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Nintendo tries out streaming on Switch in Japan

As Switch rapidly catches up to PlayStation 4's installed base in Japan, Nintendo takes aim at major cross-platform titles with cloud streaming releases - a possible taste of the future to come?

The big Switch news of the week, beyond a doubt, is the announcement of the Fortnite bundle for the console - a link-up with arguably the planet's biggest game of the moment, which may be a bit underwhelming in its substance (okay, it's extremely underwhelming in its substance), but is a dramatic statement in its intent.

Nintendo putting a third-party game on the packaging for its consoles is a moderately rare occurrence, though this is far from the first time it has happened, as some have been quick to claim - just off the top of my head the Wii U launched with a ZombiU bundle and there was a Just Dance bundle for the Wii, among plenty of others. A bundle with a non-exclusive, cross-platform title, though? Now that's worth raising an eyebrow over. And the sheer cultural status of Fortnite right now means that for Nintendo to make an implicit claim that Switch is the place to come and play this game is the industry equivalent of fighting talk.

"A bundle with a non-exclusive, cross-platform title, though? Now that's worth raising an eyebrow over"

That's all the more important because Switch, for all its success, carries with it a certain weight of negative expectations. No matter how well a Nintendo console does, there's an anticipation - even from fans of the company and its products - that two things will go wrong at some point. The first party content machine will sputter and slow down (no sign of this yet on Switch, but the difficulty of maintaining output at the breakneck pace required to support a console on first-party software alone is unquestionably high), and the third-party support won't materialise. So when the first problem materialises, the base of third-party games won't be there to give the system a soft landing.

By emphasising the place of Fortnite in the console's line-up at this point - not just a third-party game, but a third-party cross-platform title for which Nintendo is happy to promote Switch as "the best place to play" - the company is suggesting that the second problem, at least, might not be an issue this time around.

Less notable in the news, but arguably even more interesting, is another prong of how Nintendo is approaching this problem of third-party support. An experiment which began in Japan earlier this year is set to continue, namely the use of cloud streaming to deliver third-party games to Switch that are too "heavy" for the console to run natively.

Phantasy Star Online 2 got this treatment back in April, though it was a bit of a weird one - a six year-old game that ought to have been perfectly comfortable running natively on Switch, with the cloud version largely serving to offer up a graphics and performance downgrade. Much more notable, and seemingly more successful, was the launch of Resident Evil 7 on Switch using cloud streaming in May. Now the experiment moves into the next stage; Ubisoft's Assassin's Creed Odyssey will launch day-and-date on Switch with other platforms on October 5th, with the Switch version being a cloud service for which users can buy a daily or "lifetime" (defined in this sense as two years - yeah, cloud streaming is going to absolutely suck for anyone who actually likes having a collection of games) subscription.

These experiments are quite different from the Fortnite bundle in most regards, of course, but they are a different approach to solving the same problem. Nintendo needs to convince the world - both publishers and consumers alike - that Switch is a valid and important platform for third-party games. One way to do that is with high-profile promotions of successful third-party launches on the platform. Another is with roundabout technical solutions that actually get major cross-platform third-party titles up and running on the relatively lightweight Switch hardware.

"Nintendo needs to convince the world - both publishers and consumers alike - that Switch is a valid and important platform for third-party games"

For all the misgivings that may exist about cloud streaming as the inevitable future of gaming as a whole, as a solution to this specific problem - the question of how to put a game built for PS4 onto a significantly lower-spec system without compromising the experience too badly - it makes perfect sense. If there's a market for this and the business model can be made to make sense (thus far it seems to make some sense for publishers but is pretty rubbish for consumers, so some tweaking is likely required), then it could be a pretty good answer to some of the questions over the position of Switch in the market overall.

Thus far, these cloud streaming experiments are being confined to Japan. There are a few reasons for that, with the internet infrastructure undoubtedly being a pretty major one. Japan's infrastructure is far from perfect; providers here, like in many other countries, were caught wrong-footed when after years of making pie in the sky promises about broadband speeds, services like Netflix came along and people actually started wanting to use that much bandwidth all at once. In densely populated areas in particular, network speeds can be pretty miserable in the evenings and at weekends.

But overall it's a much faster and more reliable network than is found in many parts of Europe and the United States, with decent competition between ISPs and the vast majority of areas at least served by fibre to the curb. Mobile network coverage is also extremely good even in rural areas, and rising competition has pushed providers to increase data caps dramatically, with 50GB offers now commonplace - enough for 4G LTE to be a reasonable option even for streaming. As a result, game streaming is a technically realistic option in Japan to an extent that might be more problematic in other regions.

More importantly, though, the market in Japan is in a very receptive position for this kind of offering. Nintendo's hybrid home-and-handheld device has sold very strongly in Japan compared to the PlayStation 4, which despite its all-conquering performance in other global markets has been firmly in the solid but unimpressive camp in its home market. Basically, while the PS4's trajectory everywhere else has resembled the PS2's strong run, in Japan it's looked more like the PS3 all over again.

"Publishers of major HD console titles face anaemic prospects for their games in Japan"

By contrast, Switch has been gaining on PS4's installed base in Japan rapidly, and will likely catch up with it by the end of the financial year. With Xbox an irrelevance in the Japanese market, this means that publishers of major HD console titles face anaemic prospects for their games in this market. Japan can still be lucrative, but there must be a sense of frustration among publishers at seeing the addressable market decline in a country where gaming more broadly remains such a popular pastime.

Several reasons conspire to produce this situation: the popularity of "mid-core" mobile titles, broad economic trends driving low wages and job insecurity for young consumers who are traditionally the biggest spenders on games, and so on. One very major factor that I've mentioned before but which remains to my mind underappreciated is the movement away from having televisions in young people's homes. Speak to university students and young professionals, and the number who have TVs in their apartments is notably low, while those who actually have a decent-sized TV that would do justice to a system like PS4 or Xbox One are a vanishingly tiny number. Tablet, laptop and smartphone screens have all-but replaced TVs for an entire generation - troublingly, exactly the generation the industry would like to be selling decent numbers of games to. Under these conditions, the appeal of the Switch is readily apparent; a console that doesn't need to be hooked up to a big TV is a console you can sell to consumers who don't have a big TV.

For companies like Capcom and Ubisoft trying to sell Resident Evil or Assassin's Creed in Japan, that aspect of the equation is important. The form factor of Switch is appreciated all around the world - being able to lift the console out of its dock and go to continue playing while lying on the bed or similar is pretty fantastic - but in Japan it's arguably make or break. It's probably no surprise that among the most popular Switch accessories in Japan are "play and charge" docks that allow you to plug the console in and continue to use its screen while it charges.

Watching to see whether these experiments in cloud streaming succeed will be very interesting in the coming months, but equally interesting and much more important is the question of whether this decline in TV ownership might be reflected in other countries too. It's anecdotal at best, but I certainly have the sense that friends with teenage children are more likely to be asked for a tablet or a laptop than to put a TV into their bedroom - and as viewing habits have moved to Netflix, YouTube and other on-demand services, TV ownership among those who have moved out of home also seems to be in decline.

That trend is certainly more advanced in Japan than elsewhere, but it's hard to say that it's not also happening in other markets; in which case form factors like the Switch, with all the opportunities and compromises it brings, will have to become the norm for consoles in years to come.

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