Nintendo Announces Groundbreaking Console [Strategy of a Declining Tech Giant]

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It’s been a while since Nintendo has wowed the world, but it looks like its new console may do just that. The Switch is a game console that aims to tackle both the in-home and handheld experience at once, while also keeping a firm hold on the in-person multiplayer experience gamers have come to know and love from Nintendo.

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Thus far, the world has only observed the console’s capabilities via the preview trailer which was released at 10 am on October 20th:

The keen-eyed gamer will note that the video games demonstrated in the preview not only include Nintendo exclusives like the new Legend of Zelda and Mario Kart, but also huge third-party titles such as Skyrim and NBA 2K17, games that have typically not been available for the Nintendo consoles. This reveal indicates a massive shift in Nintendo’s strategy, and is perhaps the most significant piece of information to come out of the Nintendo Switch preview.

Nintendo’s Old Strategy – Blue Ocean

Typically, Nintendo has pursued a “blue ocean” strategy, with which it has sought to innovate differently from its competitors. Instead of striving to push its hardware performance stats above those of Sony and Microsoft, Nintendo has typically aimed for the middle of the market and avoided duking it out over frame rates and CPUs. Its console efforts innovated their controls and sought to be palatable to huge, untapped demographics like families and the older crowds. Remember when everyone fell in love with Wii Sports, regardless of age?

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Traditionally, Nintendo hasn’t worked very well third-party game studios such as Bethesda, Activision, Warner Bros., etc, as the strategies and markets haven’t lined up very well for them to develop for Nintendo gaming systems. For example, Bethesda’s games typically have high system requirements to allow for (relatively) seamless navigation of incredibly expansive game worlds, replete with intense levels of detailed textures and content.

Unfortunately, the Wii and Wii U weren’t consoles that pushed at the upper limits of performance capabilities. They strove to innovate the playing experience itself by introducing motion-based controls and a second screen, respectively.

Nintendo’s New Strategy – Red Ocean

Based on the preview of the Switch, Nintendo is targeting a large segment of the user base that they have started to lose a grip on: young gamers. People under 35 are still the largest age group buying and playing video games. Additionally, the fact that the preview highlighted third-party games suggests that Nintendo have lined up the most devoted gamers in their marketing crosshairs.

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Past differences notwithstanding, it looks like bridges have been mended (or built) to bring on a significantly larger network of game developers for the Switch than any Nintendo console previous. Studios now on Nintendo’s short list include Ubisoft, Take-Two, EA, Activision, Warner Bros., and many more. If console sales do well in the first few quarters, Nintendo could easily sign up more studios to join the Switch’s developer network.

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What truly makes this an important moment for Nintendo is that they’re finally selling a unit that has an effective platform model behind it. By attaching these big names to such an innovative console, gamers will be attracted and validate the new concept with their purchase dollars. This, in turn, will draw even more studios, followed by more customers. A self-sustaining cycle, as any platform worth its salt should be.

It appears that Nintendo is steering for the red sea, the segment of the market with blood in the water – blood shed by companies fighting tooth and nail to be on top. Sony and Microsoft have traditionally aimed for the young crowd and duked it out for the better-performing console and most attractive exclusive games every few years.

nvidia tegra nintendo switch

NVIDIA has also partnered with Nintendo for the new console in a big way, apparently amassing over 500 combined years of work in development. The new Tegra processor raises the Switch’s performance quality high enough for Nintendo to confidently steer towards red ocean territory. As Sony and Microsoft release updated versions of their flagship consoles, the 2017 holiday sales will be well worth watching.

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With an actual platform approach and a renewed focus, Nintendo might regain its former glory as a gaming tastemaker. Wii U’s time in the spotlight was rather uneventful, so this could be a do-or-die moment for Nintendo if they don’t want to fall off the younger generations’ radar and languish in obscurity. Using an unfettered development platform will certainly be a key factor to the Switch’s success.

The Switch launches in March 2017, so only time can tell.

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Alex Moazed

CEO & Founder

Alex Moazed is the Founder and CEO of Applico. Alex founded Applico in 2009 when he was 20 years old and funded the company with his own credit cards. Within the first three years, Alex led the company to become one of the largest app developers in the industry. Subsequently, Alex evolved Applico into the world’s first Platform Innovation Company, trailblazing a new type of consulting and engineering firm. In his role as CEO, Alex is laying the foundation for platforms to be the predominant business model of the 21st century. Alex is a founding board member of the Application Developers Alliance and a graduate of Babson College, Choate Rosemary Hall and Greenwich Country Day School.