Rengo Is Said to Be Cardboard Maker for Nintendo Switch Labo
(Bloomberg) -- Japan’s Rengo Co. is supplying cardboard for the Nintendo Co. Switch accessories that will go on sale later this month, people familiar with the matter said.
The Osaka-based manufacturer of processed paper and corrugated packaging is one of several companies in the supply chain contributing to Nintendo Labo, said the people, asking not to be identified because the matter is private. The cardboard sheets pop out and fold into everything from motorbike handles to fishing rods and a miniature piano.
Nintendo surprised gamers and investors in January when it unveiled the accessories, and shares of the Kyoto-based company jumped to a 10-year high on optimism the colorful cardboard gadgets will broaden the Switch’s appeal. The company has not disclosed its suppliers publicly, though speculation has been rife in Japan. Shares of cardboard maker Ohmura Shigyo Co. jumped more than fourfold in January after several blogs speculated it was the manufacturer behind Labo.
Representatives for Nintendo and Rengo declined to comment, while Ohmura didn’t respond to requests for comment. Rengo shares rose 1.5 percent, reversing an earlier decline. Ohmura Shigyo’s stock fell 4.1 percent.
Nintendo Labo will initially come in two sets that go on sale April 20 for $70 and $80 each.
The Switch, which retails for about $300, is essentially a tablet that can be hooked up to a television or played on the go. It comes with two detachable controllers that are packed with sensors, including infrared cameras and sophisticated vibration engines. Nintendo’s previous console, the Wii U, fell far behind rival products from Sony Corp. and Microsoft Corp., but the Switch’s hybrid approach has caught on with gamers were looking for a new kind of device.
The company in February increased its forecast for Switch hardware sales for the current period to 15 million, up from its original estimate of 10 million. Nintendo President Tatsumi Kimishima said he wants to sell about 37 million units by the end of March 2019 and said Switch sales are so far roughly on pace with the Wii, its best-selling home console in history.
Nintendo has set itself apart by focusing on physical ways to interact with games in a market where the majority of revenue is made by tapping a smartphone screen. The Labo move echoes the Wii a decade ago, which broadened the audience for Nintendo’s products by getting kids and grandparents alike to swing controllers and play virtual tennis and bowling.
Rengo, one of the first companies in Japan to produce corrugated cardboard, is the third-largest maker of containers and packaging products in Japan by sales. It has 35 manufacturing plants in Japan and about 55 factories in Asia and the U.S. Rengo has a market value of about 250 billion yen ($2.3 billion), with revenue for the year through March projected to be 603 billion yen.
Rengo is focused on Japan production for Nintendo, one of the people said. While Rengo is able to supply enough cardboard for Labo, sales for the Nintendo accessory are only a small part of its sales, another person said.
©2018 Bloomberg L.P.