Gaming sites have been flooded with articles on the Nintendo Switch and its games. Everywhere you look there are live streams of Switch gameplay, review articles of the hardware and games, even articles on how the games taste. Spoiler: they taste bitter, very bitter.
Two themes have leapt out as I perused these articles. The first is that the Switch is unique and innovative. Second is that Nintendo has failed to measure up to Microsoft and Sony. The mythos created from these two narratives is Nintendo as an innovator or as a failure soon to be the next Sega. In examining Nintendo’s history these narratives are misleading. Let us take a trip back in time to several Nintendo console launches for proof.
Nintendo’s Innovation History:
As many fans know, Nintendo first began by making hanafuda cards. They eventually expanded to toys. Game & Watch was their first solo video game product that they began selling in 1980. The hand held system housed only one game each, but sold rather well. The technology was nothing new. Nintendo essentially repurposed the existing LCD calculator technology to become the Game and Watch.
The next system was the NES. Atari, in 1982, released an 8-bit console called the Atari 5200. Coleco also put out a new console that year, the ColecoVision, that was able to port some arcade games. Gaming computers like the Commodore 64 released in 1982. It wasn’t until 1983 that the NES was released in Japan, and two years later in the US.
Nintendo repeated this same pattern over and over again. Sega released Genesis in 1988 and SNES came out in 1990. The Atari Jaguar, 3DO, Saturn, and Playstation all released before the Nintendo 64. The Playstation 2 and Dreamcast came out before GameCube. It appears that Nintendo was always late to the party, but in actuality this is part of their business strategy.
Nintendo, since making toys, takes technology that is already established and repurposes it. They do this so their manufacturing costs are drastically down compared to the competition. Game and Watch was repurposing already established and easy to manufacture technology. The 8-bit technology had been established before Nintendo came to market. This allows for Nintendo to avoid selling consoles at extremely high prices and losing money on price cuts.
This brings us to Nintendo’s latest “innovations”. The use of accelerometers in video games was first introduced in 1981 for Atari 2600. Nintendo repurposed and refined it to use in the Wiimote over twenty years later. The docking station for a computer is not a new concept either. I had a laptop with docking station in 2003. It, too, instantly put the image out onto another screen. Tablet and mobile phone gaming have even had powerful processors running similar games on iPads for years. These concepts are not new. The only innovation present is applying the well established ideas to video game consoles. The reality is that Nintendo did not innovate, but often helped popularize these concepts for gaming.
The second theme of the articles, or should I say the comments sections, is that Nintendo has made another misstep by making an underpowered “gimmicky” console. In all the aforementioned Switch articles, there will be at least one troll whining for Nintendo to make a “proper” console. The thinking goes that Nintendo’s consoles are failing to sell. They are hemorrhaging money and if they fail again with the Switch then they will end up like Sega.
Sega is the cautionary tale. The 8-bit and 16-bit eras of video gaming, there was no greater rivalry than Sega and Nintendo. Sega was the edgy company that aggressively attacked Nintendo with “Nintendon’t” marketing. Sega pioneered the idea that Nintendo was a family company that would not embrace mature or edgy games. The success of the marketing can be seen in how this idea continues to pervade the market 25 years later. No amount of Resident Evil, Conker’s Bad Fur Day, or other M-rated games seems to be able to change the perception.
Sega built a solid console base with the Genesis and hoped to ride the momentum into the dominant gaming company. They attempted to use an add on called the 32X to beat Nintendo to the 32-Bit games. It was quickly abandoned for the Sega Saturn. Sega again abandoned the console four years later and was first to the market with Dreamcast.
Dreamcast pushed the limits of consoles at the time and brought brand new concepts like a built-in modem to console gaming. The console was priced competitive and sold well. Quality games came out like Soul Calibur, Crazy Taxi, and Phantasy Star Online, but none could save the console once the DVD player PS2 released. Then when Nintendo and Microsoft entered the 6th generation of consoles, Sega crashed. They consolidated their losses and left the hardware market.
What went wrong for Sega? They released a poorly supported add on, the 32X. Saturn failed after that, largely due to a lack of quality games. The quick abandoning of hardware hurt consumer confidence. The second component was drastic price cuts and selling Dreamcast at a loss. The hope was to fuel sales, but instead it just drained more and more money from the company. Finally, they had no choice but to cut R&D and give up on future consoles.
When looking at Sega’s history there are some similarities to be wary of. The first is the lack of 3rd party support. In a perpetuating cycle, 3rd party games sell consoles, but it takes an adequate install base for 3rd parties to join. Nintendo has failed to attract 3rd parties on several consoles; particularly the Wii U. Nintendo would be wise to cultivate 3rd party developers as much as possible to stem the tide and help sell the console. While Nintendo has produced lists of developers who will support the Switch, they have done this previously with support drying up shortly after launch. The big difference here appears to be Nintendo’s chase after many developers with quality games on Steam.
The other similarity is the quick turn from Wii U resembles that of Sega Saturn. Has this hurt consumer confidence in Nintendo? Early Switch response seems to be “no”, but it appeared that way for the Dreamcast also as it had one of the best 24 hour console sales in history.
The big difference, as we saw in the history for Nintendo, is that they do not sell consoles at a loss. They intentionally use established, easy to manufacture technology to maximize their profits. As aggravating as it is to have Nintendo stubbornly keep prices high on consoles, and especially games, this practice has served them well. Doing so limits their risk and improves the bottom line.
Finally, Nintendo’s financials are in fine shape. While the Wii U was not a resounding success, it also did not drag them into the red. Pokemon Go, mobile games, software sales, and the 3DS have lined Nintendo’s coffers. Their stockholders are happy and investments, particularly in the Pokemon Company, are paying for themselves. Nintendo is not a dire financial position that Sega found themselves in.
Bring the Fun:
Take all the conversation of Nintendo as the next Apple or being innovative with a grain of salt. On the flip side Nintendo will not be leaving the hardware market anytime soon. Their use of easy to produce and already established technology maximizes their profit. A “proper” console will not be coming from Nintendo because they refuse to risk by selling consoles for a loss. That said, they will be selling consoles for the foreseeable future. Rest easy Nintendo fans because Mario, Zelda, Metroid, and Splatoon will continue to bring the fun. And fun is good.