The Nintendo defense force has faith. Despite a tiny launch line-up and a cloudy future, Switch entered the gaming market with a bang. Stocks issues keep being recorded in all continents, the situation being extremely serious in Japan where costumers have to earn the right to purchase via lotteries organized in stores. As the demand seems to be never ending, observers wonder if we might be witnessing a Wii-like phenomenon.
Before entering the (dramatically important) analysis of Switch’s debut, let’s have an overview of the firm’s yearly financials. Here, we must stress that despite the 2.74m Switch shipments, the fastest-selling Pokemon game ever and the “greatest Zelda of all time”, revenues still go down 3%. Operating result melted 10% in the wake of new expenditures. The net result, however, skyrockets by 521% and this is where it gets interesting. Those profits comes from 3 items : minority interests bring 20 billion yens (Pokemon GO dividends, no doubt), the exchange market was 13 billion more favorable compared to 2016, and the company earned no less than 60 billions by selling securities. By doing the maths, you realize that video games actually don’t make more profits than last year. Those artificial profits hides the truth, which is that the business is flat due to the fact that Switch cannot compensate WiiU’s rapid collapse. On the next fiscal term, 3DS shipments should go down, increasing the pressure on the new system.
The big question is : who’s buying Switch ? Who are those who frantically throw themselves on the first Switch in sight ? With 2.76 millions copies sold, Zelda Breath of the Wild has over 100% attach rate. Mario Kart 8 DX also has a high percentage, with half of Switch owners getting it at launch. 1,2 Switch is stalling, and many ports achieve mediocre sales. My interpretation is that Nintendo fans become increasingly radical : they want more Nintendo, as soon as they can grab the stuff. True, some core gamers at large join them in the Switch install base, the offer being a lot more attractive than WiiU in its time. But data is lacking to give solid conclusions. August 31st will be key in ascertaining Switch’s attractiveness as Nights of Azure 2 hit PS4, PSVita and Switch at the same time. FIFA Switch eventually came to be FIFA18 but will come in a weaker version, lacking Forstbite engine and story mode. The only question will be whether Nintendo fans quit playing Splatoon 2 to embrace EA’s football.
Let’s stress that those will be the only occasions in which Switch and PS4 will directly face each other : despite the stupefying sales pace, 3rd parties around the world do not care about the hybrid system. NIS America may have shipped 100K units of Disgaea 5 Complete, NIS Japan disregards that and is making all its next games for PS4, PSVita and PC. Not even a little port for Switch ! Very surprising given the business opportunities that were proven by Disgaea 5 Complete’s good reception. BandaiNamco, who’s regularly provided Dragon Ball Z games for 3DS, and who’s porting Xenoverse 2 on Switch, ditches Nintendo’s new system in the case of Dragon Ball Fighter Z, one of the best games of E3. Code Vein, Namco’s brand new post-apocalyptic action IP, is skipping Switch too. The last direct that had revealed Nights of Azure 2, Fate Extella and Senran Kagura for Switch shook the web. But after this E3, we can conclude that Nintendo merely reactivated old alliances, KoeiTecmo and Marvelous obeying the Big N every time a fat check comes from Kyoto. In Japan, the balance of powers has yet to turn in Nintendo’s favor.
In the West, no one will be surprised in seeing large publishers shunning the Switch. Bungie was recently saying that Destiny 2 on Switch would be “unrealistic” because the idea behind the Switch doesn’t fit with always online. Bethesda is not doing more than the Skyrim super late port, and is almost being cynical in the way it keeps all its new games for PS4 and XboxOne. Despite outsourcing the development of Mario + Rabbids, Ubisoft has no big game to give in exchange of borrowing the Mario franchise : Switch ends up having the usual Just Dance, and Starlink Battle for Atlas, a shoot’em up based on toy models. One after the others, AAA titles shine at E3, and for none of them Switch gets the spotlight. In the mid/long term, Switch can only choke form the lack of AAA, not even having AA titles to resist. In fact, the situation hasn’t really changed compared to January 13th : Nintendo is trying to find its way alone and the line-up is as weak as before… As I said last year, the “perfect Zelda” achieved nothing in the console war.
Nintendo intends to ship 10m Switch by next March, but that would merely make it reach WiiU’s final figure. Once every Nintendo fan has the system (adding some core gamers interested in some Nintendo IPs), how will Switch extend its influence without any of the big names that dominate today’s gaming market ? After this E3, Switch welcome a mere 10% of upcoming titles and no 3rd party developer came up with something new in the tiny Direct of just 25 minutes. And on the 1st party side, nothing big enough to threaten Sony’s and Microsoft’s market share. True, we got a glimpse of the ever returning Yoshi and Kirby, but no doubt they’re quicly developed low end games aimed at luring the masses. Xenoblade 2 received a new, improved design by jumping on the bouncy harem RPG bandwagon and Fire Emblem Warriors seems to have quite an effective casting. But those two seem isolated, not mention that their release window is still vague. To Call of Duty WWII and Far Cry 5, Nintendo hasn’t got more than a simple Metroid Prime 4 logo to oppose. The competition must be stricken with fear… Only Mario Aliasing Odyssey got a definite release date, which leaves room for many delays. In the current state of affairs, the Switch is trying to conquer the world with an army of late ports, a flurry of indies and a 500-yen Senran Kagura application. Not sure it’s gonna be enough…
By the way and if Sony and Nintendo both achieve their objectives, Switch would be largely dominated by PS4 in its first full year, Sony expecting no less than 18 million PS4. The gap would only grow whatever the reason (no enough supply or loss of interest). That said, there is no doubt that Switch will eventually sell several times more than WiiU. It’s the most powerful handheld on the market, which gives it a potential market of at least 25 million costumers in Japan alone. Even without 3rd parties to support it, the mainstream public (who still buys 3DS) should guarantee continuous sales. It will also get a main Pokemon game and a main Fire Emblem strategy-RPG, so that’s millions more clients in the bag. And with no successor for PSVita, many Japanese developers may need Switch to tap the handheld market. This is the major subject of the next few years : will Japanese 3rd parties make sufficent profit on PS4 alone ? Will their technological level improve to the point Switch ports would become impossible ? Monster Hunter World and Code Vein already signify their PS4pro/XboxOneX optimization : even before releasing, Switch was out of the league. If that becomes a general trend, then the current divide of the Japanese market will continue : older core gamers playing on PS4 in cold war with a mainstream majority focused on casual experience. At best, Nintendo can aim at peaceful coexistence with Sony, both system being complementary and a decent number of gamers playing on both.
As suprising as it may seem after 3 months of massive success of its new console, Nintendo is still a tiny player on the world stage. Not a single publisher has faith in Switch even though it’s flying off shelves, and the manufacturer itself isn’t strong enough to match ambitious and innovative rivals. This E3 is further proof that Nintendo is leagues behind and isolated from everyone.