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Switch Pro Development Led to a Record R&D Spending of $880 Million for Nintendo in 2020

Nintendo had an excellent 2020 thanks to the stay-at-home lifestyle enforced by the pandemic and a strong lineup of first-party and third-party titles. The company reported annual revenue of $16.59 billion for FY2021 (ending on March 31st), an increase of 34.4% YoY, marking its highest earnings in more than a decade. The operating profit was even more impressive, reaching $6.04 billion, an increase of 81.8% compared to the previous year. Much of this was the result of record hardware sales, with the overall sales figure for the Switch reaching 85 million units as of 31st March.

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At the same time, Nintendo’s spendings also reached an all-time high with an approximate investment of $880 million in R&D for the financial year ending on 31st March. Marketing costs also grew by a notable margin, reaching approximately $796 million during the period.

During the earnings call, the company answered some questions regarding the increased R&D spendings. The bulk of it supposedly went into software development, with increasing outsourcing costs also being a major factor. Furthermore, the cost of first-party titles is also growing, along with online services and other related aspects. The interesting bit was regarding the next-gen Switch which is expected to launch later this year. The company stated that the Switch console is midway (not at the end) through its lifecycle, and investments into the next-gen platform are growing.

The hardware and software development teams are in the same building, communicating closely and thinking about how we can propose new forms of entertainment. 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 commercialize a product is whether it can create a new experience.

Nintendo President

Areej

Computer Engineering dropout (3 years), writer, journalist, and amateur poet. I started my first technology blog, Techquila while in college to address my hardware passion. Although largely successful, it was a classic example of too many people trying out multiple different things but getting nothing done. Left in late 2019 and been working on Hardware Times ever since.
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