Switch’s successor contributed to record annual R&D spend at Nintendo

Nintendo has said that investment in Switch’s successor contributed to a record annual research and development (R&D) spend at the company.

As noted by Niko Partners senior research analyst Daniel Ahmad, Nintendo spent approximately $880 million on R&D—more than in any prior year—during the 12 months ended March 31, 2021.

The company commented on the R&D spend in an investor Q&A following the publication of its latest financial results on Thursday, according to Japan-based analyst and investment adviser David Gibson, who summarised some of the highlights on Twitter.

Nintendo reportedly said the main reason for the increased R&D budget was that software and outsourcing costs are increasing for Switch.

The company is also investing in online, and given that Switch is midway through its lifecycle, Nintendo said it’s necessary to invest in its next game platform too, which will continue to follow the company’s integrated hardware and software strategy.

Nintendo has previously said that making dedicated hardware to play its games on is central to its ability to create unique entertainment experiences.

Nintendo’s president discussed the company’s approach to developing and launching new gaming hardware in a Nikkei interview (paywall) published in February.

Shuntaro Furukawa said Nintendo doesn’t have a specific time frame in mind for hardware development, rather it is “constantly researching technology” in a bid to create new experiences.

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Nintendo's president says Switch's successor 'must offer a new experience’

Furukawa says the company is “constantly researching technology”

“The hardware and software development teams are in the same building, communicating closely and thinking about how we can propose new forms of entertainment,” he said.

“In order to create a single piece of hardware, we have to do a lot of preparation several years in advance, so we are working without stopping. In the end, the deciding factor in whether or not to commercialise a product is whether it can create a new experience.”

Nintendo said on Thursday that Switch had shipped almost 85 million units, and sold through over 81 million units to consumers, as of March 31.

The company reported annual revenue of $16.59 billion, up 34.4% year-over-year and the highest total in over a decade.

Operating profit totalled $6.04 billion, up 81.8% year-over-year and the highest the company has ever recorded.