Tensions between Japan and South Korea come as the U.S. and its trading partners are embroiled in a global trade war.Technologyread more
The one-to-eight stock split would mean the current number of ordinary shares — which stands at 4 billion — will increase to 32 billion. It comes ahead of a reported Hong Kong...Asia Marketsread more
Minutes from the Reserve Bank of Australia's monetary policy meeting in July showed the central bank was ready to adjust interest rates if required.Asia Marketsread more
Current and former Tesla employees working in the company's open-air "tent" factory say they felt pressure to take shortcuts to hit aggressive Model 3 production goals,...Technologyread more
China's fiscal spending increased 10.7% in the first six months from a year earlier, the finance ministry said on Tuesday, underlining the government's bid to support the...China Economyread more
The findings by McKinsey and Company come amid a year-long tariff fight between the U.S. and China, which has spilled into areas such as technology and security.China Economyread more
Microsoft's considerable reach into the corporate world isn't something Slack CEO Stewart Butterfield is very concerned about.Technologyread more
A devastating outbreak of African swine fever that has killed millions of pigs in China is changing attitudes in a country where farm hygiene has often been seen as lax by...Livestockread more
In a closed-door meeting at a Manhattan mansion, executives outlined changes to controversial software that was implicated in two crashes.Aerospace & Defenseread more
President Donald Trump and the RNC are picking up key supporters in the business community who did not back him as a candidate in 2016.2020 Electionsread more
Amazon workers in Minnesota and Germany are striking as Prime Day kicks off, in a stand against working conditions and wage practices. The action in Minnesota represents the...Retailread more
Nintendo has a lot riding on its new game console.
With the launch of Nintendo Switch this Friday, the storied Japanese game maker not only hopes to climb back into the fight for the attention of gamers, but to regain favor with external, third-party publishers. But cautious reviews and an opaque roadmap from company officials have created some unease among investors. (Since Dec. 9, Nintendo shares are down from $32.10 to just under $26.)
The Switch marks more than just a new console generation for the company. It's also the formal end to the company's worst-selling home console of all time. The Wii U, launched in 2012, sold just 13.56 million units worldwide in its time on the market — far short of the company's initial expectations of more than 100 million units.
Nintendo's president, Tatsumi Kimishima, told Japan's Nikkei newspaper that the new device could sell as well as the Wii (which moved more than 100 million units in its lifetime). But if the Switch posts numbers closer to the Wii U, analysts say it could be a big blow.
"The Wii U bought them time to figure out when to launch the Switch, but if you look at Nintendo's overall business model, you have hand-held revenue, mobile gaming revenue, some incremental theme park revenue, future TV and/or film revenue and a significant amount of hardware and software revenue expected from Switch," said P.J. McNealy of Digital World Research. "So if Switch misses, that hurts all of their IP, which hurts all of the parts of their business."
Ben Schachter of Macquarie Capital notes that, ironically, should Switch fail, Nintendo's stock could actually rise, since it could push the company to focus solely on software sales, something a group of investors has been advocating for years.
But few expect the system to flop as majestically as Wii U did. McNealy says the trajectory of Switch should be visible within three months of its launch.
"We're expecting 2 million units at launch," he said. "If they sell out immediately, it's a good early indicator, then the refresh rate in April, May and June bears close watching."
Mike Hickey at Benchmark Capital agrees. He says that while no one expects Switch to turn in Wii-like sales numbers, sales projections in the 35 million to 55 million range are appropriate. And, he adds, given Switch's design, it could open the door for future system upgrades, rather than having to reinvent how gamers access games.
While there's pent-up demand among gamers for a new Nintendo system — and Nintendo has shown an ability to use its own stable of invaluable IP (like Mario, Zelda, "Donkey Kong" and "Pokemon") to sustain its systems on its own — the ideal scenario for Nintendo is to lure back third-party publishers (like Electronic Arts and Take-Two Interactive Software) that have largely abandoned its platforms.
That likely won't happen until the company establishes a significant installed base of Switch owners. Michael Pachter of Wedbush Securities notes we should get an idea of how open other game publishers are to working with Nintendo early this summer.
"While we expect the Switch to be successful, we believe that the hardware will require significant third-party software support to remain a hot seller," he said in a note to investors. "We won't know too much about third-party support until E3 in June, so we think that it is too early to jump on the Nintendo bandwagon."
One thing is certain, though. Nintendo will not easily give up the fight for a strongly positioned home console. While those units don't make much, if any, money in their early days, they become more profitable as time goes on and (since they're built to Nintendo's own specifications) they ensure the company's internal game developers, including Mario creator Shigeru Miyamoto, get to make exactly the type of games they want.
"Hardware is still critical because they want people to experience Nintendo's own IP wherever they are — on a phone, in the living room, on the go — and they don't want to cede the living room to Sony and Microsoft and maybe Amazon or Apple down the road, " said McNealy. "Could Nintendo morph into a software only [company]? Sure. But no time in the short term."