The Nintendo Switch's fast start may not be fast enough

When it comes to Nintendo's Switch, everyone seems to agree that it's off to a good start, with Nintendo hyping its first month sales results at every opportunity. And there's no two ways about it, those numbers are pretty good:

In the 12-month period ended March 31, Nintendo earned ‎¥‎489 billion ($4.4 billion) in revenue, slightly down on the ‎¥‎504 billion it earned in the previous year. However, net profit increased from ‎¥‎17 billion in FY2016 to ‎¥‎103 billion ($925 million), beating Nintendo's own forecast by 14%.

The company said that the difference was down to better than expected shipments of the Switch, which sold 2.74 million units in March alone. That figure was attained by Reuters, which attended a press conference with Nintendo CEO Tatsumi Kimishima in Japan. Kimishima said that the company expects to sell a further 10 million units in the current financial year.

So far, so good. Where I start to have issues with the hype, though, is when Nintendo start trying to draw parallels between the Switch's launch and that of their previous console success, the Wii:

According to Reuters, Kimishima said he was "relieved" by the console's early performance. "If the 10 million target is achieved ... that means the sales momentum would be close to the Wii," he said.

There's a problem with that comparison, though: the Switch is not the Wii, and the market that it's launching into is not the same as one that the Wii launched into.

Nintendo's Wii was a pop-culture phenomenon. Launching in 2006, at the start of its console generation alongside Microsoft's XBox360 and Sony's PlayStation 3, and prior to PC gaming renaissance, which didn't really get going until 2010, the Wii didn't have to vie for market share with established competitors. Everyone was starting from zero; no platform was coming into the year with tens of millions of customers who already owned huge libraries of compatible games.

The Wii had a couple of other features that gave it a competitive edge. One was its price point; the Wii was cheaper than its competitors. Its control scheme was also unique, and intuitively easy to use; children too young to read, and whose hands couldn't really wrap themselves around the standard XBox or PS3 gamepad, could still grasp and wave around the Wii's baton, as could older players who might suffer from, say, arthritis.

The elegance and simplicity of that interface also made it easy for non-gamers to use. You didn't have to know from experience which buttons normally did things in games, or work through a lot of tutorials to learn how to control the games. The result was a platform that could connect players from three to ninety-three; children could play with their grand-parents, allowing multiple generations of families to all equally access and enjoy gaming, really for the very first time in the history of video games.

The result was lightning in a bottle; people who Microsoft and Sony hadn't bothered to design for and market to were suddenly interested in gaming, connecting to and with the Wii in a way that they simply couldn't for the XB360 or PS3. Nintendo really couldn't make enough of them to keep pace with that early demand; stores couldn't keep the Wii on shelves. The only similar example of a game console success was Sony's PlayStation 2, which flew off shelves, in part, because it was also the cheapest DVD player on the market, in addition to being a game console.

None of that is really true of the Nintendo Switch, though. Gamers who'd previously discovered gaming thanks to the Wii have now outgrown it, and are demanding more variety and sophistication in their games, along with better performance. The gimmicky control scheme of the Switch isn't really a selling point, either, with many Switch owners ditching their Joy-Cons for the Switch's Pro controller's better ergonomics. 

Unlike the Wii, where the quality of the unit was at least comparable to that of its competitors, the Switch looks and feels cheap, with a plastic screen that gets scratched by its own included dock, controllers that need extra insulating foam installed in order to work properly, and inadequate storage that make it essentially incompatible with the digital distribution that is taking over the industry... the issues just keep coming.

And while none of these might have been crippling if the Switch were launching onto a level playing field, the market that it's launching into isn't a level playing field. Thanks to Steam's 125 million users, PC (which wasn't a factor when the Wii was launched) is dominant in the current market, and Sony's PlayStation 4 isn't just outselling the XBox One, it's also still outselling the Nintendo Switch:

Sony Interactive Entertainment sold 20 million units of its PlayStation 4 console in the last fiscal year, boosting revenue by 6% and operating income by more than 50%.

[...] 

Across the entire year, 20 million units of the PS4 were shipped, 13% more than the 17.7 million units in the previous fiscal year. Given that the PS4 had 40 million confirmed sales in May 2016, that puts the total PS4 installed base somewhere around 60 million - possibly just below, but certainly not very far away.

[...] 

Looking ahead, Sony expects PS4 shipments to decline to 18 million next year. However, it expects the GNS division to improve in general, with a 14.6% increase in revenue and a 34% increase in operating income.

Remember, Nintendo are saying that they'll be thrilled to sell 10M units in 9 months, a pace of roughly a million units a month on average; Sony, on the other hand, are forecasting sales of 1.5 million units per month for the same period, and that's down slightly from the PS4's sales performance of the previous year. Sony are starting with a 60 million lead in player base, and will probably increase that lead even if Nintendo's Switch performs as well as Nintendo is hoping.

At this point, it's worth remembering that the WiiU had a player base of 13 million when it was discontinued, because developers couldn't be bothered to make games for its different OS and weird control scheme when it didn't have even half as many users as the XBox One... which itself still has only half as many users as the PS4. And the only game of note that the Switch has going for it right now is Zelda; yes, ports of Skyrim and Shovel Knight will probably sell reasonably well to Switch owners who have nothing else to play and a desire to justify their Switch purchases, but ports of games that most interested gamers already own on other platforms aren't going to sell Switches to the skeptical.

And when it comes to Nintendo's own new-game releases for the Switch... is the obligatory new Mario game going to be a better system seller than Breath of the Wild? Will anyone care about the new Mario game that doesn't already own the Switch? Are gamers really desperate enough for gimmicky tech demos like Arms to drop hundreds of dollars on a new console just to get them?

I know that Nintendo fans (and shareholders) have a lot of hopes pinned on the Switch changing Nintendo's fortunes in the highly competitive gaming market, but... how does that happen, exactly? Unless the Switch suddenly starts selling faster than the PS4, fast enough to regain some of the ground that Nintendo lost with the failure of the WiiU, I just don't think that the Switch can ever have anything like the momentum of the original Wii.

And, failing that, I don't see how the Switch does anything but follow the WiiU into irrelevance and eventual obscurity.

[Quotes from gamesindustry.biz.]

Nintendo Switch does exactly what it says on the tin... for better and worse

The reviews of Nintendo's Switch are rolling in, and the developing consensus seems to be pretty clear: at US$360 (including Legend of Zelda: Breath of the Wild), it's really expensive price point for a portable Zelda machine.

Gizmodo's review is a pretty fair example of that consensus:

This is a system that still has no idea what it wants to be. It’s too underpowered for something expected to sit in your living room and it’s too big for something expected to be clutched in your hands for three hours at a time. In attempting to bridge the gap between home and mobile gaming, Nintendo’s built Frankenstein’s monster. While the transition between home and mobile gameplay is undoubtedly smooth, the PSP and Vita accomplished near similar feats with a much more hands-friendly device.

The only moments when the Switch seems to be more than a Zelda machine and the Joy-Con controllers seem to be more than a marketing gimmick is in the very rare occasions when the controllers and tablet combine and make gameplay more immersive.

I was using the camera function in Zelda (don’t ask) and needed to snap a quick picture of a room full of sketches of chickens. I could have used the Joy-Con’s extremely flimsy joystick to point the camera, but instead I just moved the entire Switch console and swung it around as though I were in the room with Link. It was a brief, but impossibly cool moment. As if Nintendo was saying it understood our mad desire for more immersion and was offering us a window into the world that didn’t require the goofy headset or high price point of VR.

Unfortunately it was just one moment, and until the Switch can have a lot of those moments—found in an array of games—it’s not worth it. If you already own one, enjoy your $300 Zelda machine. If you don’t currently own the Switch than bide your time and wait for more games.

Again, I ask: who is this for? It's a chunky tablet with terrible battery life, at a time when tablets don't sell anymore; it's a portable dedicated gaming system at a time when smartphones rule the scene for on-the-go gaming; it's an under-powered console that can't even play it's own marquee game as well as the WiiU can, which makes it even more under-powered than the failed WiiU was; and it's going head-to-head with the well-established PS4 in the living room with exactly 1 decent launch title, and some gimmicky controllers that aren't going to lend themselves to cross-platform game development.

Sure, Nintendo's managed to create some artificial scarcity (and line-ups) by not having enough units on sale at launch to meet initial demand, but I'm wondering now if they're not falling into the same trap that VR did. Google Cardboard and Gear VR moved millions of units because they had units available when the VR hype was at its peak, before the VR letdown set in; by the time Oculus Rift and HTC Vive hit the market, that easy money was all gone, and they've struggled to move units ever since.

Similarly, Nintendo may be missing the boat by not selling as many units as possible early, while the hype is still high, rather than waiting for a wave of reviews to hit the web that pretty much all say to wait until there are enough good games to make the Switch worth your while... something which might not happen, if the Switch's sales numbers aren't high enough, early enough, to convince 3rd-party developers to spend heavily developing for, or adapting existing games for, the Switch.

Gizmodo's review goes into a lot more detail about the Joy-Cons (and their limitations), and the rest of the available launch titles, and it's definitely worth a read, if you're still remotely interested in the Nintendo Switch. Let's face it, though: right now, this one is for rabid Nintendo fanbois and die-hard Zelda fans only. And even Zelda fans might want to pick that up on the WiiU instead. Even if you need to buy a second-hand WiiU to play it on, it'll still cost you a fraction of what the Switch will.

Yes, the PS4 is selling well. No, that doesn't mean that this isn't still the last console generation.

I've been running into a particular argument every so often, lately: that the PS4 is selling well, therefore consoles are still as big as ever.

The fact that Sony themselves say that they're trying to compete with PCs and not XBoxes; the fact that Microsoft has straight-out said that the the concept of console generations is passé; the fact that this generation of consoles were all very PC-like, except for the WiiU, which flopped; the fact that none of the current generation of consoles is anywhere near Steam's 125 million users; none of that matters to these console evangelists. PS4's exceptionally good sales must be the only meaningful data point, right?

I disagree. And I'm not the only one.

From Business Insider:

The PlayStation 4 is killing it. Sony announced on Wednesday that it has sold 50 million PS4 consoles since the device launched in November 2013. All signs point to that being a good ways ahead of Microsoft’s Xbox One and Nintendo’s Wii U, which is no longer being made.

Considering that the PS4 arrived at a time when many onlookers said the home gaming console was in its death throes, that’s a very strong figure. But as this chart from Statista shows, it’s still a long way from its predecessors.

The PS4 has been on the market for a much shorter time, but it’s hard to say if it’ll ever reach the summit. The PlayStation 2 was many people’s main DVD player, the Wii hit the pre-smartphone casual gamer jackpot, and the original PlayStation was a breath of fresh air that stayed on sale for nearly 12 years.

[...]

It's easy to forget that the PS2's record-setting sales were due, in large part, to PS2 being a cheap DVD player, and not just because it was a great game system. It also bears mentioning that neither XBox One nor WiiU made this "top 10" list, having been beaten by Super Nintendo, Nintendo 64, and Sega Genesis; PS4 is still some distance behind the original NES.

More interesting, though, is how this console generation compares to the last. PS2 is still the all-time highest selling console, beating the #2 finisher (the original PlayStation) by a whopping 54 million units, but the next three spots on the list are all from the last console generation. Nintendo's Wii was the clear winner of generation 7, but it was only 16 million units ahead of the PS3, which actually came from behind to edge out the XBox 360. That's 273 million consoles, pretty evenly distributed among the three big console manufacturers, in the last console generation.

This generation sees the PS4 at 50 million, followed by the XBOne at about half of that (Microsoft stopped talking about their sales numbers when the PS4 was at 40M and the XBOne was at 20M, and there's no particular reason to believe that they've closed the gap since). And the WiiU was selling only half as well as the XBOne when Nintendo stopped making it, leaving only 13.32 million units in circulation, total. That means that the consoles of this generation have managed only 85 million in sales or so, combined, with PS4's gains coming at the expense of its competitors.

Meanwhile, Steam has an estimated 125 million users... and has every reason to believe that those gamers will continue to game on Steam for the foreseeable future. After all, it's not like their current PC titles will fail to work on future PCs, meaning that they don't have to start from scratch building an entirely new library of games every few years. That gives Steam, and PC gaming generally, a kind of momentum that consoles can't match. No wonder Sony is making the PS4 as PC-like as possible, while Microsoft's XBOne straight up runs Windows 10 now.

XBox Scorpio is still coming, as is the Nintendo Switch, and both will sell millions of units when they launch, but I'm not expecting either offering to change the overall trajectory of this console generation any more than the PS4 Pro did. The movement away from consoles (which run on exclusivity) and towards Steam and Android (which run on open-ness) seems pretty clear by now; even the AAA PC games publishers have been unable to break this trend, with "walled garden" services like Origin and Uplay failing to lure users away from Steam; it seems like even PC gamers are only using those services to install the games that they're buying elsewhere, and not as the portal for all their gaming.

So, is this still the last console generation? I think it is, and I don't think that PS4's exceptional sales numbers change that, simply because PS4's sales are the exception, when it comes to console sales, and not the rule, while Steam continues to strengthen its hold as gaming's #1 platform, a hold that even Microsoft now seem unable to break.

About that Nintendo Switch commercial...

Just for fun, let's compare this: 

to this: 

Apart from the radically different video quality (and, goddamn, does 480p ever look like shit now), what do you see?

In the original Wii ad, I see a memorable sales pitch to families, about families. I didn't have to think for more than a second about how to find the original Wii commercial on YouTube; "Wii would like to play" is still stuck in my head today, for fuck's sake. The games in the ad are nothing special, in hindsight, but damned if everybody playing them isn't having a blast, regardless of their ages. There were plenty of games on display, too, that nobody had seen before (you know, launch titles).

The Wii's ad made 100+ million people want the Nintendo Wii. Hell, it made me want a Nintendo Wii; I almost went out and bought one of these things, back in the day.

In the Nintendo Switch ad, I see none of that. It's well-produced, to be sure, but today's jaded media consumers are well used to that, and the Switch itself isn't doing anything in the ad that people can't already do, with devices they already own. I see ad-people going to ad-places where there are tons of fun ad-things to do, which they then ignore completely, instead (improbably) pulling out their Switches to play Splatoon. 

Yes, Splatoon. Not only was there not a single game shown in the Switch ad that we haven't seen already, some of them (like Skyrim) are years old. They're popular, yes, but they're not going to sell an expensive, experimental new console design.

It brings me back to a question that I asked near the end of my previous post. Who is the Switch for, really? I've watched their 3-minute ad a couple of times now, and still can't answer that. 

This is lifestyle advertising; like every beer commercial ever made, it puts a lot of attractive people together on screen along with the product, and has them pretend to have fun that's at least tangential to the product, and hopes that you end up wanting to buy the product. In a purely technical sense, it's not a bad ad; it's well-produced, the music is good, and lifestyle advertising has sold a lot of beer over the years, so maybe there's something there. But I didn't see anything in that 3-minute video that made we want to know more about the Switch. 

I just don't care, at all, about Nintendo's Switch, and 3 minutes of highly-polished advert didn't change that in the slightest. I know that some people will get very excited, so the jury's still out on whether the Switch and its marketing campaign will succeed or fail, but as far as I'm concerned... it's a fail. Sorry, Nintendo fans.

Microsoft says this might be the last console generation

It's more of a confirmation than anything else, but this really is looking more and more like it'll be the last console generation.

From Engadget:

"The future of Xbox looks a lot like PC gaming." That's what Engadget editor Nathan Ingraham wrote after speaking with Phil Spencer earlier this year. Spencer spoke about wanting to see a steady stream of hardware innovation rather than seven-year gaps between consoles, citing the smartphone market as inspiration. Greenberg went one step further. In his opinion, this is the last console generation. "We think the future is without console generations," he said, explaining that Project Scorpio was a "big bet" that gamers will embrace that notion.

Q: The Xbox platform has moved forward to have such regular updates and new features coming all the time. It kind of seems like hardware is going the same way. There was a very short gap between the Xbox One and the Xbox One S, and we're probably talking an even shorter gap before Project Scorpio. Do you see a future of console upgrades continually happening? Is this the last console generation?

Greenberg: I think it is. ... For us, we think the future is without console generations; we think that the ability to build a library, a community, to be able to iterate with the hardware -- we're making a pretty big bet on that with Project Scorpio. We're basically saying, "This isn't a new generation; everything you have continues forward and it works." We think of this as a family of devices.

But we'll see. We're going to learn from this, we're going to see how that goes. So far I'd say, based on the reaction, there appears to be a lot of demand and interest around Project Scorpio, and we think it's going to be a pretty big success. If the games and the content deliver, which I think they will do, I think it will change the way we think about the future of console gaming.

Emphasis added, natch.

"Greenberg" is Aaron Greenberg, Microsoft's head of Xbox games marketing, who also tried hard to put a brave face on the way Sony handed Microsoft's ass to them, this console generation ("It's been a good industry for both of us, and we're innovating in different ways"), and some clarification on whether Scorpio will get console-exclusive releases ("It's one ecosystem -- whether you have an Xbox One S or Project Scorpio, we don't want anyone to be left behind"), but the headline of this piece just leaped out at me.

In other news: Told you so.

Sony is still selling PS4's (although Nintendo's given up on the Wii U completely), and it still remains to be seen how Sony's "Neo," Nintendo's "NX," and/or Microsoft's "Scorpio" are received by consumers, many of whom just either bought a gaming system or didn't want one, but the future of gaming really is looking more and more like PCs.

Nintendo's unrealistic expectations

Apparently, Nintendo thought that the Wii brand name was worth 100 million units in sales, just on its own. From gamesindustry.biz:

Nintendo president Tatsumi Kimishima commented, "In an internal sales representative meeting, someone projected that we would sell close to 100 million Wii U systems worldwide. The thinking was that because Wii sold well, Wii U would follow suit. I said that, since the Wii had already sold so well, we need to clearly explain the attraction of the Wii U if we are to get beyond that and sell the new system, and that this would be no easy task. I was responsible for selling the Wii U, and I knew what was good about it, so I talked with those in charge of sales about the importance of conveying the attractiveness of Wii U to consumers."

Shigeru Miyamoto still believes in the Wii U, but for now the top brass at Nintendo recognizes that it must do a better job with the NX. "It is true that we are having a hard time with Wii U sales, due to its price and the added fact that tablets are distributed free of charge in the market. I do think Wii U continues to be attractive as a media device that changes life in the living room. A similar challenge continues with NX," Miyamoto noted.

You know, the more I hear them talk about it, the more convinced I become that Nintendo still have no idea what people liked about the Wii. At all.