Why it matters: As Nintendo's immensely successful Switch handheld console enters its seventh year, industry watchers wonder if the introduction of the system's successor is imminent. Recent responses to shareholder questions on the matter reveal little but indicate the company is carefully managing the shift from physical to digital sales.

Nintendo has indicated that it wants to leverage Switch user accounts to smoothly transition users to the company's next console. This is nothing new for competitors Sony and Microsoft, but Nintendo has a shaky history regarding crossing from one hardware generation to the next.

The confirmation from President Shuntaro Furukawa was in response to a question during this year's shareholder meeting. Furukawa also said that despite the shifting ratio of digital to physical game sales, Nintendo's next console will continue incorporating physical media. The revelation isn't surprising but is reassuring to users concerned about the rise of digital-only releases like Alan Wake II or the digital-only variants of the PlayStation 5 and Xbox Series consoles.

According to a Google translation of the shareholder Q&A session, Furukawa noted that previous changeovers forced Nintendo to rebuild consumer loyalty from scratch and that maintaining a user account system will let the company avoid that problem next time around. While Furukawa wouldn't say whether Nintendo's next system would support backward compatibility with Switch games, the feature is the primary reason for migrating user accounts between hardware generations.

PlayStation and Xbox owners enjoyed a mostly painless move from their last-generation to current-generation consoles, preserving their user accounts and all of their old purchases. In May, Xbox head Phil Spencer admitted that the previous generation was the worst one for Microsoft to lose because it established the software libraries that players will seemingly be able to retain going forward, possibly solidifying their loyalty to their chosen platforms.

Meanwhile, Nintendo users mostly had to start fresh when jumping into the Switch platform. The handheld is not backward compatible with Nintendo's previous systems – the Wii U and the 3DS (some of the Switch's top-sellers are rebranded Wii U titles) – and the company replaced its old Nintendo ID system with the current Switch Accounts during the transition. Transferring retro game purchases from the Wii to the Wii U was also needlessly complex. Ensuring Nintendo's next console inherits the Switch's success means solving this problem.