Nintendo's new Switch milestone shows it's still in a league of its own

The Switch is officially Nintendo's bestselling home console ever, surpassing the original Wii with 103.5 million units sold over the last five years. The Switch reached that milestone faster than both the PlayStation 4 and the Wii. Not only that, but Nintendo's most recent financial quarter was its second-best on record, with massive jumps in sales and profits and a huge boost to its digital business.

This is yet more evidence that Nintendo exists in a world of its own creation, not restricted by the constraints of the traditional console gaming business and capable of astounding new business milestones thanks to its diehard fanbase and its unique approach to game design.

While Microsoft and Sony are currently locked in a heated content war to try to grow their respective businesses, Nintendo is arguably at its most comfortable and secure position in a decade. It's achieved this through its investments in first-party games, strong hardware sales and its refusal to compete in areas where it has known weaknesses, like cutting-edge graphics and big-budget game development.

This strategy has allowed Nintendo to turn its console into its biggest revenue driver and to reap more profits from its software library at a time when competitors are either losing money on hardware or relying overwhelmingly on third-party software sales amid an ongoing chip shortage that continues to constrain supply.

Over the past three months, Nintendo was able to ship roughly 10.7 million Switch consoles, while Sony shipped just under 4 million PlayStation 5 units. (Like Sony, Nintendo is also lowering its forecast for Switch sales going forward, citing the chip shortage.)

Nintendo has also earned more than double Sony's PlayStation profits in 2021 calendar year, because it makes more on each hardware unit sold and because many of its bestselling games, like Animal Crossing: New Horizons and the newest slate of Pokémon games, cost a fraction of what the competition costs to develop and market. Nintendo is also known to keep its prices high, refusing to discount products even years into their lifespan because customers have shown they'll keep buying Nintendo products at full price.

Nintendo is also uninterested in competing as aggressively as the competition for third-party content, even after Microsoft announced its nearly $70 billion purchase of Activision Blizzard and Sony its $3.6 billion purchase of Destiny developer Bungie. "Our brand was built upon products crafted with dedication by our employees, and having a large number of people who don’t possess Nintendo DNA in our group would not be a plus to the company,” President Shuntaro Furukawa said on an earnings call on Thursday.

Nintendo is readying a few big releases for 2022, including a new Kirby game and the sequel to The Legend of Zelda: Breath of the Wild, which has sold more than 25 million copies to date and ranks as the fourth bestselling Switch game of all time. Entering its sixth year, the Switch is showing no signs of slowing down anytime soon.

“Switch is just in the middle of its life cycle, and the momentum going into this year is good,” Furukawa said. “The Switch is ready to break a pattern of our past consoles that saw momentum weakening in their sixth year on the market and grow further.”