Nintendo has released its annual financial report for the 2020 fiscal year. In keeping with standard accounting practices, the 2020 fiscal year covers 2019-2020 since it ended on March 31st of this year. The report details Nintendo's profits and expenditures, showing that Nintendo spent significantly more on research and development this year than in recent years.
What could this increase in Nintendo's R&D spending mean?
Nintendo's research and development spending in FY (fiscal year) 2020 came to $775 million. It's worth noting that the company includes hardware and software development in that figure, as well as tools it creates for other developers to use. Products falling under this purview would include Pokemon Sword and Shield, Ring Fit Adventure, and the Nintendo Switch Lite console. All of these would count under Nintendo's 2020 R&D spending.
Looking back through recent Nintendo fiscal years, however, 2020 is something of an anomaly. In 2019, the company spent $632 million on R&D, and in 2018 the R&D spending was $603 million. Between the latter two years, there's a small increase in spending, but between 2019 and 2020 there's a 122% increase. If your eyes are glazing over at the math, think of it this way: the last time Nintendo's R&D spending jumped like this was back in 2014, when it was presumably getting ready to develop the Switch. Back then, the increase between 2013 and 2014's R&D spending was also a 122% jump.
Does Nintendo have a new console on the way?
It's still too early to call whether this R&D spending increase actually points to a new console. It could be an iteration on the Switch - the long-rumored Switch Pro - or it could be another alternative form factor model like the Switch Lite. Still, it's interesting that Nintendo has increased its R&D spending so much in 2020. The company has enjoyed higher profits all round this FY and has also increased its employee base by around 250 in the last year, so the higher spending could simply be a reflection of that. As it stands, though, the Switch has been on the market for three years and the 3DS is on its way out (selling only 0.69m units, and under 6m games), so now would be a good time to research new hardware.
There's another interesting tidbit in the 2020 Nintendo financial report. The company says it's "working on the development of a new product that improves people's QoL (quality of life) in enjoyable ways" and that it continues to "engage in the development of new products for the future". It's not clear what this new product might be yet or whether it's related to the marked increase in R&D spending.
If you want to read the full Nintendo financial report, you can do so here. It goes into detail about the sales figures for 2020 FY products like Pokemon Sword and Shield (17.37 million combined) and Animal Crossing: New Horizons (11.77 million units, the best start ever for a Switch game). You can also find lots of other financial and corporate details about the Japanese gaming giant's 2020 financial year, so if you've got a head for numbers and data, it's a treasure trove.
What would you like to see from this increased R&D spending? Let us know in the comments below!