Nintendo has been around forever (127 years), but it’s certainly not financially where it once was. While it’s difficult to envision that the company would fold if the hybrid mobile console gaming system once called the NX, now the Switch, wasn’t a success, Nintendo does need a hit to regain its place at or near the top of where it once stood in the industry.
You can’t go on Pokemon alone; Nintendo needs Switch success
Last year, Nintendo announced that it made a profit for the first time since 2011. It wasn’t a tremendous profit with the company making just over $200 million for the fiscal year. But the success of Pokemon Go and other products outside of the realm of video games have continued to buoy the company along with the one-time gains the company saw from the sale do the Seattle Mariners that it purchased when Ichiro Suzuki was lighting up the Major Leagues in the Pacific Northwest.
While everywhere you looked a few months ago, people were playing Pokemon Go, writing about Pokemon Go but Nintendo didn’t reap that instant popularity as much as the maker of the game, or for that matter, Apple which takes a substantial cut of in-app purchases that could put over a billion in its well-heeled coffers after a year of offering the game to iOS users and watching the money roll in with little work.
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For over a year we were speculating about what the NX, Nintendo’s first console since the Wii U, would look like and last week we finally got a glimpse at something the world has never really seen before in this hybrid mobile gaming-home console system thanks to Nintendo’s release of a trailer that gave us our first look.
While Nintendo has not given us any more about game titles, release date, pricing or any of the other questions we would love answered, the company has said that it won’t ship the Switch at a loss and hopes to ship at least two million units in March which would go on its books for the fiscal year that ends at the end of the third month.
Tatsumi Kimishima, Nintendo chief executive officer, recently said that these two million units would be spread across Europe, Japan, and the United States. Despite the success of Pokemon Go, Nintendo has had a pretty rough start to the year and desperately needs Switch sales to change its fortunes around.
The largely reviled Wii U sold six million units in the first six weeks following its launch, so if the Switch can simply match those sales, assuming an early March release, it shouldn’t have too much of a problem making that two million mark. And the Switch does have the gaming community pretty excited since the release of that trailer last week. Who knows, the switch could be the future of gaming and will rocket Nintendo back into the conversation with Microsoft and Sony when it comes to console gaming. The company certainly has the titles that gamers have known forever with the Zelda franchise as well as Mario Brothers.
Nintendo must find the perfect price point for the Switch
The company can ill afford to lose money on the Switch hardware hoping to simply make up for it in game sales.
While the gaming community largely hailed the Switch as a pleasant breath of fresh air, investors weren’t as taken as the public was and Nintendo saw its stock price slip nearly 7% following the release of the trailer.
In December, Nintendo plans to release Super Mario Run for iOS and will mark the first occasion where the lovable plumber is gracing a smartphone or tablet game, and many investors believe that this is the path that Nintendo should be following. It doesn’t help that the Switch is a mobile gaming system that could take away from its smartphone game endeavors.
“Switch, while it looks interesting, could imply smartphone games are not as much of a priority now,” David Gibson, a senior analyst at Macquarie Securities in Tokyo recently told CNN Money. “The reason why the share price is where it is isn’t that of Switch — it’s because of smartphone games.”
Gibson is not alone in this thinking with analysts calling on Nintendo to abandon its building of hardware since the failure of the Wii U after the limited success of the original Wii which gave gamers something different. The Wii was more than mildly successful with over 100 million units shipped compared to the 13 million Wii U units sold.
Part of the Wi U’s problem was that Nintendo failed to produce enough games while also producing games for the 3DS portable system. This is something that Nintendo will need to be mindful of if the Switch is to be a success.
Mario, Zelda, Pokémon and Wii Sports are the primary reasons that people look to purchase Nintendo systems. But for the switch to be a success Nintendo the company will also need help from third-party game producers.
“Having only one developer for a system, even if it’s Nintendo … is not enough,” Toto told CNN. “You need to have third party developer support for people who don’t like Mario.”
Unlike many others, Toto who knows the industry quite well believes there is still a way back for Nintendo even if the Switch fails to lure customers.
“Once the management at Nintendo takes mobile more seriously, I believe that Nintendo would mop the floor with everybody else,” Toto said speaking of the library of familiar characters Nintendo has for the smartphone market.