Nintendo spent a record sum of $880 million on research and development (R&D) for the Switch’s successor last year, according to the company’s latest fiscal reports, which were released on Thursday. The number was reported by Niko Partners senior research analyst Daniel Ahmad and covers that twelve months that ended on March 31st, 2021. While the number itself it the largest dollar amount the company has ever spent on R&D, it’s worth noting that this spending represented only 5.3% of Nintendo’s total revenue because revenue growth was so strong.
The company explained its reasoning in a Q&A, according to Japan-based analyst and investment adviser David Gibson, who provided an overview of the session on Twitter. Nintendo reported that the main reason for increased R&D spending was the increase in software and outsourcing costs. The company is also investing in its online service, and said that since the Switch’s lifespan is about half over, it was important to begin investing in the development of its successor, amidst rumours of a Switch Pro launch.
As far as the Switch itself, the system is continuing to sell well. In 49 months, the Switch has sold 84.59 million units. It is currently selling faster than both the Wii and PS4, and should reach 100 million units faster than both consoles. Perhaps more interestingly, the Switch is almost selling on pace with the Nintendo DS, which remains the second best-selling game console of all time, behind the PlayStation 2.
Nintendo continues to invest heavily in R&D.
In FY2020/21 it spent approximately $880 million on R&D, more than any prior year.
Although I will note that this represented 5.3% of total revenue, which is a lower percentage than prior years, because of strong rev. growth. pic.twitter.com/RVgVg14uQs
— Daniel Ahmad (@ZhugeEX) May 6, 2021