Japan-based video game developer Nintendo Co. (NTDOY - Free Report) ) and Western Digital Corporation (WDC - Free Report) recently collaborated to launch Nintendo Switch-licensed microSDXC SanDisk memory cards with capacity of 64 GB and 128 GB.
Per Nintendo, the memory cards are exclusively for Nintendo Switch video game systems and will be available for sale next month. We believe that the brand value of SanDisk and strong demand for Nintendo Switch console will help these cards to gain traction in a short span.
Per Nintendo, as of Jun 30, 2017, 4.7 million units of Nintendo Switch (launched in March) have been sold globally. The company targets to sell around 10 million units in the first year, same as what Microsoft (MSFT - Free Report) Xbox One achieved in its first year.
The collaboration also augurs well for Western Digital as its customer base will expand. The Switch exclusivity will help the company penetrate the Japanese market faster where Nintendo has a significant presence.
Western Digital shares have gained 31.7%, significantly outperforming the 12.8% rally of the industry it belongs to.
Higher Memory to Boost Demand for Nintendo’s Games
In Japan, Nintendo Switch has outperformed Sony’s (SNE - Free Report) PS4. In the first 26 weeks, the company sold 1.5 million units of Nintendo Switch in the country, which is more than double the number of PS4 units sold over the same time frame when it was launched in 2013. Reportedly, it took PS4 69 weeks to reach the figure which Nintendo Switch achieved in 26 weeks.
Moreover, Nintendo Switch has also fared better than the company’s Wii U gaming console, which took nearly a year to sell 5 million units.
However, owing to a limited storage capacity of 32 GB, Nintendo Switch users are unable to enjoy the full gaming experience for certain games that require additional storage due to their large file formats (in the range of 50-100 GB).
One such game as noted by Nintendo is NBA 2K18, which necessitates the use of the new memory card for accessing its full version. The company has many such advanced games in its pipeline. These include the new Pokemon and Metroid 4 games which it plans to release in 2018. FIFA 18 is also scheduled for launch this month.
However, buying an extra memory card for such games will lead to an increase in price for gaming on the console, which is a concern.
Currently, Nintendo carries a Zacks Rank #2 (Buy) while Western Digital has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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