The Nintendo Switch has aided Nintendo’ s market capitalization surpass Sony’s company worth on the stock market. Nikkei reports Nintendo’s market cap reached 5.44 trillion yen on Friday, which is $48.9 billion, while Sony’s market cap as of Friday was $48.5 billion. While this is not the first time that Nintendo has managed to pass Sony, the most recent pass occurring 11 months ago, prior to this the last time Nintendo passed Sony was a decade ago, fueled by the popularity of the Wii.
When it comes to gaming consoles, sales are determined by personal preference based on popularity and innovation. The two main factors are the developments of new generation consoles that display newer technological opportunities that ideally translate into games as well, and the games themselves. With the recent E3 expo, Nintendo revealed many new titles for the Switch console which help drive an increase in sales in order to prepare from the coming influx of games.
When the Switch first came out, consumers were able to only choose from a small pool of games, many of which were playable on the Wii U, which resulted in a less impactful release. Despite this small amount, the quality of the games as shown by live video game streamers did help alleviate the effect a small sample size had. Combined with the underestimated demand that resulted in Nintendo providing a small supply, the Switch console itself was completely sold out prior to release at 2.4 million machines.
Sony, on the other hand dominated the market in regards to hardware sales and a game library second to none. The company has recently announced that PS4 sales have just passed 60.4 million units sold through the consumers, and not just shipped. With the recent display of functional variety that consoles have displayed, the need for multiple consoles has decreased, with only avid gamers purchasing more than one console game. Instead, behavior patterns show that a combination of a console of choice and the PC provides more than enough game coverage.
However, now that Nintendo’s game pool has increased to 20+ titles along with the apology for the Switch shortage and the promise to increase the amount of Switch consoles available has reinvigorated the demand for the Switch. Nintendo will continue to do well considering their recent success at E3, provided the quality of the games live up to expectations. Nintendo’s revenue stream also relies heavily on selling toys that relate to their video games. With the rise of titles, Nintendo will also be able to capitalize on an increases in toy sales in tandem with their new games, further improving their revenue stream.
It is important to remember that market capitalization displays the estimated value of a company based on the sum of its shares multiplied by its stock prices. While important for the companies and future investors, this has a minimal effect on gamers as long as the market cap is healthy. Console consumers focus on the quality of the consoles and titles, and as long as Nintendo is able to supply the demand for both their consoles and games, while also continuing to innovate for future consoles and games, then the company maintain a strong market cap.