For the past decade, Nintendo has underperformed. This has changed recently as the Nintendo Switch has been a star performer the past year. Going into holiday 2019, and the end of a rough decade for the company, Nintendo is looking stronger than ever.
The Wii, launched in 2006, was Nintendo’s most successful console system, eventually selling 100 million units. However, the Wii was more of a short-term hit. Its unique motion control system proved to be somewhat of a novelty.
From 2009 onward, sales of Nintendo console systems consistently fell short of DFC Intelligence estimates. The 2012 launch of the Wii U proved to be the nadir, as it underperformed even the most pessimistic estimates.
The Switch, launched in 2017, has been a different story. Sales started out strong but were not overwhelming. In 2018, sales met DFC forecasts, but only because of a strong November and December.
It is only in 2019 that the Switch has really shined. While the PlayStation 4 and Xbox One are slowing in anticipation of new systems, the Switch is stealing the spotlight.
Perhaps most interesting about the Switch’s performance is how it is reintroducing the Nintendo brand to a new generation of consumers. Nintendo has always been seen as more of a kid’s game system. However, the Switch is proving surprisingly popular among teenagers.
Among the current generation of teenagers, the Nintendo brand is relatively fresh. The poor performance of the Wii U actually works as a positive for this audience. Of course, it really helps that the Switch fits into today’s mobile lifestyle.
Portability is huge for the Switch. The ability to take the system on the road has proven to be a game-changer. In high schools around the country, lunchtime battles of Super Smash Bros are commonplace.
Mobile game platforms like the DS/3DS sold a large number of units because it was common for a single household to own multiple systems. The September launch of the Nintendo Switch Lite directly targets families where each child needs their own system. According to Nintendo, 43% of initial Switch Lite purchasers already owned a Switch.
Another interesting trend with the Switch’s portability has been more genre diversity. The new RPG Pokemon titles, Sword and Shield, have historically worked best on Nintendo portable systems. The same goes for turn-based strategy games like the recent Switch release Fire Emblem: Three Houses.
Japanese publishers that have struggled in recent years could benefit from the success of the Switch. The rise of first-person shooters and eSports has been a major growth driver for the video game industry. However, they have also alienated a large portion of the audience who is not as into the hyper-competitive nature of such games. Japanese companies have simply not been strong in the intense action category.
The recent Ring Fit Adventure is a perfect example of the new Nintendo. Ring Fit Adventure is an $80 fitness product that also works as a Japanese RPG. Unlike the Wii Fit Balance Board, released over a decade ago, this game is designed directly for video game fans. The target demographic is teenagers and young adults.
The success of Nintendo raises the question of what will happen with new systems from Sony and Microsoft. Of course, the first question is, will the PlayStation 5 or Project Scarlett have any mobile features? This could be a critical distinguishing feature for those systems.
Sony and Microsoft have both struggled with mobile devices. The Sony PlayStation Vita was an excellent system but struggled to find an audience. Microsoft has made all kinds of efforts with mobile devices. However, products like the recent Surface Pro X are designed more for high-end computing and have received lukewarm reviews.
Today’s consumers use multiple devices. The choice of a video game system is not necessarily an either-or decision. With the Switch, Nintendo has shown that is possible to have success not catering to the high-end action-focused audience.