Nintendo has been a name associated intimately with electronic gaming since the launch of Donkey Kong in 1981. The company’s traditional strategy has been to take over family living rooms by selling cartridge-based gaming consoles supported by blockbuster, family friendly titles such as Super Mario Brothers and Mario Kart. Nintendo’s performance faltered in the faced fierce competition in this space with entries from both Sony’s Playstation and Microsoft’s Xbox, but the company recovered to enjoy huge success again in 2006 by re-focusing on the casual gamer with the Wii console and its innovative motion-based controller.
A Shifting Landscape – the Rise of Mobile
Fast forward to today, and the company is again struggling to resonate with gamers. Identifying a fundamental shift in the industry it helped to create away from the living room and onto mobile devices, the company tried to respond with the Wii U in 2012. The Wii U was a portable system designed to compete with the myriad of mobile gaming options consumers now enjoyed on smartphone and tablet platforms.
But in continuing to focus on its traditional casual gaming consumer, Nintendo was fighting a losing battle. Casual gamers were not the most loyal customers, and in a world where entertainment was consumed in the form of mobile videos, social media and mobile gaming, Nintendo found itself competing against everything. Between 2012 and 2014, the company posted three years of negative operating income.
More recently, Nintendo has stayed relevant by leveraging its brand assets, in particular its gaming franchises such as Mario Brothers and Pokemon. 2016 saw the spectacular launch of Pokemon Go, a game developed by a third party (Niantic) from which Nintendo enjoyed minimal financial gain, and the successful launch of Super Mario Run on the iOS platform. These forays into the mobile gaming space, however, appear to be secondary to Nintendo’s core strategy – another console launch in the form of the Switch.
Due to be launched in March this year, Nintendo is betting its future on yet another console launch. The Switch is designed to seamlessly transition from living room to mobile, and is focused on keeping the user engaged with gaming both in the home and whilst on the go (see video).
The strategy appears to be a winner – the Switch is a new platform that Nintendo hopes will attract both gamers and developers, and company appears to be on the right track in attempting to woo both. On the gamer side, Nintendo has announced the Switch will launch with Zelda and Mario Kart game titles, two traditionally very successful brands for the company. The Switch is also intentionally designed to appeal broadly to gamers by offering both local multiplayer functionality and internet based play. Nintendo has also opted to launch an online subscription service for multiplayer gaming, and has announced an aggressively low price point (half that of its competitors, Xbox Gold and Playstation Plus), which should increase adoption. The service also allows seamless integration with smartphones, which may open up interesting cross-platform gaming opportunities in the future. On the developer side, Nintendo has received commitments from every major developer in supporting the Switch, which includes Activision, Ubisoft and Electronic Arts, which is a win for Nintendo as many of these companies had abandoned the Wii U platform. A strong launch performance and install base number should also increase the incentives for developers to release titles on the Switch.
Nintendo is supplementing the launch of the Switch with a commitment to continuing to release games on the iOS and Android platforms. The company recently announced its intention to launch 2 to 3 mobile games per year, but also stated that its focus will lie primarily with the Switch platform.
It remains to be seen if the Switch will ultimately be a success for Nintendo, but in taking steps to boost its presence in mobile gaming and leveraging its significant brand assets across multiple platforms, Nintendo is making a big push toward being relevant again.