The Dangerous Game Nintendo is Playing With the Switch

Atari had a nice run, but Nintendo is the godfather of modern gaming. It was the original NES console that really made the video game industry what is today. It was the Gameboy that really pioneered the current $50 billion dollar mobile gaming market. However, except for the successful Wii, Nintendo has been on a steady decline since its early glory days. The company is attempting to reverse its decades long slide with the Switch. Will this new hybrid console be enough to make Nintendo king of the world again?

Is the Switch a Console or a Handheld?

Nintendo’s biggest successes over the past several years have been in the handheld market. If you exclude smart phones, Nintendo is completely dominant in the handheld niche. Looking at the new Switch it appears that Nintendo is trying to appeal to both people who want a console and to people who want a handheld. Can the Switch work as both?

Nintendo is running a big risk with the hybrid strategy. It seems likely that the Switch will disappoint both hardcore console and hardcore handheld enthusiasts. The company can only succeed if huge numbers of casual gamers are willing to buy the hybrid just because it is different and because they have fond memories of Nintendo.

Where the Gaming Market is Now?

Nintendo’s WiiU was a massive failure for several reasons. One of the biggest problems was that the gaming console market has come to be dominated by hardcore gamers. The gamers may have been raised on Nintendo’s family-friendly games, but they have moved on to edgier games. The WiiU had nothing to offer this large segment of the market. The only system the WiiU was competitive with was the Wii. Many Wii owners are casual gamers and saw no reason to buy a more expensive console that was basically the same as what they already owned.

Nintendo failed to understand that the gaming market, like all entertainment, is more splintered now. It is no longer a viable business practice to build a console that will appeal to everyone. The result, like in the case of the WiiU, is that you get a product that appeals to almost no one.

Nintendo’s Biggest Advantage

Until recently, Nintendo has refused to use its games and characters on other platforms. With the huge success of Pokémon Goand the more moderate success of Super Mario Run, Nintendo has claimed it is trying to introduce new players to Nintendo on their phones to get them to buy Nintendo hardware.

Nintendo has a significant library of intellectual property, but it seems reluctant to use it. Its characters are global icons. With the Nintendo Switch, the company is trying to get the most out of its library of familiar characters. Its strategy appears to be trying to use nostalgia to attract gamers who now play grown-up games and appeal to a new generation of gamers familiar with the old characters, but looking for games that look and play more like the modern games they have been exposed to.

This strategy depends on a large number of people falling in love with the portable gimmick of the Switch, much the way people fell in love with the Wii’s wireless controllers. The danger is that the Switch will be a success at the cost of Nintendo’s future. What happens after the Switch? Can Nintendo continue to come up with new gimmicks to sell hardware?

The Future of Gaming

The biggest trends in gaming are augmented reality and virtual reality. The mobile gaming market is poised to be a major player in both of these trends. Phones are becoming more and more powerful. Soon major PC style games will be played on phones, not desktops, or consoles. The Switch does not help put Nintendo in a place to compete in that future. Everything the Switch can do now, almost any phone will be able to do better in a year or two.

Even if the Nintendo Switch is a runaway success, it will only be postponing the company’s doom. For Nintendo to survive another ten years as a meaningful player it either has to give-up its obsession with a business model focusing on hardware, or it needs to start making its own phones.

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