¥66 billion ($500 million). This is almost 8,000x the average and more than twice the spending of the next highest year, 2019. While development costs are stable this year, production costs are slowly beginning to rise.
Markets are obviously unstable at the moment with the cost of energy rising globally. This crisis, colliding with the computer chip shortage we have been suffering through in recent years, has meant that costs have risen sharply in technology based markets. This vast increase in spending could be Nintendo opting to buy parts in bulk in order to negate future shortages and future proof the business.
However, the stark increase in development costs in 2021, and parts in 2022 paint a different story. Looking at the figures it seems that Nintendo has a new piece of hardware in development. Nintendo usually releases new hardware every five to six years, and with the Switch releasing in 2017 it is due for an update.
However, recently Nintendo has extended the life of successful products over new releases. Most famously it is now eight years since the release of Mario Kart 8 with Nintendo deciding to continue updating the game over releasing a sequel. This new spending points to either a completely new console, or an update such as a Nintendo Switch Pro. It seems likely we will have to wait longer for the official announcement to find out which.
If you want to find out more about what Nintendo has in store for us this year, you can check out all the biggest announcements from the latest Nintendo Direct.
Written by Georgina Young on behalf of GLHF.
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