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This is an unusual moment in Nintendo's storied history. It's launching Legend of Zelda: Tears of the Kingdom, the hugely anticipated sequel to one of its most critically acclaimed games of all time, while simultaneously watching the Super Mario Bros movie sail past a billion dollars in the box office, becoming not only the most successful video game adaptation ever, but also the fifth highest grossing animated movie ever.
Meanwhile the company's dream of expanding into Disney-style theme parks is off to a strong start, with Super Nintendo World areas at Universal Studios parks in Osaka and Los Angeles set to be joined by areas in Florida and Singapore by 2025.
Throw in the fact that Pokémon Go is still one of the top-grossing mobile games in the world, and that the Switch installed base has sailed past 125 million units worldwide, and it seems evident that this is a golden age for the company.
Yet, in the same week that Tears of the Kingdom arrives – accompanied by a Zelda-themed OLED Switch that seems to be giving the ageing hardware a nice sales bump – we've also seen results from Nintendo that received a response that seemed a little pessimistic for a company in a golden age.
The reason is simple; Switch is coming to the end of its lifespan, though Nintendo disagrees somewhat with market analysts about how fast that's happening. The company reckons it can sell another 15 million Switch units in the year to March 2024; several analysts have publicly raised their eyebrows at this projection, given among other factors that it'll be facing a market where PS5 supply is plentiful for the first time. Even if it hits those numbers, this would be a decline from FY23's sales. Nintendo knows the slowdown is here, it's just quibbling about the pace.
Nobody should be shocked that the Switch is slowing down at this point. It's a six-year-old console that wasn't cutting edge hardware at launch (Nintendo's consoles, probably sensibly, rarely are), and is now showing its age as a result, though Tears of the Kingdom is ample demonstration of what's still possible on this hardware.
More importantly than any technical failings, the console has reached about as much of its addressable audience as it's likely to. If it does hit its targets this year, it'll top 140 million units – putting it within shouting distance of the best-selling console of all time, the significantly cheaper Nintendo DS.
This is, then, an extremely good problem for the company to have – its console hardware has sold so many units that it doesn't have any worlds left to conquer. That, along with other developments in the past few years, sets it up for the next act in its story from a remarkable place of strength.
Its IP library has never been stronger, and it's been executing incredibly well for the past five or six years – not just in software, where it has almost always been excellent, but also in its smart choices of licensing partners, with companies like Illumination, Universal, and Niantic all playing major roles in bringing Nintendo's success to the next level.
A good problem to have, though, is still a problem – and the problem is easily summarised as: what's next? We are at an unusual breakpoint in Nintendo's strategy. Tears of the Kingdom feels very much like a swansong for the Switch, but we don't have any clarity on what comes next.
The company certainly toyed internally with the idea of a souped-up "Switch Pro" type device, and information leaks about that device led people to assume that it would be something that launched alongside Tears of the Kingdom, following Nintendo's well-established pattern of using major titles to bridge hardware cycles.
More importantly than any technical failings, the console has reached about as much of its addressable audience as it's likely to
That didn't happen; the pandemic intervened, delaying the new Zelda game and likely putting the kibosh on any new hardware launch as supply chains struggled to meet demand even for existing hardware.
If Nintendo still wanted to pursue that plan, though, it could be doing it right now – supply chains have stabilised, the game is ready, and Switch needs a successor. So why isn't Tears of the Kingdom launching with a fancy new Switch Pro to accompany it?
The key issue, in fact, may lie in that last statement – that the Switch needs a successor. Two or three years ago, the Switch was clearly going to be doing fine for some time, but might have benefited from a higher-end option on the market for die-hard fans and people who wanted to play primarily in docked mode on big TVs.
Now, the Switch actually needs a replacement – not a sidenote, but a whole new chapter for Nintendo – and given the company's track record, it seems unlikely that slapping a more modern chipset and some go-faster stripes onto the existing Switch would satisfy what the company demands from that kind of system.
I think the odds are good that Nintendo has new hardware to announce later this year, and that it has studiously avoided mentioning it up until now precisely because it doesn't want to undermine the launch of Tears of the Kingdom, an upgraded version of which will still quite likely be a launch title for the new system.
I also think, however, that the odds of this hardware being a straightforward "Switch Pro" type device are receding. From a market perspective, if the Switch has achieved saturation, it's going to be very hard to move the needle significantly with a Switch Pro, especially assuming a long period of overlapping compatibility between the devices.
Moreover, just from a purely Nintendology perspective, it's been six years since the company launched a new piece of hardware – and I'd wager it's got an itch to do something new. This is a company that proudly sees itself as a toy company, first and foremost, and consequently has always erred on the side of innovation with hardware updates, building them around new concepts that have at turns both wowed consumers (motion controls, dual screens on a handheld) and left them shrugging or confused (3D screens, the whole Wii U thing).
A straightforward update to the Switch – more powerful, maybe some design tweaks – is the safe option that most people expect and think they want, but Nintendo has always been at its strongest when it delivers something people didn't even imagine they wanted.
The company's own success makes this a very high pressure environment in which to be trying something left-field, though. This is a very, very different environment to the initial launch of the Switch. Nintendo has never really been in crisis – at least not to the extent that breathless prophets of the company's doom have claimed over the years – but the failure of the Wii U, which came at the point when the 3DS was also running out of steam, was such a low point that the firm's executives even relented to investor demands and started working on smartphone games, something they had resisted for many years.
Six years later, Nintendo has arguably never been riding so high. That creates both significant opportunities to innovate, and pressure to play it safe – especially, perhaps, given the importance of those working arrangements with companies like Universal, which may be sapped of much enthusiasm should Nintendo experience another Wii U style market failure.
Yet the arguments in favour of Nintendo pulling something weird out of the hat are quite strong, because for all that the market loves the Switch right now, a conventional upgrade is hardly a risk-free path.
I think the odds are good that Nintendo has new hardware to announce later this year, and that it has studiously avoided mentioning it up until now
Doing something innovative, while still maintaining the core functions of the Switch such that backwards compatibility is unaffected, is the kind of approach that has worked best for Nintendo in the past – and arguably the company's biggest flops have come when it's failed to effectively differentiate a new generation from the previous one in the minds of casual consumers.
The Wii U never quite got over the confusion about whether it was a new console or a weird accessory for the Wii; that was far from its only problem, but the belly-flop of that concept, compared with the soaring success of the not-dissimilar (albeit better executed) Switch serves to highlight how tricky Nintendo sometimes finds it to explain subtle distinctions to mass market consumers.
A fresh concept, not just a fresh chipset, will undoubtedly appeal to a lot of the people making decisions in Kyoto – and would go some way to explaining why we're seeing the swansong for Switch without even a glimmer of light on the horizon for new hardware.
As to what form that concept might take, or how distant from the Switch it may be, I can't even offer speculation – I don't have any inside track on Nintendo's next console, beyond its closely guarded existence. Nobody, however, should be too surprised if Switch 2.0 turns out to be something quite new, and quite different to the spec bump we've all been expecting.
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