How the Success of the Nintendo Switch Could Change the Console Industry

Prior to the Switch’s launch last Friday, analysts at investment banks across the country forecasted weak sales numbers and an overall flop for the Japanese entertainment company, citing a high starting price and lack of strong launch titles.  Nintendo, which is still reeling from the unsuccessful launch of the Wii U, was banking on the Switch not only to succeed, but also to revitalize a business model forged on innovation.  If you look at the history of the gaming industry, you can see that upon the release of a highly successful Nintendo product, the rest of the industry subsequently attempts to tailor their products/technologies to match that of Nintendo.  There is no better example of this than the release of the Wii in 2006, which prompted Sony and Microsoft (both of whom were on the verge of releasing their newest generation consoles) to attempt to incorporate similar accelerometer-based technology.  As a result gamers received the Xbox Kinect and Playstation Move packages.

Fast forward to today and we see a drastically different story than that painted by analysts less than a week ago.  Nintendo claims that the Switch is claimed has outsold the 2006 Wii launch, and company stock prices reflect that with a recent jump of 4.1%.  The flagship title Zelda: Breath of the Wild has just barely came in at no. 2 in the UK games charts behind Playstation exclusive Horizon: Zero Dawn.  But what does this mean for the future of the big three console companies?  The Switch essentially capitalizes on consumers’ obsession with mobile gaming, allowing them to take games they play on the TV at home with them on the go (and done in a much more effective way than Sony’s mid-2000s PSP).  Given the Switch’s relative success in comparison to the Wii, can we expect to see a restructuring of the approaches that Microsoft and Sony take to future platforms?  Will the entire industry see a shift to provide consumers with a high-performance alternative to smartphone mobile gaming?  We can only wait and see.

References:

Nintendo shares jump 4.1% after Switch console success – Independent.co.uk

Analyst Predicts The Nintendo Switch Will Have a Sluggish Start with $5M in Sales in 2017 – Forbes

Nintendo says the Switch outsold the Wii at launch – Polygon

11 thoughts on “How the Success of the Nintendo Switch Could Change the Console Industry

  1. I think that it will be very difficult for Nintendo to move to the front of the console race. While it may be true that the Switch has outsold the original Wii launch, if I remember correctly, it seemed that the Wii had difficulty competing with the Xbox 360 and the Playstation 3. There are people who are going to buy the Switch, either due to its novelty or because they’re die-hard Nintendo fans, but it will not be able to compete with Microsoft or Sony’s new consoles in the long run.

  2. The battle of the big Three in gaming is something we have been directly witnessing so far in our lives. I remember in elementary school, the hype behind the Wii was huge, and then middle school was all about the Xbox 360. The 360 was so strong back then that PS3 had to offer free “live” membership just to compete It seems like now the PS is the leader and most in demand among the younger demographics. To me, the winner for the foreseeable future will be the one that learns to utilize AR/VR. I believe PS3 is already trying to speed up their process in regards to this new technology, even though the overall AR/VR market are still in its relative infancy period.

  3. On the same thread as one of the comments above, it will be interesting to see whether the Switch changes the dynamic of the market or if increased sales are merely a result of the novelty of the product. Ultimately, regardless of the temporary entertainment derived from motion based gaming, most gamers use either a console or a computer. Therefore, whether the Switch truly changes the “game” or more accurately gaming as a whole will determine its future sales.

  4. While I do not play that many video games anymore, I had never even heard of the Nintendo Switch or its debut until reading this blog post. That either means Nintendo did not do a good enough job of promotion or college kids are not a big target demographic in the video game industry anymore. Nintendo may have been gearing the Switch towards middle and high schoolers as well as families like it did for the Wii.

  5. I remember reading something when the Switch came out that one of the potential reasons for it being such a high seller is purely due to the quality of its flagship game “Breath of the Wild” which has an IBM rating of 10/10. Therefore this could quite possibly be a case of the game selling the console, rather than the pure innovation of the console being the reason for its high selling performance so far.

  6. As Will stated above, the nostalgia of being able to play Zelda is the primary reason I believe the Switch is doing so well. One area the Switch also lacks is streaming capabilities (Netflix is one of the few reasons I use a console). I think this is definitely a case of the game explaining high sales and I would not be surprised to see the Switch struggle in sales over the next year.

  7. Are consoles a means to an end, which is playing games you like? If so, then the key lies in assembling a portfolio of games. That requires convincing developers that you will sell a lot for them, and working out revenue agreements (and exclusivity? – I don’t know if there are games available for multiple platforms).

    Historically the players in the market shifted over time; Atari for example is long gone. But to my knowledge there have never been more than three, and (except on a fleeting basis) never just two. I have some thoughts on why, but don’t know the details.

    In the “A Profile…” industry series there’s a nice volume on toys; I don’t think that covers gaming, rather it looks at Mattel and rivals. I know there is very good analysis of the industry out there, but it’s not one I know in detail. I was never a gamer…

  8. I was never a “gamer,” so I do not have a lot of background on this topic. If I remember correctly, I think the reason the the Nintendo Wii was able to do so well was because Nintendo kept marketing additional innovations (Wii Fit, Mario Kart console, etc) to enhance the gaming system over a prolonged period of time. I will be very curious to see whether Nintendo is able to do the same thing with the Switch.

  9. Yes, after the Wii first came out some platforms like Xbox and Playstation sought to develop similar motion oriented systems. However, the market never truly developed as it was originally suspected. The Wii remained unable to capture enough market, and traditional gaming forms like Xbox and Playstation remained the most popular. Perhaps, the market has thus already been set, and people don’t want something that requires them to get up and move around. It thus remains to be seen if Nintendo can actually be effective in establishing a market presence with the Switch this time, however.

  10. I don’t envision Microsoft or Sony following suit with dual compatibility. I think this works really well for Nintendo’s market, as they’ve had enormous successes with their GameBoys over the years. I haven’t been as into video games in recent years as I was growing up (I had Microsoft and Nintendo game systems), but my feelings on the three consoles are the following: XBox and Playstation compete with each other way more than they do with Nintendo. Nintendo had a lot of proprietary games like Pokemon, Legend of Zelda, and the Mario series. XBox and Playstation had some of their own proprietary games too, but theirs didn’t have the power of Nintendo’s. People would sometimes switch from XBox to Playstation or vice versa, but I’ve never heard of someone switching from one of those to Nintendo as their primary system. Since this is the case, I don’t necessarily think that Microsoft and Sony have to make a move to dual compatibility, especially since VR wil likely be way more important/profitable in the future.

  11. I think that a prudent move for Microsoft and Sony would be to try and take over some of the mobile gaming market. To my knowledge the only major player in that sect of the gaming market is Nintendo. Yet brand loyalty plays such a large role in consumer behavior within the market that those who are devotees to the Xbox or the Playstation could probably be swayed to try a Microsoft or Sony version of a mobile gaming device.

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