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"Who else but die-hard Nintendo fans will buy the Switch?"

Analysts weigh in on the new console, challenges ahead, and what audience Nintendo is truly targeting with Switch

Now that Nintendo has finally teased the world with its Switch hardware reveal, everyone of course wants to know more and bigger questions about Nintendo's strategy have become top of mind. Speaking with GamesIndustry.biz, analysts have brought up a number of potential issues facing Nintendo as it moves forward. Most importantly, who is Nintendo really targeting with its new product and how is the company positioning the Switch against powerful consoles like next year's Xbox Scorpio or this year's PS4 Pro?

"Nintendo's Switch reveal trailer unveiled a product positioning which aims to defend against the increasingly robust encroachment of the smartphone and tablet gaming opportunity yet still appeal to traditional console gamers that are looking for a big-screen gaming solution in the home. It has designed the Switch to deliver a flexible solution to cover multiple types of usage, but must avoid delivering a substandard experience by trying to be all things to all users," said Piers Harding-Rolls, head of games research at IHS, which is now forecasting that Switch will sell 2.85 million units globally next March when it launches.

"I have my reservations with regards to the breadth of the audience it targets...The reveal video makes a lot more sense to me if you swap out all the adults in it with kids"

Joost van Dreunen

"Interestingly, the Switch reveal trailer was squarely targeted at young adults, which suggests that Nintendo is refocusing its early marketing on more traditional console gamers and those that also increasingly like gaming on the move. To build success with these buyers the offering must include third-party titles that are supported on other platforms," Harding-Rolls continued. "Nintendo looks to have killed off its motion controllers with the Switch and opted for a more traditional form of gaming experience. This suggests the company is serious about getting third-party publishers to support the platform with multi-platform titles. Potentially, this will help Nintendo's ambition to target young adult gamers."

Third-party support does seem to be better already. Wii U had a list of just 21 publishers and developers at its launch while Switch has close to 50. Support, of course, is something that's always in flux, but it's crucial for Nintendo to get its messaging right with consumers if it wants to maintain that support from third parties. "They need a proper message. Right now I am concerned they are pitching it as just another tablet with controllers," said DFC Intelligence's David Cole.

"Nintendo's ability to market a clear use case message to the audience [will be key]. Nintendo failed to do this with the Wii U and paid the price," added Harding-Rolls.

SuperData's Joost van Dreunen believes Nintendo needs to do a better job in defining its audience. "I have my reservations with regards to the breadth of the audience it targets. The Switch will likely be most popular among a younger audience: its functionality is uniquely geared toward pre-teens and teenagers. While the device seems much less like a toy than we're used to from Nintendo, its features like backseat multi-player and the ability to have several people play using a single piece of the controller target Nintendo's traditional audience. The reveal video makes a lot more sense to me if you swap out all the adults in it with kids," he noted.

It's clear that the widespread adoption of gaming on smartphones has had an impact on Nintendo, and indeed the company is pushing out its own mobile titles like Super Mario Run this holiday, but will that approach truly serve as a stepping stone to the Switch, or will it ultimately cannibalize Nintendo's new hardware?

"I think it will be very difficult for Nintendo to win back the casual gamers that are mostly on mobile now"

Dr. Serkan Toto

Dr. Serkan Toto, an analyst who specializes in the mobile market in Asia, remains skeptical. "Sorry, but is a portable/home console approach really that innovative in 2016? I am most concerned about the target group of the device: who else but die-hard Nintendo fans will buy the Switch? The Switch lacks a killer feature, and I think it will be very difficult for Nintendo to win back the casual gamers that are mostly on mobile now," he commented. "In Japan, for example, the mobile gaming sector is already 2-3 times bigger than consoles. Even the PS4 struggles over here. It's going to be a huge challenge to try to reverse that trend."

So will Super Mario Run make a difference? "I find it very difficult to picture a scenario where a critical number of mobile, free-to-play users converts to console and buy hard- and software for several hundred dollars upfront. Different markets, very difficult to bridge," Toto continued.

As ever, the biggest factor in the Switch launch and its chances for success could be its price. "Price pretty much depends on specs, and success depends on both price and specs. If the specs are close to PS4, I think they can price around the same ($249), and at most $299. If specs are weaker, price could be lower," noted Wedbush Securities' Michael Pachter.

"Assuming they are close to PS4, they are making porting of games easy for developers (and inexpensive), and I think they will get a lot of third party support. If the specs are weaker, porting will be costly and less likely to occur. So my 'prediction' is that if specs and pricing are similar to PS4, the Switch will get a lot of third party support and will be immensely successful. If specs are weaker or if pricing is too high, sales will suffer because of lack of third-party support or because of uncompetitive pricing."

Analysts agreed that $299 really is the highest Nintendo could acceptably go. "They must find a way to release the Switch at US$299 to stand a chance, that's the threshold," said Toto. "It's not impossible by offering the device in multiple versions, i.e. without the home dock. 'Hardcore' video game fans can, at US$299, already get fantastic devices from Sony and Microsoft. The portable gaming use case, at scale, has been taken over by smart devices."

"It is likely that Switch will be capable of displaying 4K video content and judging by the pricing of the original Shield tablet is likely to sit in the $250-$300 range"

Piers Harding-Rolls

SuperData's van Dreunen added that a high profile bundle, like Zelda, which we know is a launch title, could play an important role in incentivizing consumers. "I'm hoping they'll keep it under $300, ideally bundled with a Zelda or Mario Kart. Anything over that will severely limit its market potential," he said.

Harding-Rolls sees $300 as the max as well, commenting, "The reveal suggests it is competing more significantly with traditional home consoles, but with the edge of mobility. Pricing will need to be competitive in this context and anything over $300 may not be a convincing proposition." He pointed to similarities with Nvidia's Shield as evidence that Nintendo may very well end up in that price range.

"The new console shares a number of design, positioning and component similarities with Nvidia's Shield tablet. As such it is likely that Switch will be capable of displaying 4K video content and judging by the pricing of the original Shield tablet is likely to sit in the $250-$300 range," he said.

Excitement is currently sky high for the Switch. In fact, as noted by Bloomberg yesterday, right after Nintendo said it would unveil the console, its shares climbed almost 5% leading to a market value gain of $1 billion (the stock is up 3.34% as of this writing today). The company's stock is up more than 50% in 2016 in large part because of its embrace of smartphone gaming, but how Nintendo balances its portfolio and its message on mobile and Switch will be fascinating to watch in the next 6-12 months and it will reveal a lot about the future of the firm.

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Latest comments (12)

Daniele Mancuso Technical Manager & Development Lead, GlobalSign3 months ago
I love how these "analyses" are so quick to reach some conclusions purely based on average common sense, abstract conjectures and the uttermost security that hundred of millions of consumers in the world are really looking forward to throw away their 1080p TVs for a uselessly overpriced 4K display to achieve the "ultimate gaming experiences" in their living room, or as if the average videogamer is really looking forward to spend his/her money on a machine like this Skorpio thing (which does not exist yet, and nobody has the slightest idea of what it will really be like, in spite of all the hype that Microsoft is vehemently fostering on the mainstream VG sites through their PR army).
Also, "Analysts agreed that $299 really is the highest Nintendo could acceptably go". Whether this could be true or not, in a world where people do think that it is perfectly reasonable to buy a bloody smartphone (every year!) priced between 700 and 800 euros, these kind of considerations do not make any sense to me.
Rather, I am impressed there are so many professionals of the Gaming Industry who already think to know the destiny of a device showed in a presentation video less that 3 minutes long!
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Robin Clarke Producer, AppyNation Ltd3 months ago
"I find it very difficult to picture a scenario where a critical number of mobile, free-to-play users converts to console and buy hard- and software for several hundred dollars upfront. Different markets, very difficult to bridge,"

Like is currently happening with Pokemon on 3DS you mean?
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Martin Darby Design Director, Strike Gamelabs3 months ago
The content will be king.
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Show all comments (12)
Adam Campbell Producer, Hopster3 months ago
I can't understand why analysts are comparing price/specs to home console form factors like the PS4 and Xbox One. When it comes to portable devices and mobile architecture, the rules are different.
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Jess Kappeler Senior Game Designer, Pipeworks Studio3 months ago
Everyone that owns a 3ds. Turns out to be a lot of people.
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Richard Sutton Studying Bachelor of Science - Computing and I.T., Open University3 months ago
These analysts should maybe pay more attention. If anyone saw a tablet as opposed to a gaming device in that video, they should work in a different industry. And I wasn't aware that adults had no desire to play local multiplayer. Guess at the age of twenty-five, I'm still a teenager.
And as others quite rightly pointed out, portable gaming has a much larger user base than 'hardcore' gaming.
Seriously, how about a bit of journalistic aptitude to cover the fact that Microsoft is bribing you game websites? Just came from a pathetically fawning article saying how great the Xbox is suddenly doing and healthy for the industry it is.
Funny that. I thought Microsoft sold at massive losses to stay in industry and doesn't really care what happens as it can still sell Xbox computers.
I thought Nintendo were still the only company to actually innovate on hardware still. And still present, as always, very high standards in hardware and software.
Some may scoff, but a Nintendo gamer hardly ever encounters glitches or freezing if they play exclusivly first and second party. Must seem a foreign concept if you only ever play third party in this age.
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Anthony Chan3 months ago
Personally ... I still love my dual screen 3D capable 3DS... I wasn't certain from the teaser if 3D was coming back to Switch. While some might find it gimmicky I think its awesome that certain games are able to enhance their graphics with this capability (Monster Hunter and Pokemon come to mind)

@Richard Sutton; I honestly saw a tablet when I saw the video. Personally I am looking forward to any mods (uh oh taboo?) that will be able to dual boot Android from the Switch. If that happens, Nintendo may inadvertently have a a runaway hit. Think! A mod that allows you to play android games from the device, and another mod that will allow you to use the joy-con controllers with those android games... That would be bliss.

But overall, as I stated in the other article; I truly hope they consider not discontinuing the handheld market - specifically the 3DS. Its honestly their best piece of hardware. I don't need to play RDR or GTA or COD on Nintendo consoles (especially handheld). If I truly wanted to play those games, I would get a PC, XB, or PS4. I play on Nintendo, because whimsical and fun is what Nintendo excels at. It gives me a reason to own a Nintendo device + another device for the "mature' games.
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Emmanuel Dorée Studying Software Engineering, Open University3 months ago
I think it will be very difficult for Nintendo to win back the casual gamers that are mostly on mobile now
Nintendo don't need to win them back because they are also making mobile games now... And the way Switch was advertised it looks indeed like they are not targeting casual gamers nor even kids but the latter could change.

What I am curious about is how Nintendo will position its Switch versus the 3DS. While Zelda BotW will probably be the last Nintendo game to release on Wii U; will 3DS games slowly start releasing on the Switch too or not? Will Nintendo really embrace the Switch as its only console or does it have different plans like releasing a Switch handheld or Switch 'Mini' down the line? The current Switch looks to big to appeal to Japanese handheld gamers for example.

Edited 1 times. Last edit by Emmanuel Dorée on 22nd October 2016 9:39pm

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Andreia Quinta Creative & People Photographer, Studio52 London3 months ago
It seems to me that Nintendo is targeting a more Japanese lifestyle audience again, more so than Western countries. We'll just have to wait for specs, week 1 games and pricing to judge, but I'm skeptical.
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Andy Samson QA Supervisor, Digital Media Exchange3 months ago
@Andreia Quinta:
It seems to me that Nintendo is targeting a more Japanese lifestyle audience again, more so than Western countries.
You mean to say westerners do not go outside or have any social life? Wow, really? Well, Nintendo's about to change that with the Switch.
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Andreia Quinta Creative & People Photographer, Studio52 London3 months ago
@Andy Samson: No. To rephrase, what we see in the video is just a very localized otaku thing to do in Japan, it's inherent to their lifestyle and culture, to go out and meet friends or do something and taking a portable game system with you for it (not you) to be the attention of the 'party'. Yes we do that with a 3DS, but to the extent of all of your friends also having one? All of them? And we're talking about adults here, or so the video depicts.

A basketball court (swap this for a Baseball court and voilá, Japan) where adult mature men are playing basketball, and once they finish they plug in a 3DS/Vita/Switch to play.. Basketball? Buff, jacked-up Fifa/Call of Duty style 'mates' suddenly break open their socially friendly portable consoles to play a virtual game of the game they just literally lived? Possible? Yes. Likely? Not so much.
Western men can do that with Fifas, play football with their mates and play together fifa online or at a mate's house. It's still very different from western men finishing a football match one evening, and once finished pulling a 7" tablet to play fifa on the actual football court.

The girl meeting up with her friends, and taking the console with her? What mature adult would do that? It's bad enough as it is with friends having their faces stuck on phones. But in Japan? Quite normal.

And the eSports thing I think we all concede how ludicrous it looks coming from Nintendo.

Point being, I understand these are just hypothetical scenarios portrayed in the video, but just as well, my understanding is it screams Nipponese culture all over it. Painting western figures on top of Japanese culture ideals doesn't automatically make it western culture.

So yes, skeptical.

Edited 3 times. Last edit by Andreia Quinta on 24th October 2016 12:19am

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Bob Johnson Studying graphics design, Northern Arizona University3 months ago
Yep Nintendo focuses on Japan first and foremost. And then tries to sell that stuff to the rest of the world.
That's why there is always a bit of a disconnect over in the west with some of things they do.

They probably targeted the "Vita" market first because they want to expand into that market and because they can always sell to kids later plus they probably don't want to confuse kids before xmas. They have enough stuff coming out for kids during xmas with Pokemon and the 3ds. That's my guess.

And as for the Switch itself, I do know the younger crowd watches a lot more tv and plays more games on portable devices in different rooms around the house. Maybe the Switch can become to the console what the laptop became to the desktop.

Edited 2 times. Last edit by Bob Johnson on 24th October 2016 9:08pm

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