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What Nintendo’s new Switch console could mean for the electronics maker

Next week Nintendo will launch a new gaming console, and with it, the Japanese manufacturer hopes to regain dominance of the video game console market after disappointing sales of the Wii U.

To Nintendo, the Switch, on sale March 3, is an effort to appeal to gamers whose habits and preferences have evolved in recent years.

Visitors play Nintendo's new video game console Switch during its presentation in Tokyo.
Kazuhiro Nogi | AFP | Getty Images
Visitors play Nintendo's new video game console Switch during its presentation in Tokyo.

Since 1980, Nintendo has taken a two-pronged approach to the gaming market: In addition to a traditional, TV-based home console, the company has also produced a portable, battery-powered handheld device. A Nintendo engineer created the pocket-sized Game & Watch after being inspired while watching a bored commuter play with an electronic calculator on a train. The Game & Watch was the first in a series of handhelds that included the Game Boy line and Nintendo DS. With the Switch, the home of Mario might be looking to converge both home consoles and handhelds into a single device.

Nintendo is making several key bets with the Switch: that gamers are increasingly mobile, increasingly casual and increasingly social. The device has two controllers that connect to a tablet, which is then lifted away from a TV-connected dock — changing seamlessly from a traditional TV console to a handheld. Each controller can individually be detached and used independently; one can be passed to a friend for multiplayer games.

The appearance of the Switch doesn't mean Nintendo is ditching mobile-only devices entirely, and the company may still release a follow-up to its current portable handheld, the Nintendo 3DS, said Matthew Hudak, analyst at Euromonitor International. (Nintendo did not respond to a request for comment.)

For one, handheld games are still selling well despite the threat from smartphone gaming. "The actual volumes for handhelds have still been fairly high," Hudak said. Still, Hudak says combining the TV-based and handheld markets may bring in new consumers who aren't traditional gamers. But combining the two markets would be a long run strategy.

Word on the street about the Switch has been largely positive. "It's definitely nice to see a convergence device," says Chris Arbogast, the director of marketing for Nyko, a third-party hardware manufacturer. Nyko develops accessories for a variety of consoles by watching consumer chatter on online forums and message boards like Reddit. "There was a huge amount [of interest] leading up, especially on subreddits for Switch and on traditional gaming websites," says Arbogast.

Still, smartphone gaming is only going to get bigger, and Nintendo's strategy going forward includes it: Pokemon Go, released just last year, was a viral hit and a cultural phenomenon, becoming the fastest mobile game to reach 10 million downloads worldwide. Super Mario Run was released last month, and Nintendo has just announced a new Fire Emblem game in development for mobile.

But a smartphone-centric strategy is risky, as mobile gamers are very finicky. "Even something like Pokemon Go that did very well, it also faded very, very quickly," Hudak said.

"They saw a while ago they needed to shift into [the mobile] space," said Hudak. "But the question is, how can you actually do both, because they also want to try, seemingly in the long run, combining their handheld audience with their static console audience."

The key might lie in pricing. "The big thing they need to return to overall," said Hudak, "is to be able to attract that casual gaming audience." A $300 console may not appeal to notoriously price-sensitive casual gamers.

Third-party hardware maker Nyko remains optimistic on Nintendo's future. "From what I've seen in the past, they'll make a decision not necessarily based upon what's going to make the most revenue, but what's going to be the most unique and different, enjoyable experience," Arbogast said.