Nintendo Switch Bears an Impossible Weight, But is on the Right Path

The Nintendo Switch is a peculiar device that seems to hold Nintendo’s future in its hands. Nintendo isn’t exactly in trouble. Their mobile game releases have been highly successful, their expansion into universal theme parks will likely be a resounding success for decades to come, their latest flagship title, Breath of the Wild, literally dominated E3 last year, and on top of it all Nintendo has a lot of money in the bank as is. Nintendo isn’t in any sort of dire straights like SEGA was long before the Dreamcast came out, or Sony recently suffered by selling off several of their devisions, laying off thousands of employees, and selling off a couple major buildings. Nintendo, by any accountants observation, is an extremely healthy company. A couple years of profit loss is nothing, nor is it even unusual in the tech field.

Nintendo being healthy financially is why they haven’t shown similar signs of slowing down like other companies have. They are building new buildings (their recent HQ in Japan, most recently) and hiring new staff at a pretty consistent pace (while laying off no one). Yet despite all of this, so much seems to be resting on the shoulders of the Nintendo Switch. It bears a burden that is nearly impossible for any piece of tech to bear, while the company behind it doesn’t seem to wholly reliant on its success.

So what is that burden? Nintendo’s future as a video game hardware manufacturer. All the points listed above is why Nintendo will survive with or without video game hardware, but regardless Nintendo has built their entire company, despite the recent expansions, around the idea of video game hardware. They have entire divisions dedicated to it that are likely bigger than any team making a mobile game. They have dozens of video game studios under their wing dedicated to created video game hardware specific games. Sure, on a dime much of these studios output can be relocated to phones or turned entirely into multi-platform developers, but that isn’t what Nintendo wants. It’s not honestly what I want either.

Home consoles themselves are already becoming a bit antiquated. Let’s set aside the meteoric rise of the PlayStation 4, which may or may not ever breach the 100 million unit plateau. Last generation we had the 100 million unit selling Wii and two 80+ million unit sellers in the Xbox 360 and PlayStation 3. You might as well toss the 80 million unit seller in the PSP and the 150 million unit seller in the DS to that list.

Outside of the PlayStation 4, sales are in decline for all hardware makers this generation

Comparatively, this generation hasn’t just shown a decline in home and on the go console sales among a select crowd of casuals that ran to smart devices, something that could explain the sinking tide of the Wii U and arguably 3DS. There is a massive decline industry wide.

Let’s look at where sales stand today, as we approach 4 years into this generation for most of these devices (some longer). The Wii U sales are practically done, sitting around 13.5 million units. The Xbox One has moved roughly 28 million. The PlayStation 4 stands at 50+ million, the 3DS at 60+ million, and the Vita around 15 million. That is a grand total of around 170+ million units of hardware. Last generation it was 506 million units of hardware. Now, last generation lasted 8 years, correct? Even if we double the current generation’s numbers, we’re still well short. We’d have to basically tripple those numbers to reach that feat. But hey, it’s all Nintendo’s decline, right? Well, no. Let’s take Nintendo out of the equation.

Last generation, Sony and Microsoft’s combined hardware sales were around 250 million units. This generation they sit at 94 million units. Even if we assume numbers double in the next 4 years (which is a big assumption), they are still well short of the 250 million unit mark of last generation. Like it or not, the entire industry is in a downturn. Now, maybe you think this is a regression to the mean, right? Well, let’s glance at two generations back then, shall we?

The GameBoy advance (all versions) sold 81.51 million units. The GameCube sold 22 million units. The PlayStation 2 sold 153 million units, while the original Xbox sold 24 million units. All told, that was 280.5 million units. Eliminating Nintendo from the equation makes it look more comparable at 177 million or so units sold, but I think we can all agree that’s a bit unfair going two generations back. Smart devices didn’t exist to really counteract handhelds, and Xbox was only just getting started.

I just threw a lot of numbers at you that seem to point to the same conclusion. This generation isn’t just a decline for Nintendo with their worst selling hardware systems to date – it’s a problem that is industry wide. The video game console business on the whole is in decline. This is no longer just a Nintendo problem.

That being said, it has been essentially left up to Nintendo to try and make video game console gaming a quintessential part of any person who wants to play a video game’s lives. While Sony and Microsoft battle it out over the top specs, 4k, and supporting what I still feel is a niche group of VR gamers, Nintendo is left alone, tasked at making video game hardware relevant again in a world where digital sales are only increasing and video game like smart devices and PC sales are getting healthier and more affordable.

Nintendo is on an island, but one which determines the future of the whole industry.

Perhaps it was stated best by Kojima, of Konami/Metal Gear fame, when he talked about the brilliance Nintendo has put in display with the Nintendo Switch itself based on the current direction of the video game hardware industry:

“I feel like cloud technology is what everything will eventually move to,” he said. “It’s further behind right now than I think where people thought it would be at this point, but I think it will go there, and when the infrastructure is ready, you’ll be able to play everything, on every device, anywhere. The Switch is the predecessor to this step.”

The future that is clearly ahead will seem more desirable after Nintendo shows how much the convenience of playing at home and on the go seamlessly really is. Everyone talks about taking video games mainstream – they already are, but video game specific hardware is quickly becoming a niche form of gaming that slowly but surely, only one company at a time can sustain (in the moment, that is Sony). Nintendo is forgoing that niche and saying look, we as hardware makers need to change and adapt to how people consume games today. The Switch, in many ways, plays right into that is a large reason why it has such a high chance of success.

Even in a future where everything is in the cloud, consumers will still need devices to play them on and even as they may be able to get all the big AAA games in the cloud a decade from now, Nintendo is setting themselves up to me the one hardware manufacturer best equipped to be relevant by that time. Even as the Switch lacks basic streaming and web-browsing functionality at launch, a year from now I think we all know that stuff will be there, and it will be around long before the Switch isn’t “relevant” in its current version.

You see, the Switch is literally baring the weight of the entire video game industry on its shoulders from a hardware perspective, because the alternative is having video game hardware becoming an extremely niche prospect Switch looks to not only maintain Nintendo’s relevance, but video game hardware relevance in general, with a product that feels familiar, but clearly is built from the ground up to game on. Specs? Sure, those always matter to a small crowd. Many PC gamers game on budget stuff, with probably less than 1% of them sitting at the very top end. The specs are ultimately not what matters, but form factor and convenience do. Affordability does.

No doubt the Switch could be a $500 device with 4k gaming that largely looks the same with a bit more weight too it and shorter battery life. But that ignores what gaming hardware needs right now. A device like the current PlayStation 4 Pro will always be needed. Someone should push the envelope and cater to a shrinking niche crowd. They can’t be left behind. But, likewise, someone else needs to step in and adapt to where gaming is going. Right now, only Nintendo is willing to take that risk, likely because it’s failure doesn’t doom the company. However, the Switch failing to launch could signify a scary future for dedicated game hardware, one I would rather not think about.

So much of the industry rests on the Switch’s success. Thankfully, the reason so much rests on it is because it is taking the correct and most logical path forward, putting Nintendo on the right track with consumers today. It’s not perfect. It may fail. But it also may be exactly what we need.

*Sales date based on Wikipedia and VGchartz (for estimation purposes).