Nintendo Switch Console Is Met With Skepticism From Investors

Nintendo Switch Console Is Met With Skepticism From Investors

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The Nintendo Switch. Gamers will have until March, the official launch date, to decide whether it’s a must-have.

Credit
Nintendo

TOKYO — Nintendo unveiled its latest piece of video game hardware on Thursday: the Nintendo Switch, a shape-changing console that doubles as a traditional home-based machine and a smaller portable device. Gamers will have until March, the official launch date, to decide whether it’s a must-have. (Nintendo hasn’t set a price yet.) Investors got to weigh in faster, though, and the initial review was not encouraging. Nintendo’s share price plummeted 7 percent on Friday after trading opened in Tokyo.

What is the Nintendo Switch, and what’s riding on it?

The Nintendo Switch is an all-in-one gaming machine, essentially a compact processor with removable controllers and a screen, which can be configured for playing at home (with a television) or on the go. It’s a big deal for Nintendo, the Japanese game giant, because it has fallen behind rivals in hardware. Nintendo reshaped the console market in the mid-2000s with its innovative Wii, whose motion-sensitive controllers and relatively simple games dramatically expanded the audience for gaming, attracting millions of so-called casual players. But Nintendo’s follow-up, the Wii U, has disappointed. Last year the PlayStation 4, from Sony, outsold the Wii U almost threefold, and the Xbox from Microsoft has also done better.

The Nintendo Switch doubles as a traditional home-based machine and a smaller portable device.

Credit
Nintendo

What went wrong?

In a word: smartphones. The Wii’s strengths — simplicity and affordability — turned into weaknesses once phones became the go-to game platform for casual players. Sony and Microsoft held onto their core audience of hard-core gamers — people who want big screens, hefty processing power and hyperreal graphics that phones can’t provide — while Nintendo fans drifted to phone games like Angry Birds. Game developers, too, turned their backs on the Wii, creating a downward spiral. Fewer new games meant even less appeal.

So is the Nintendo Switch a strategic, er, switch?

Not really. Nintendo faced a choice: fight Sony and Microsoft for hard-core game fans, or try a new way of appealing to casual gamers. It chose the latter. The Nintendo Switch, to judge from the company’s early marketing, is aimed at people who like games enough to want to play them on dedicated hardware (not just a smartphone) but not so much that they’ll lock themselves in their rooms all day with a PlayStation or Xbox. The question is whether enough of those people exist. Serkan Toto, a game industry analyst in Tokyo, doubts it. Nintendo “masterfully captured” casual gamers with the Wii, he wrote on Twitter, but today few are likely to turn away from their phones, especially when it means paying several hundred dollars for a console. “It will be very, very difficult to get them back.”

What does Nintendo have to get right?

Everything, according to Mr. Toto. “They absolutely need to hit all the bases this time,” he said. That includes persuading developers to make lots of high-quality games for the machine. It also means getting the price right. Even committed console buyers are willing to jump between brands if it means getting a better deal; with casual gamers, a steep price could “break the device’s neck,” Mr. Toto said.

What if the Nintendo Switch is a dud?

That would be bad for Nintendo, obviously, but the company is about more than just hardware — especially recently. After years of hostility toward smartphone gaming, it has pivoted to an “if you can’t beat ’em, join ’em” approach. And that’s beginning to pay off, as shown by its success in turning its Pokémon franchise into a huge smartphone hit. Its future could lie in unlocking similar value from a game catalog that includes Mario Brothers, Zelda and other popular titles.

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