It has been a very successful year for Nintendo. Prior to the Switch’s release, nobody anticipated that Nintendo would have such a successful year. The year is almost over, so GamesIndustry brought some analysts together to talk about Nintendo’s year, as well as what they need to do in 2018 to continue their momentum.
The first comes from Game Investor Consulting founder Nick Gibson. He said that “(2017 was) a turnaround year for Nintendo, a year in which Nintendo proved its many doubters wrong. There was substantial scepticism within the industry about Nintendo’s ability to remain a console manufacturer following the relative failure of the Wii U and the decline in its handheld business in the face of massive mobile competition. Switch’s performance has exceeded most industry analysts’ expectations and quite probably most within the industry. Nintendo may have diversified its model to start having its IP offered on mobile but this is simply supplementary to its core console business which now appears to be back in rude health.
Switch’s success so far is down to a combination of hardware quality and innovation plus some amazing releases so far but long-term console market success is almost entirely driven by software. Nintendo could carry this entirely by themselves but to maximise the momentum they are going to need to get the big third-party publishers on board, too. Unfortunately they still have work to do in this area.
Nintendo’s share price is almost double where it was at the end of 2016. It has returned to levels last seen in 2007-08 and while it hasn’t matched that era’s peak, there is clearly a great deal of expectation by shareholders that Switch is a major growth-driver for Nintendo. With some already talking of Switch exceeding Wii’s lifetime sales of 100m+, Nintendo will need to keep its messaging under control to prevent the sort of share price collapse that it suffered in late 2008 when it started to become clear that the massive, early Wii sales momentum wouldn’t be maintained.”
The second analyst that talked about Nintendo’s year is SuperData’s Joost van Dreunen. Dreunen said that “The company is back on top after investor sentiment was starting to sour. Not only that, but the current success of the Switch reminds everyone who thought that mobile gaming would simply decimate Nintendo that even such a behemoth is capable of a powerful comeback. Now that the games industry is more mainstream, a lot of people new to the industry have opinions about what makes this market work. Nintendo has proven many of the newcomers wrong. Making truly great gaming experiences is not just a function of analytics and digital distribution. It also involves magic.
Serialisation and sequels are a common practice for any entertainment firm, but Nintendo has done an exceptional job at innovating on its tried-and-true formulas without alienating its user base. Titles like Zelda: Breath of the Wild and Super Mario Odyssey are the rare exception of an empire like Nintendo – and one that is publicly traded at that – constantly pushing the boundaries to cater to its audience. We’re seeing a growing number of small and medium-sized game developers get a lot of traction on the Switch. The indie scene is an important driver of innovation for the industry at large, and I expect to see Nintendo stepping up its third-party efforts to extend its library and build up its offering.”
IHS Markit director Piers Harding-Rolls also had things to say, explaining that “This followed a partially realised implementation of this product strategy with the Wii U, which had failed hard, Nintendo has learnt a number of key lessons from the Wii U strategy and put those hard lessons to immediate use with the Switch. Nintendo has delivered a formidable collection of first-party games on Switch, making it a must buy for many console gamers. Sure, Switch is interesting hardware, but it is the content that really makes it sing. Nintendo has made limited progress in terms of its online business and has delayed its subscription service launch to 2018. I think this is one area Nintendo really has to up its game.
The next step for Nintendo is translating this early adopter, core audience momentum into a broader proposition for other consumers. My view is that this starts to become important during summer next year when console markets are generally quiet, the initial launch fever is over and most early adopters have already bought into the Switch experience. Nintendo is still experimenting with mobile games and its licensing strategy and there has been significant progress in 2017 in both of these areas. With monetisation of Nintendo’s mobile games a little hit and miss, I believe it needs to build out a portfolio of games to generate a significant amount of revenue from this part of the market, a bit more like EA’s approach. So steady progress in my view will be releasing some more titles in 2018 and adding to the existing portfolio.”
Lastly, ICO Partners’ Thomas Bidaux says that “The curation of their catalog is probably one of the big challenges for the new year. While opening up to more studios was a boon for the industry and many developers, we are already seeing signs that Nintendo might have opened the doors too wide and should pay more attention to some of the titles launched on the Switch. As they open up, they will face the delicate balancing act of making sure the games are numerous, diverse and of quality. Switch managed to open up like no other Nintendo console before when it comes to third-party developers – especially independent ones. I think this is a very important shift for them, and a sign that they are following the trends and know how to go with them, a behaviour they haven’t showed in the past.
Nintendo’s growing presence on mobile will be important to keep an eye on. Super Mario Run has been a success if you consider its reach, but the revenue it generated is not very impressive. Fire Emblem Heroes is on track to be a strong on-going mobile F2P success. Animal Crossing Pocket Camp has received very mixed reviews, with many fans of the franchise disappointed by the game’s shallowness and its aggressive monetisation. As far as that space of the industry is concerned, it doesn’t seem that Nintendo has found its own sweet spot yet, and it might take them a while to find the balance between the game experiences they want to provide, and the monetisation that fits them.”