Nintendo has been on a bit of a rollercoaster ride for the past few weeks. First, we learned that holiday sales of Switch 2 had disappointed, potentially leading to the company dropping its targets and slowing manufacturing of the console. Then, mere days later, Pokémon Pokopia turned out to be an absolute smash and Switch 2 rocketed back to the top of the hardware charts.
The day is saved! Perhaps even the month is saved; probably not the entire quarter, let alone the year, but a bit of positive news never hurts. Moreover, Pokopia is utterly charming; a perfect example of Nintendo doing what it quietly does best, using an established and well-loved franchise to sell an entirely new and beautifully made game to a huge audience who, with the best will in the world, probably wouldn’t have given it a second glance without the brand recognition.
On a meta level, too, Pokopia is doing what Nintendo does best; rescuing itself from some rather dubious strategic decision-making by making really, really good games. The company has had eras in which it had brilliant business leadership to match its world-class creative teams, but it also often ends up leaning on the excellence of its game creators to smooth over weaknesses elsewhere in the business.
This is not to say that Switch 2 has been a strategic misstep of some kind. The console launched to record-breaking sales last year, after all, not least because of pent-up demand after such a long lifetime for the Switch. In many regards it has struck a balance that Nintendo has sometimes fumbled in the past – offering significant enough change and upgrades to ensure that consumers are excited for the device, without breaking so totally from its predecessor that it loses the momentum of the previous generation.
The headwinds that Switch 2 sailed into soon after launch were, to some degree, not of Nintendo’s own making or within its control. Having delayed its plans for a Switch successor due in part to shortages in the COVID era, Nintendo would be forgiven an exaggerated sigh at running headlong into component shortages and supply chain issues resulting from political instability and overheated AI investments. All of that has limited its room to manoeuvre on pricing, its exasperation at the situation made clear by the lawsuit it’s currently pursuing against the U.S. government over tariff charges.
Nintendo does still have some levers to pull on pricing, though. The decision to launch a notably cheaper Japan-only version of Switch 2 appears to have been a costly one – the amount the company loses on each console has been suggested to be as high as $160, though of course it immediately claws back some of that in the software sales that accompany any console. In terms of volume, though, the gambit has worked. Sales of Switch 2 in Japan are much steadier and healthier than in other markets, almost making up for the targets reportedly missed in North America in the holiday quarter.
“Pokopia is doing what Nintendo does best; rescuing itself from some rather dubious strategic decision-making by making really, really good games”
It’s unlikely that Nintendo is keen to pull that lever in other markets, of course, but we should acknowledge that it exists (and that Sony, which also sells a cheaper Japan-only PS5, also has access to it) in any discussion about console pricing. Selling hardware as a steep loss leader and recouping the investment through lifetime software sales used to be how the console business was expected to work, after all; it’s odd that such a strategy now seems largely confined to one specific market whose currency happens to be in the toilet.
Having said that not all the headwinds were of Nintendo’s making, of course, begs the question of which headwinds the company did blow in its own face. The answer is that the weakness of Switch 2 is the same as the source of its likely redemption; as ever, it’s all about the games.
For all Nintendo’s development excellence, Switch 2 has had an uncharacteristically weak software slate since it launched. There are only a handful of high profile exclusives that set it apart from its predecessor console; of the really big Nintendo “tentpoles” that usually support its systems with consistent sales over many years, only Mario Kart has made an appearance thus far.
It’s an odd miss for a system that’s been in the works in some form or another for at least five years. You’d think that Nintendo would have internal teams that had been sitting on polished Switch 2 titles waiting for a go sign for ages at this stage. Instead, with Switch sales holding up well even very late in its lifecycle, the allocation of resources to the new system seems to have arrived late and reluctant.
“The sales pitch of Switch 2 for the past year has essentially been ‘buy this to play your Switch games on nicer hardware'”
Consequently, the sales pitch of Switch 2 for the past year has essentially been “buy this to play your Switch games on nicer hardware”. That’s not entirely a losing strategy in the early months of a console’s availability, of course, especially with Switch 2 being arguably the biggest single-generation performance jump over a predecessor we’ve seen since the early 2000s. Nonetheless, it’s a strategy that loses steam quickly once you exhaust your pool of die-hards and early adopters.
Under those circumstances, it’s hardly surprising that Pokopia has the whiff of a saviour title around it: Switch 2 soared once there was something to play. What’s more surprising is that Nintendo seems a little taken aback by the discovery that software sells hardware, an industry principle that they’ve always been a perfect example of in the past. The company came into the holiday season with their biggest offering being Hyrule Warriors: Age of Imprisonment – a perfectly fine game that plenty of people enjoyed, but it’s a Dynasty Warriors spin-off with a Zelda coat of paint, not a major Nintendo tentpole. How was the company surprised at their holiday sales when they didn’t have a big holiday game to offer consumers?
The core difference between Nintendo’s consoles and those of its competitors – the reason I think it’s fairly inevitable that it will ultimately recover from this situation – is that there really is a big contingent of consumers out there who want a reason to buy a Switch 2. The massive jump in sales when Pokopia launched speaks to that: consumers who really like Nintendo products and are basically begging the company to give them a good reason to pull the trigger on this purchase.
What’s strange is that instead of giving those consumers the nudge they need, Nintendo hasn’t just had a fairly low-key slate of releases in its console’s launch year, it’s also been increasingly coy about even talking about what’s coming in future. In fact, the company has been getting more and more insistent about not talking about major titles until really close to their launch dates, to the extent that a consumer thinking about buying a Switch 2 today has almost zero visibility of what major games may be on the way for the system in the next few months, let alone the coming year or two.
“It’s not clear what level of the company that decision is coming from, but for a game maker to do its best to clamp down on any stirrings of hype around its upcoming software is baffling”
It’s not clear what level of the company that decision is coming from, but for a game maker to do its best to clamp down on any stirrings of hype around its upcoming software is baffling. It very much feels like someone senior was stung by criticism of some games being announced too early (Metroid Prime 4 was a good example) and decided that nothing at all should be announced until the last minute; a ridiculous overcorrection that appears to be actively hurting the company’s market position.
With a handful of notable exceptions like a new Fire Emblem and From Software’s The Duskbloods, there’s basically nothing in their official pipeline for the console right now – nothing for consumers to get hyped up for, or to buy a Switch 2 in preparation for; no forward-looking catalogue to justify a new console purchase for a potential buyer openly seeking that justification. We’re stuck with leaks and rumours, such as this week’s reports that a new Starfox title and an Ocarina of Time remake may be launching this year, and possibly even a new Mario title next year. That leaves us playing guesswork at major titles that may be only a few months away – a bizarre situation that for some reason Nintendo has insisted on manufacturing for itself.
Of course, if and when a new Starfox, or an Ocarina of Time remake, do actually appear, they will sell consoles by the crateload. Nobody doubts Nintendo’s ability to deliver amazing games. However, between wonky pricing, poor release schedule management, and a PR strategy that feels like it crash-landed on Earth yesterday and is still trying to figure out how humans work, it’s hard to escape the conclusion that we’re now in one of the phases where Nintendo’s amazing creative teams are having to carry a lot of dead weight from the company’s decision makers.
