Editorials Nintendo

Nintendo Switch: The End of Nintendo’s Legacy

Nintendo enters 2017 with perhaps the biggest hype bubble in gaming history for its upcoming console/mobile hybrid system, the Nintendo Switch. We only got a single official trailer that made its debut in the fall on the heels of a poor stock prediction. On top of that, we also got to see the Switch in action for a few minutes during an episode of Jimmy Fallon Live. The information vacuum created by Nintendo has birthed abundant rumors and speculation, not to mention extreme (and unwarranted) anticipation from fans and gaming media alike.

In the last decade, Nintendo has proven itself a company that is unable learn from its past mistakes. It lacks understanding that it exists in a global market with a diverse regions of consumers. Nintendo’s actions since the launch of the original Wii have revealed their limited world view. Their reaction to consumer-driven initiatives shows a company that works against their own consumers.

The past year alone has seen Nintendo aim their legal team like a gun at fan-made indie games. These games took years of work and were essentially love letters to the franchises. No one invests over nine years into the creation of a fan-made game if they dodn’t love the property. Nor if they disrespected the company that created said property.

Nintendo keeps taking anti-consumerist actions which are nationalistic in nature.

All this is leading to the announcement of their latest system, the Nintendo Switch. How can we as gamers expect Nintendo to correct the issues of the past? Nintendo shows they have learned nothing from their failures.

It might seem that I’m being “mean” to the company. Believe me when I say that Nintendo, as a company, could not care less about me or any of you. As a company, they are an amoral machine whose purpose is to create as much profit as possible. They are without feelings. I doubt my words will elicit any tears in back in Kyoto or Redmond (or any other of Nintendo’s regions).

In my opinion, Nintendo is in for the toughest year since they entered the video game market in 1984. I’m basing this opinion after doing research on years of history. Looking at the patterns of Nintendo’s decisions, it reveals a pretty dark outlook for the company’s future prospects. In order to understand the situation I’m about to present, we have to look at everything that Nintendo has done in recent history. Only then can we have a better understanding of where the company is headed.

History of Corporate Hubris, Anti-Consumerism, and Nationalism

Nintendo is a global video game and electronics company. They have been a provider of arcade and game electronics since the late 1970’s and entered the U.S. home video game market in 1984. Nintendo has 32+ years of home and portable gaming market history to date. Because of that, it is hard to imagine how they continue to make narrow-minded decisions that make little sense.

For example, let’s look at the Nintendo 64 game console. The Nintendo 64 game cartridge is one of the most flawed design decisions in Nintendo’s history. Why did Nintendo stick with outdated, cumbersome cartridges when CD-based games were on the immediate horizon?

Nintendo 64 exists because of the failed deal between Nintendo and Sony to create the SNES-CD System. Nintendo had a working relationship with Sony, who created the excellent audio subsystem components for the SNES. They developed a prototype SNES-CD hybrid system dubbed the “Play Station.” This CD hybrid system debuted at the 1991 Consumer Electronics Show. After that event, contract negotiations broke down. Nintendo sought to pursue system development with Sony’s competitor, Philips.

Prototype for the Sony "Play Station" - The Super NES CD Console
Prototype for the Sony “Play Station” – The Super NES CD Console

Following the back-door deal made with Philips after the 1991 CES, Nintendo announced the Phillips SNES-CD at the 1992 E3 show. This blunder led Sony to make some of the most successful consoles in gaming history — the original PlayStation.

Sony Playstation - the system born from Nintendo's blunder
Sony Playstation – the system born from Nintendo’s blunder

Nintendo was paranoid over Sony retaining the rights to the CD hardware. They believed Sony would use the rights to develop their own home console (which it inevitably did). The purpose of the deal with Philips was to stop Sony from making a competing console. Sony entered the home console market in December 1994 with the original Sony PlayStation. How did that work out for Nintendo?

Based on the platform totals from VGChartz, the original PlayStation is the fourth best selling video game system to date, selling 104.25 million units (note that the Wii is fifth, behind the PlayStation). The PlayStation 2 is the best selling video game system of all time, selling more than 155 million units worldwide. It was also the fastest console to reach the 100 million units sold. PlayStation 3 has also been successful, selling over 80 million units to date. The PS3 is ninth on the all-time platform totals above the Game Boy Advance and NES. PlayStation 4 holds the record of the fastest selling console after its launch on November 15, 2013, selling over 1 million units in 24 hours.

Why am I discussing Sony PlayStation, you ask? Because through Nintendo’s own actions and corporate hubris, they created their own worst enemy. Sony entered the console market like a rocket and crushed other competitors. Even Sega could not stand up to the juggernaut that was the PlayStation 2.

There are examples of Nintendo’s narrow-mindedness when it comes to its worldwide audience. Earthbound launched in the U.S. in 1995 to poor reviews and sales. Neither its prequel (Mother) or the sequel on GBA saw a North American release. Fans had campaigned for years to bring the Earthbound (Mother) series to the U.S. Mother released on the Wii U Virtual Console as “Earthbound Beginnings” in 2015. Earthbound hit the Virtual Console two years prior in 2013.

EarthBound - Super NES
EarthBound – Super NES

For all that fan effort, the Earthbound games came to the Wii U Virtual Console 18 years later. This was less because fans wanted it and much more that the Wii U was underselling. Nintendo needed exclusive software since third parties had all but abandoned the Wii U.

Another example of Nintendo’s anti-consumerism and Japan-centric thinking is the infamous Nintendo of America, Inc. v. Blockbuster Entertainment court case. The summary of this case is that Nintendo was trying to shut down the video game rental market in the U.S.

Blockbuster Video
Blockbuster Video

This already happened in Japan due to the combined efforts of the music, film, and software industries lobbying the Japanese government to amend the Copyright Law to include the “Right of Lending” which gave authors control of whether their content could be rented and under what conditions. The Software and Video Game industry in Japan ended rentals of any property without the express permission of the copyright holder.

Nintendo took this fight to the U.S. in 1987, where the rental market was flourishing and Blockbuster was a household name. Video game rentals started becoming huge since people could play a game at a small fraction on the sale price. Nintendo took Blockbuster to court over this issue in an attempt to end video game rentals in the U.S. It lost the case and had to settle with Blockbuster.

Nintendo could not let go of the issue and tried to stick it to Blockbuster two years later in 1989. They accused Blockbuster of copyright infringement over “photocopied” game manuals. Nintendo won and Blockbuster has to create instruction cards for each game. In addition, Nintendo also refused to sell games to Blockbuster directly. Blockbuster had to buy large quantities of games from other retailers instead.

Nintendo also tried to introduce legislation to congress via lobbying in the form of the “Computer Software Protection Act” (H.R. 5297) which never made it through the House Judicial review.

Anti-consumerism is an odd trait for a company, especially one as beloved as Nintendo. But they take actions time and again that substantiates their anti-consumer tendencies. In the past couple of years alone there are further examples.

Take the Pokemon Company filing a lawsuit in 2015 against the Pokemon themed PAX party. Organizers threw a Pokemon themed party every year since 2011 before the PAX event. The purpose was for Pokemon fans to gather and enjoy themselves. Party organizers charged a $2 ticket fee which covered incidentals and venue space at the bar. They didn’t profit from it, yet TPC felt it necessary to make a giant example out of their fans. The court ordered a payment of $5400 to TPC, which they had to start a crowd-sourced campaign to try and pay off.

Suing fans of your products is no way to win over people. It is a draconian tactic meant to fear monger anyone from using your IP in a way you don’t approve of. That’s okay if you are willing to burn your fans and lose customers by crushing them to make that point.

In 2016, Nintendo launched the largest legal “witch hunt” against fan games that I have ever seen. It started with the DMCA take down of two major fan projects. Project AMR2 and Pokemon Uranium were two of the biggest online fan projects to get the axe. The games were both in development for over nine years and distributed for free on release.

Project AMR2 and Pokemon Uranium Version
Project AMR2 and Pokemon Uranium Version

While some apologized (i.e made excuses) for Nintendo’s take downs as IP protection, on its face, it is crushing their fans if they step out of line. Instead of encouraging talent and finding some middle ground to legitimize fan projects, Nintendo chooses instead to squash fans legally so that their efforts cannot be acknowledged.

Sega has adopted fan projects and even hired on fan creators to work for the company. Other game companies like Valve and Epic Games have done likewise.

After taking down both AMR2 and Pokemon Uranium, Nintendo went after other fan games. In one DMCA take down order, they removed over 500 fan games from the Game Jolt web site.

Admittedly, these games were flashes in the pan and not very good but some had been available for years. Nintendo didn’t care at all when they were in the black financially. They moved to shut down any IP infringements and brand confusion ahead of the Nintendo Switch. In reality, these games weren’t confusing anyone. These take downs reeked of desperation of a company trying to protect themselves at all cost, even from their own fans.

Nintendo acts more like a toy company when it comes to feverishly protecting its IPs than it does a video game company. A global mindset would account for the multiple regions, diverse gamers, and other cultures. Such a global company would respect the sovereignty of the customers in those regions. They would not try to impose restrictive and abusive copyright measures into another market.

Nintendo Creators Program (YouTube)

The Nintendo Creators Program was the company’s effort to control brand messaging. The program consisted of a contract with Nintendo. To upload any review or gameplay footage to YouTube, Nintendo had to approve the content. They also would get a percentage of the monetization (if any).

Nintendo Creators Program
Nintendo Creators Program

This program is extortion at best. At worst, it is corporate fascism. Nintendo was telling YouTubers that they couldn’t make videos of their games unless authorized. Approval, as stated in the contract, required the videos to be positive. Only games from Nintendo’s approved list could become videos. Any games that weren’t on the list would be outright rejected and pulled down.

Put your feelings aside and think about that for a minute. This is where the gray area between the first amendment and copyright law butt heads. Nintendo takes full advantage to stifle any negative commentary about their games. This tactic is one of the most reprehensible acts by a video game company I’ve seen. This is in an industry where EA treats their developers like slave labor, and this is still worse!

YouTube reviews and “Let’s Play” videos are free advertising for games. No one contests that except Nintendo fanboys. Sony and Microsoft encourage the sharing and creation of gameplay videos. Game publishers will actually seek out popular YouTubers and work with them. Publishers know how much trust YouTubers have from their legions of viewers. So it is insane that one company actively seeks to do the opposite and shut down video content about their properties unless you pay them and say nice things. YouTubers like Angry Joe, Jim Sterling, and Haedox have covered this topic extensively.

On this topic, I’ll end with a thought: If you have to sign a contract of employment with a company with strict conditions to create videos of their games whether it’s a review or a game play video, doesn’t that compromise your integrity to tell the truth about those games or lose access to them? Think on that, but the answer is yes and it is disgusting and is integrity compromising on the part of Nintendo.

Blue Ocean Strategy and Artificial Scarcity

Blue Ocean Strategy was a book published by two professors (W Chan Kim & Renée Mauborgne ) based on the study of 150 strategies used by 30 companies of a 100 year period. The basis of the strategy is that most companies compete head-to-head in the “red ocean.” In order not to battle competitors, a company would create an uncontested marketplace or “blue ocean.”

Nintendo adopted the strategy after the Nintendo GameCube, which led to the development of the Wii. The problem is that instead of a “blue ocean,” Nintendo created a bubble market of gamers by implementing a successful gimmick centered on motion controls. This bubble of new consumers were not really gamers, but people who were attracted to the simplicity of the Wii and games like Wii Sports.

The problem came with the assumption by Nintendo that these new customers would convert to full gamers and be constantly engaged in Nintendo software and hardware. That assumption proved to be a huge mistake as those same expanded customers became disengaged near the end of the Wii’s life cycle and didn’t purchase the Wii U.

While reaching out to get new customers in the “blue ocean,” Nintendo left behind much of their base to remain engaged and loyal without much support. This flawed assumption resulted in disappointing Wii U sales. The Wii U has sold only 13.8 million units to date. In comparison, the Wii sold 101.18 million units and the GameCube sold 21.74 million units.

The Blue Ocean Strategy failed Nintendo, and yet they are still using it to market the Nintendo Switch.

Artificial Scarcity is defined by Wikipedia as: “ . . . the scarcity of items even though either the technology and production, or sharing capacity exists to create a theoretically limitless abundance . . . ”

Nintendo started this with the introduction of the Wii. Treading cautiously into the gaming market after the lackluster sales performance of the GameCube, Nintendo produced a low number of Wii systems. They underestimated the initial demand for the Wii, and because it was difficult to find, it became a hot commodity. Wii sales exploded and Nintendo seemingly could not keep up with the demand. At least, that was their narrative throughout the Wii life cycle. In reality, they keep production of Wii systems low on purpose to keep the demand high.

The strategy worked so well that Nintendo continued to use it with other products. Special editions of Nintendo 3DS systems, Amiibos, and the Wii U were all introduced to market using the same scarcity tactic. Soon, gamers became wise to what was happening.

This was due to the fact that competitors like Microsoft and Sony had no problems meeting the demands for their systems. The Xbox 360 was dominating most of the seventh generation of consoles and there was huge demand for the console. Microsoft had no issues keeping stores stocked with systems.

Since Nintendo systems were manufactured at Foxconn, which also produced Xbox and PlayStation systems, it became clear why Nintendo had shortages: They created the short supply to keep demand high for as long as possible.

Deceptive and Incompetent Marketing

Nintendo’s marketing efforts since the end of the GameCube have been confounding, and the quality has only gone downhill since.

The Wii motion control gimmick and strong software library kept its sales high. That explosion of sales compared to the GameCube made the marketing complacent. The proof was the introduction of the Wii U at E3 2011. The entire focus was on the Wii U gamepad. The console itself was never shown or talked about at the E3 press conference. This single move derailed the Wii U right out of the gate. The confusion created by that presentation was so profound that it confused potential customers for years after that. People thought that it was a tablet and some thought that it was an add-on for the original Wii. Even professional video game journalists had no idea what to make of the Wii U when it was first “revealed.”

Nintendo’s marketing was not up to the task of correcting the message and pushing the Wii U forward after the initial blunder. They also failed to successfully promote the 3D gimmick in the Nintendo 3DS. While the Nintendo 3DS was a more powerful DS, the 3D screen was another gimmick that people didn’t care about. This was evident with the creation of the Nintendo 2DS system soon after.

The worst crime of the marketing part of Nintendo, especially in the U.S. market, was the constant addressing of rumors and leaks with lies. Before the introduction of the New Nintendo 3DS XL system in North America, it was reported that the system would be able to play SNES games from the Virtual Console store. This feature would be exclusive to the New Nintendo 3DS XL.

Nintendo stated that “New Nintendo 3DS has an improved CPU, which enables Super NES games to run on the system with quality results.” Anyone with an ounce of critical thinking skills would have called bullshit on this immediately. How can a handheld system that is powerful enough to run upscaled Nintendo 64 ports (Starfox 64, Super Mario 64) not be capable of running Super NES games? The two generation old Game Boy Advance had ports of Super NES games, yet somehow the Nintendo 3DS was not up to the task?

New Nintendo 3DS XL

This was a bold-faced lie to cover up the fact that they wanted to lock that feature to only the New Nintendo 3DS to sell more units. That vile tactic would only look valid to the most unempathetic fanboys. It goes back to my point about the anti-consumerist nature of Nintendo as a whole. They basically told a lie to every owner of a 3DS in the hopes they would buy a new system to get the feature.

As of July 2016, Scott Moffitt left Nintendo possibly under involuntary circumstances. His position as Executive VP of Sales and Marketing was also dissolved. I thought Scott Moffitt was a terrible marketer and did a poor job of pushing Wii U and 3DS. I won’t miss him and neither should fans. However, that position has existed since the creation of Nintendo of America. That means the current executive hierarchy has to absorb his tasks. This is a poor financial sign that Nintendo would permanently axe a long-time executive position.

Another example was very recent. In November 2016, both Eurogamer and Nikkei insiders said that Wii U production would be wrapping up. Eurogamer went so far as to say it would end the first week in November 2016. Nintendo denied those claims saying that there were no plans to discontinue Wii U production.

Nintendo Interim President Tatsumi Kimishima stated in March 2016 about the Switch that “It’s a new way of playing games, which I think will have a larger impact than the Wii U, but I don’t feel it’s a pure replacement for the Wii U.”

A Japanese spokesperson for Nintendo responded to the Nikkei and Eurogamer leaks in a statement “Even though the Nintendo Switch is slated to go on sale, [Wii U] production is scheduled to continue.”

Note that these two statements from Nintendo completely contradict what actually happened. Wii U production did end in November 2016, proving the Nikkei and Eurogamer leaks to be correct. Nintendo lied to consumers and directly contradicted reporting from journalists and business insiders which turned out to be accurate.

Nintendo propelled a narrative that the Wii U would be supported well into the Switch life cycle only to pull the plug on the system months before launch.

The Failure of Super Mario Run

Super Mario Run was a mobile-only endless running game developed by Nintendo for iOS. It was released on December 15th, 2016 and was highly anticipated by fans and mobile gamers.

The game was free to download from the iTunes store, but customers were only allowed to play a small portion of it. To unlock the full game, users would need to pay $9.99.

The price point and the game performance became a contested issue soon after launch. Many iOS users complained of the game freezing or failing to properly load on the iPhone. Others pointed out that the game would not load if the phone was not connected to a cell or wifi network.

The price point became a huge bone of contention for iOS players. Big games like Minecraft and GTA: San Andreas were priced lower at $6.99. They provide no free model and are on the top 5 most paid games in the iTunes store. Nintendo seemed entirely out of touch when they launched Super Mario Run at $9.99.

Nintendo zealots argued that people didn’t want to pay for the game at all. This assertion was untrue since many of the price complaints lobbed at Super Mario Run was that the price was too high for a runner game. Few people said they wanted the game for free — simply that it made no sense why this game should cost more than the full-length games mentioned above. Those who said Super Mario Run’s price was justified because Mario is “the Mickey Mouse of gaming” displayed a level of blind devotion that was unbelievable.

Much of the problems logged in reviews and forums showed that users could not play the game in areas with low coverage. This included many commuters in urban areas or people living in rural areas with little to no coverage.

The compounded issues for Super Mario Run led to the conversion sales rate being extremely poor. After the first day of sales — while outpacing Pokemon GO in total downloads at 5 million (vs. 1.8 million) — the revenue earned from Super Mario Run was only $5 million. This meant the game only converted 10% of downloads to sales in 24 hours.

This lead to a run from the stock by investors. The week after the launch of Super Mario Run saw Nintendo’s stock lose almost $3 billion dollars in value. The following three days saw strong download numbers at 37 million, but poor conversion rates at only $14 million total revenue. That is only a ~3.8% conversion rate of total downloads (100% conversions would have yielded approx. $370 million in revenue for reference).

Add this poor performance in the U.S. iTunes market with the fact that in Japan, the game only placed sixth in the top list for iTunes. Investor confidence was shaken greatly and it showed up in one of the worst few days of stock value losses for Nintendo since the post-Pokemon GO Q1 2017 financial meeting in July.

Nintendo failed to price their product accordingly and did not adequately research current mobile game trends or top game downloads. Also, it adopted an “always-on” DRM strategy that has failed other companies in the past. Add that to the shortsightedness of not testing such a scenario outside of Japan. Major urban centers like Kyoto and Tokyo have high speed wifi available almost everywhere.

Nintendo Switch predictions

Nintendo has to launch Switch out of the gate with multiple quality titles and excellent features. The new Virtual Console cannot trickle in titles as they have done for the last two generations. The VC has to be stocked with quality nostalgia to offset the smaller set of Switch exclusive titles at launch.

The battery life of the Switch has to be stellar. Anything less than 6 hours of gameplay undocked will not fly with consumers. The Nintendo 3DS battery was not up to par with previous Nintendo handhelds. The 3DS XL did better because they could include a larger battery. The Nintendo Switch was promoted running AAA titles in portable mode. Pushing graphics like that will be a much larger power drain than a 3DS XL system (you know, the one that can’t run SNES games).

The guts of the Nintendo Switch look to be running custom hardware from Nvidia. Research from Eurogamer and Digital Foundry points out that the Switch is running with a second gen Maxwell-based Tegra. I know a lot of fanboys use the Nvidia marketing release from March of 2016 to refute the facts stated by Eurogamer. Let me be clear that Eurogamer did their due diligence to confirm the spec leak with developers. They also explained that the second gen Maxwell architecture has optimizations from Pascal, but is not a Pascal itself.

nVidia Tegra X1

Considering all this information and all I have stated earlier in this editorial, here are my predictions that can be taken as an educated guess or opinion.

The Nintendo Switch will launch semi-strong but not stellar because of the hype and the enthusiasm of early adopters, technophiles, and fans. It will launch with a few Wii U ports like SplatoonMario Kart, and possibly a Nintendo Land type of game. Zelda will be delayed to Summer/Fall 2017 and any Mario or other first party software will launch around holiday 2017.

Artificial scarcity will rear its ugly head for the Nintendo Switch. Post-launch, it will be difficult to find Switch systems. That will be because Nintendo simply didn’t make enough of them to meet initial demand. Watch NPD’s and post-launch statistics for the Switch and compare that number to any other game system.

Similar to the launch of the first Nintendo 3DS, the Switch itself will not have services like Netflix ready at launch. I also don’t think they will have the Virtual Console or single sign-on ready by launch but probably soon after. Also, the User Interface and experience will be mediocre as Nintendo doesn’t test extensively for usability outside the Japanese market.

Nintendo will also create a service similar to Xbox Live and PSN that will integrate the Nintendo eShop, Virtual Console, and player data. They will probably have some cloud storage option available for storing game and app data. This service will not be free. I’ll speculate that even though the initial Nintendo service will not be up to par with Xbox Live, they will charge $10-$12 / month or $50 per year.

The battery on the Switch will last about 3-4 hours and be a huge let down. Fanboys who argue that they can simply plug it into an outlet with an AC adapter are missing the point of portability entirely. If you have to plug it in to use it, then why carry it out of the dock at all? To rational gamers, this will be a deal breaker.

The Nintendo Switch will also have sub-par third party ports. The graphical power of the system means that while you can get things like Unreal Engine 4 or Dark Souls 3 to run, it will be in a lower quality compared to current Xbox One and PlayStation 4 systems. Developers will have to account for the parity between docked and undocked modes and that means accounting for portable specs to make sure that the experience is uniform.

Nintendo is already on thin ice with third party developers. While they have a list of companies that will allegedly support them, recent news has proved otherwise. Bethesda and 2K Games could bring Skyrim or NBA 2K7 to the Switch, but so far, there has been no concrete plans from either developer. Bethesda stated that the footage of Skyrim seen in the Switch teaser trailer was only a video and wasn’t in-game graphics.

EA released a statement that Mass Effect Andromeda will not be coming to the Switch. Sega stated that Yakuza 6 will not be coming to the Switch. Atlus has stated that Persona 5 will not be coming to the Switch. These announcements do not bode well for the launch lineup or the games to come for the rest of the year for the system.

Nintendo absolutely needs new, quality third party titles to come to the Switch. While Dark Souls 3 would be nice, that game is almost a year old and will not push systems. Nintendo needs to have current AAA titles from third parties to be on the Switch at the same time as other consoles. They also need to have indie game support. These are both areas that Nintendo has been seriously lacking in since the Wii U.

The price of the Nintendo Switch will be somewhere between $349 – $500. This is accounting for at least two SKU’s and multiple accessories. The base SKU will come with a Switch, Joycons, and a AC adapter for $349. Remember, this is the company that priced the 3DS at $249 at launch on March 2011. Four months later in late July 2011, they reduced the price to $169 due to poor launch sales. History has a tendency to repeat itself, especially for those who learn nothing from it.

The larger SKU will either be the same with a Switch that comes with more storage, or a SKU that include the Pro controller, Joycon base controller, and a dock. Those accessories will probably add at least $100 to my $349 estimated price, bringing the total to $449.

The Future of Nintendo

Let me begin my conclusion with the assertion that I do not hate Nintendo. I very much enjoyed Zelda at E3 2016 and I did state multiple times it was the best game I had experienced at the show. I would love to play the finished game. Since I don’t currently own a Wii U (I do own and enjoy my original 3DS) I cannot hope to just pick up the game when it launches.

I will have to invest in the Switch. Buying a Switch means I would have to believe that it is capable hardware and that there is much more to enjoy on it other than Zelda. However, I am stuck in a conundrum. I want the Switch, but I do not believe Nintendo can pull off an improbable comeback to make the Switch attractive to both gamers and developers and bring it up to Wii levels of success.

I constantly say Nintendo was the best place I’ve ever worked. I also believe that as a game developer, that they have an undeniably great pedigree. Nintendo is one of the best game developers in history.

As a global electronics corporation, Nintendo is a terrible company. It constantly participates in tactics (artificial scarcity, legal witch hunts, overpricing, ignoring game market trends) that come off as blatantly anti-consumerist. Nintendo’s hubris among its competitors and peers is extreme.

The list of anti-consumer actions Nintendo has taken is too numerous to list in one article. Here are some of the major actions Nintendo has taken over the years:

  • Tried to end the video game rental market in the U.S. by suing Blockbuster.
  • Tried to introduce a bill to Congress to try and stop video game rentals after they lost the court case against Blockbuster.
  • Threatened Namco with exclusion from Nintendo systems after they published Splatterhouse on the TurboGrafx-16.
  • Sued to try and stop Galoob from providing the Game Genie.
  • Nearly bankrupted DMA (now Rockstar Games) over game production for the Nintendo 64 (Body Harvest).
  • Nintendo Creators Program on YouTube which stifles any negative commentary while taking a cut of video revenue from video content creators.
  • Sued the Pokemon PAX party organizers to make an example out of them while crushing them financially.
  • The recent legal witch hunt of indie produced fan games and issuing hundreds of take down orders in the span of a couple of months.

The Nintendo Switch could be a fantastic piece of hardware but the company that created it treats consumers and third party publishers with open disdain. Taking this into account, I came to the following predictions for the future of Nintendo as a company.

In my opinion, and based on my experiences and research, Nintendo as a company has no future. The Switch will be the end of Nintendo’s hardware legacy. After the system underperforms this year, Nintendo will have two possible routes to continue their existence. Let me reiterate that Nintendo doesn’t have unlimited money to outlast any financial disasters for years. I did the financial math on Nintendo on this and presented it to break that myth.

Possible Option #1 – Nintendo splits into two different companies. One part will strictly focus on game development and bring Nintendo IP’s to other game consoles, mobile platforms, and PC. The second part will focus on licensing IP’s to companies to use for film, animation, theme park attractions, clothing, etc. This second entity, let’s call it Nintendo License Ltd., will exist to manage the brand and IP’s only.

Following this option, Nintendo would massively downsize the regions outside of Japan. Nintendo of America would become a shell of itself and the North Bend distribution operation would be folded, with operations taken to a licensed Japanese distributor. The Nintendo World store would close its doors as licensing to large chains like Walmart and Target would have a much higher ROI for Nintendo merchandise while they would cut operating costs running a retail space in the middle of New York City.

Nintendo could then port older games and develop new ideas on Sony, Microsoft, iOS, and other platforms without having to worry about supporting their own hardware. The burden of working around their own API’s and hardware issues would be removed, leaving Nintendo to be focused on making games. Nintendo shines as a developer. Removing the hardware factor and allowing them to focus on making games might yield fun quality titles which could influence the whole game market in a positive direction.

Nintendo as a third party software developer could shift the market so much that the assembly line of FPS games and sequels like Call of Duty would no longer be viable. This could force publishers like EA and Ubisoft to do better or become irrelevant.

Possible Option #2 – Nintendo hits such a low point that they have to take the THQ option. Nintendo would have to auction off all of their exclusive IP’s to the highest bidders to pay off their loans, real estate leases, creditors, investors, and cover the pensions and severances of all their employees.

Taking this option would be much more of a nightmare scenario to a majority of Nintendo fans. It means that a publisher like EA could own the Mario franchise. Activision could take Metroid in a bidding war. Microsoft could purchase most of the lower tier IP’s themselves. Beloved Nintendo franchises would be cast into the “red ocean” of the video game market like chum to be devoured by all Nintendo’s past competitors.

Both long-time and new fans of Nintendo would agree that either option, and my predictions in general, would be unfathomable and unacceptable. If I went with my feelings alone, then I would agree as well. But using logic and reason, educating myself on the corporate and financial history of Nintendo for the past 30+ years, working in Nintendo marketing for 5 years, and experiencing their tactics as a gamer, I cannot come to any other conclusion.

Nintendo will suffer some sort of massive reorganization after the failure of the Nintendo Switch in the market. The period in the next two years (2017-2018) will see major changes to the company. And while they will continue to exist as a brand, I can only speculate what form Nintendo will take in the future.

This is my educated guess and no one should take it personally. I wish Nintendo no ill will. I don’t want these scenarios to happen. I hope I am wrong about their future. Competition is important for any industry. Losing a major player like Nintendo would leave a large void which could be occupied by Sony and Microsoft fighting to win over Nintendo fans. Having only two major choices in the video game system market would create complacency between them and ultimately stifle innovation.