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Why Nintendo Is Still King

Nigel has been playing video games ever since he first picked up a Master System controller in his diapers. Nintendo fanboy.

An early model of the Famicom, the Japanese release of what came to be called the "Nintendo Entertainment System" in the West.

An early model of the Famicom, the Japanese release of what came to be called the "Nintendo Entertainment System" in the West.

Things change fast in the world of business. Not too long ago, everyone was crying for Nintendo to leave the console market and become a third party publisher, similar to what former rival and competitor SEGA had done in the early 2000s. The Wii U was a colossal failure. Nintendo was losing money every quarter. It was bleak. However, Nintendo had two things SEGA didn't have—lots of money, and an ability to not panic.

Unlike SEGA, while Nintendo was losing money, they certainly weren't close to bankruptcy by any means. And to help with their companies financial situation, the late Satoru Iwata cut his own salary by 75% not once, but twice, in order to hold on to key talent. The company that started as a humble playing card company, and then a toy company, survived by adapting and not panicking. Calculated timing was key. SEGA doomed itself by rushing out add-on after add-on and trying to beat Nintendo and Sony to market by pushing unfinished consoles before developers could finish games, or pushing out games before developers could test them. Not Nintendo. It would accept it's failures, and ride it out, not pushing the Switch—then called NX internally—to market a single second before it and developers were ready.

The Wii U wasn't Nintendo's first failure. It's joined by the Virtual Boy and the N64DD (Disk Drive).

The Wii U wasn't Nintendo's first failure. It's joined by the Virtual Boy and the N64DD (Disk Drive).

Nintendo's Back Baby

Despite what some may think, the Wii U wasn't a flop from the get-go. It actually had a strong start, selling 3.45 million units in its first 6 months. Sales began to decline sharply after that, however, as the Wii U only sold another 3.09 million in the following 12 months, with most of those units being sold during the holiday season. There was one month where the company actually made a profit, and that was strictly because of one game—Splatoon. As hurting as the company was, they managed to show that they still knew how to make great games and this only fueled demand for Nintendo to get out of the console market.

Then at the end of 2018, Nintendo was back on top. But why do I say they were back on top? Simple. Numbers. Yes, the Switch wasn't quite pulling in the numbers one might have wanted to make up for the Wii U's shortcomings, but in only 21 months, the Switch had moved almost 25 million units, and once numbers come in from the Holiday shopping season, that number could be much higher. In October 2018, it was reported that the Switch surpassed the GameCube's lifetime sales. In March of 2018, it was reported that the Switch sold more units in its first year than the PlayStation 2—the console that sold more units than any other console in history. It was then reported that the Switch has surpassed the lifetime sales of the original Xbox, a console that was by no means a failure. In Japan, the Switch is on pace to possibly surpass the PlayStation 4 sales, as it's been outselling the PS4 and PS4 Pro combined almost every week since Launch.

And it's not just on the console end. The physical edition of Super Smash Bros. Ultimate (so not including digital) was recently declared the fastest-selling physical home console game of all time, having sold over 2 million units in Japan, and hitting 5 million worldwide in only 11 days. It beat out Pokémon, it beat out Zelda, it even beat out the launch of Grand Theft Auto V.

Like it or not, Nintendo is back, and they are on top of things, and they know exactly what they are doing.

A partial list of companies who have agreed to partner with Nintendo to develop on the Switch. When the Wii U was announced, there were only 21 partners, some of whom never actually worked on the console.

A partial list of companies who have agreed to partner with Nintendo to develop on the Switch. When the Wii U was announced, there were only 21 partners, some of whom never actually worked on the console.

How Nintendo Got Its Mojo Back

So, we looked at why Nintendo is back on top of its mountain by running comparisons with competitors as well as previous Nintendo consoles. Now let's look at how. This too is part of why Nintendo will continue to be king.

First, and this began during the Wii U period, but it needs to be said: Amiibo. Amiibo played a huge role in Nintendo's business strategy and certainly alleviated the painful Wii U years. NFC toys, or Toys to Life games, have been very successful in recent years, becoming highly collectible. Nintendo hasn't been able to meet the demand for these figurines, leaving many to go for hundreds of dollars on online stores. Some stores don't even bother having a section for them because they sell out so fast that the space on the shelf is better used for other things. Nintendo hit a winner with that.

Now, there are understandable complaints about Nintendo never meeting the demand for these figurines, thus making in-game content impossible to access without hacking, and those are fair complaints. Nintendo could increase supply and still not have to worry about stock not selling. But regardless, it's a very successful venture for the toy and electronics company.

Secondly, Nintendo followed the one rule of Hitchhikers Guide to the Galaxy: Don't panic. While the Wii U was tanking, Nintendo was quietly at work developing something new and something more modern. In 2014, just two years into the Wii U's life, Nintendo was developing a partnership with Nvidia behind the scenes to allow Nintendo games to be played on the Nvidia Shield in China. Nintendo liked what they saw. The handheld version of the Shield emulated Gamecube games better than anything else. The key component, a chip called the Tegra X1 was designed for tablets—which sounds like a downgrade from home console until the demos at trade shows where the Nvidia was running PC games better than the consoles of it's generation. This also gave Nintendo an idea. A tablet console.

While the limits of the X1 mean that the Switch isn't as graphically powerful as the PS4 or Xbox One, it is certainly an upgrade from either the PlayStation 3 and the Xbox 360. It is indeed a modern console, superior to consoles of the previous generation, though somewhat behind the current generation. Thankfully, it's to Nintendo's advantage that they prioritize fun gameplay over graphics. But the graphics are still good. Thanks to using a chip designed for mobile devices Nintendo was finally able to do what rival Sony couldn't—make a portable console that plays as good as a home console.

Then came E3 2015. It was crude, but Nintendo had a working demonstration to show developers and publishers. While Nintendo didn't have a traditional press conference, they still attended and had backroom private meetings with developers and publishers. A Ubisoft representative even noted "The Wii U is essentially dead to us. But we just saw what they're working on next, and it looks very promising. I assure you, Nintendo will be back."

While Nintendo was doing all of this as step two, they were simultaneously doing step three: regaining developer confidence. Developers knew that what they were seeing was a proof of concept. Anything could change. In order to not go the way of SEGA, Nintendo had to do the one thing SEGA couldn't: get developers on board. They had to reassure developers that they had time to develop. That they wouldn't rush this project. Secondly, unlike the Wii U, the NX was much easier to develop for. No bulky second screen, and the touch screen was optional. Almost a necessity thanks to the Tegra chip, the NX, like many mobile devices would be compatible with Unity aa well as Unreal Engine 4, two of the most popular tools for developers today. This itself was a huge win.

Nintendo continued to fine-tune the NX and work with publishers and developers. Then in late 2016, Nintendo held a press conference and media event where they revealed the Switch—the culmination of everything the NX had become. And with that, they also announced almost twice as many partners as they had for the Wii U and yes, Ubisoft was in attendance to reaffirm that they will support the Switch. As was EA, SEGA, and many other publishers.

The Future

NVidia has a new Tegra chip: the X2. Nintendo has stated that there will be no new Switch revisions this year, but have said that they intend to push the console for at least 6 years and haven't ruled out a revision as part of that strategy. The X2 could e part of that revision, or if the revision is late enough, possibly a Tegra X3 if Nvidia is up to the task.

Nintendo has always been one to keep their cards close to their chest, even giving cryptic answers to investors at their annual investors' Q&A meeting. While everyone thought Nintendo was on the verge of death, they weren't panicking. They were silent, but that silence wasn't because they had nothing to say. It's because they were busy doing what they needed to do to right the ship. I wasn't always a Nintendo fanboy. In fact, in the classic console wars, I was a huge fan of SEGA. I was absolutely heartbroken when I found out that I'll never own another SEGA console again. There have been times I've been worried about Nintendo. But they always surprise me. I need to learn to trust them more. Because Nintendo always knows exactly what they're doing, even in the midst of mistakes.


Nigel Kirk (author) from Calgary, AB, CAN on December 27, 2018:

I had literally bought a WiiU to play Splatoon with a friend who lived in a different country. It was fun, and I didn't mind the bulky controller, except for one game where the gyroscopic touchscreen didn't quite work - Star Fox Zero.

I'm glad they're back now though. I don't think their IP would do as well on another platform.

Poppy from Enoshima, Japan on December 27, 2018:

I'm so glad Nintendo made a comeback. I actually used to have a WiiU, but that's because I never had my own Wii. I remember families loving the Wii when it came out; I suppose the WiiU didn't have much more to offer.

Here's hoping Nintendo continues to be king!