Nintendo Switch: A Tried-and-True Approach to a New ConsoleEconomy
Forging Its Own Path in the Gaming Industry
Nintendo has the gaming world abuzz with the launch of its newest console, the Nintendo Switch. The game system, which went on sale on March 3, has turned the heads of many in the industry. But there is little reason to expect the console to make a dent in the smartphone game market or produce sales at a level to restore Nintendo to its former days of glory.
In fact, as the gaming industry stands today, there is a creeping uncertainty as to whether Nintendo can survive at all, let alone recapture its crown. Take the lukewarm market response to the Switch. In October 2016 Nintendo saw its share price dip following its first announcement of the concept for the console, and a January 2017 follow-up event providing additional details did little to spark interest among investors. However, it is important to keep in mind that Nintendo has a global army of die-hard fans, along with abundant gamers and game creators, who are excited about the potential of the new system.
Nintendo is a bit of an enigma in the gaming industry, and just as many people decry the company’s products as tout them. To make sense of this wide-ranging sentiment, we must first define exactly where the company fits into today’s market. Nintendo is traditionally seen as a video game company, but in my opinion this is slightly off the mark. The firm has long offered a range of fun and entertaining products beyond its core console business. However, it would also seem inappropriate to consider Nintendo a toymaker. Instead, I argue that the company has tried to carve out its own discrete niche in the industry by offering unique gaming experiences—something I call the “industry of being Nintendo.”
Following a Different Path
Nintendo rapidly rose to prominence after launching its Family Computer, or Famicom, gaming console in Japan in 1983. In the years that followed the firm reigned over the video game industry as the world’s top hardware and software maker and set the rules of the global gaming market.
However, by around 2000 the industry had begun to head in a new direction. Sony Computer Entertainment had emerged to challenge Nintendo’s supremacy with the first PlayStation in 1994, and the company took bold steps to meet changing market demands with its second video game console, the PS2. It initially laid out ¥120 billion to develop the game system, including building semiconductor plants in Nagasaki and Ōita Prefectures and custom-manufacturing key components. The outcome of this massive investment was the Emotion Engine, a revolutionary CPU that propelled the PS2 to the top of the home video game market.
In contrast to SCE’s drive for technological innovation, Nintendo moved away from crafting leading-edge components and instead capitalized on low-cost, mature technologies. The company first ventured down this path with its successful Game & Watch line in the 1980s. Nintendo teamed up with Sharp to develop the popular handheld games, taking advantage of the flood of inexpensive microchips that were a byproduct of the “calculator war” between Sharp and Casio in the previous decade.
By the turn of the century, around the time the PS2 hit store shelves, Nintendo was more or less committed to this manufacturing approach, which is why it did not attempt to counter SCE with a semiconductor plant of its own. Reliance on mature technologies has since become the hallmark of Nintendo, arguably a strategic decision to save the company from the burden of sinking funds into expensive new technologies.
Instead, Nintendo focused its creative resources on crafting innovative and unique gaming experiences. The company struck gold twice with this approach, bringing the world the Nintendo DS with its touch panel in 2004 and the motion-sensor-driven Wii in 2006.
By the latter half of the 2000s the firm was riding high—in 2007 Nintendo was valued at more than ¥10 trillion—but the dawn of a new decade saw smartphones spread and mobile gaming skyrocket. The bottom fell out of the console market as a result, and by the close of 2015 sales for home game systems in Japan had dropped to a meager ¥200 billion compared to ¥1 trillion for mobile games. There is even murmuring in the industry that game consoles have become obsolete. This is a notion that the Nintendo Switch looks to put to the test.
Bringing the IR Camera to Gaming
Nintendo has fused home and mobile gaming by making the Switch a two-in-one console that can be docked or used in handheld mode. In doing this it has successfully created a machine sporting standard specs that could potentially challenge the smartphone game market.
Nintendo’s big bet lies on the game system’s versatility, a feature it has stressed in television commercials in the run-up to its launch. But the Switch is also filled with innovative features people have come to expect from Nintendo, such as the Joy-Con controllers. Attaching to either side of the console, they sport a built-in motion tracking infrared camera capable of distinguishing the shape and movement of objects at various distances. This was illustrated at the January press event with a video showing the camera tracking moves from the game rock-paper-scissors.
The hands-free capability of the IR camera creates a realm of new possibilities for gaming. Players may eventually be able to use hand and finger movements to control gameplay, giving characters the ability to grab, grip, push, and a range of other actions. Motion tracking capabilities of the camera also open the way to manipulating virtual objects, such as turning over a playing card, strumming an instrument, or guiding a brush to draw a picture. The potential even extends beyond just the outermost appendages. The party game 1-2-Switch, which was launched along with the console, presents a variety of minigames requiring a range of different motions. One of these, the Eating Contest, pits players in a battle to see who can gobble down hamburgers the fastest. Contestants hold the Joy-Con up to their mouth and the IR camera gauges their chewing speed to calculate how many burgers they have downed in the allotted time.
Betting on Success
Just as combining the popular Pokémon series with location-based technology produced the smash hit Pokémon Go, the Nintendo Switch’s IR camera could lead to new types of augmented reality. Software using the motion sensing technology to combine tangible objects such as figurines, blocks, and card and board games with the digital world could potentially become the megahits of tomorrow.
Since 2014 Nintendo has released Amiibo figurines, trading cards, the wearable Pokémon Go Plus, and other game-compatible accessories that utilize near-field technology. The Switch can be expected to spawn a vast number of new compatible items, and there is every reason to believe that a next installment of the Pokémon franchise will be developed in tandem with a line of scannable trading cards and figurines that will hook into the console’s software.
Reactions to the Switch have been somewhat muted outside of gaming circles, as illustrated by the poor performance of Nintendo shares. However, looking at the company’s track record, it is still too early to count the console out. Nintendo has not gotten where it is by going toe-to-toe with SCE or other console makers, but by offering distinct experiences available only on one-of-a-kind game systems. Nintendo is betting this uniqueness will have people flocking to the Switch.(Banner photo: Nintendo President Kimishima Tatsumi during an event in Tokyo on January 13, 2017, to introduce the Nintendo Switch. © Jiji.)