Nintendo's Niche in the Gaming Market: A Look at Sales, Subscriptions, and Hardware
The Big Three (Nintendo, Playstation, and Xbox) control 100% of the global console market. In addition, they also control 29% of the global gaming market. However, while Playstation and Xbox are in direct competition with one another, Nintendo holds a niche in the gaming market that allows the company to indirectly compete with the rest of the Big Three.
Subscription information
As of September 2022, there are approximately 36 million Nintendo Switch online players. This is a 12.5% increase from September 2021 (32 million) and a 38.46% increase from 2020 (26 million). Source: Statista
The total annual gross revenue for Nintendo, if all of these subscribers chose the 1-year bundle for Nintendo Switch Online, would be $719.64 million USD. However, this number is probably greater because people are less inclined to sign up for yearly memberships, even if it makes financial sense, and the other options are far more expensive. The additional subscription choices are as follows (Source: Nintendo):
Game Sales Information
The typical business model for the majority of the gaming platform sector entails letting outside developers sell games on your platform in exchange for a portion of the revenue. The PlayStation and Xbox game pages, as well as Steam, Epic Games, and Roblox, are all examples of this tactic. The benefit of this approach is that it does not incur the high costs associated with game creation. However, it also entails giving up a sizeable portion of prospective income to compensate these outside developers. Additionally, the average pricing of these games will decrease due to the fact that third-party creators often control the game cost and they are in competition with one another.
Nintendo has a clear advantage over the rest of the game industry as a result of these faults. Even while certain outside games are permitted, Nintendo either owns or collaborates with third parties to generate the great majority of well-known titles on the Switch. Only 12 of the 74 Switch titles with the best sales are created by publishers other than Nintendo. Wikipedia is the source. As a result, compared to other console manufacturers, Nintendo has a lot more influence over the price of games on their platform. Nintendo also gains from this level of control since it can time the release of its games on the platform to prevent direct competition.
Over 994 million copies of Switch games had been sold as of December 2022. I was able to roughly estimate the number of newly released games that were popular using the list of best-sellers. Nine of the best-selling titles were released in 2022.
This totals around 66.42 million copies sold worldwide. Even though there haven't been any significant hardware updates in about 5 years, game developers continue to create titles that are good enough to make the best-sellers list.
Nintendo's software sales have largely remained consistent, albeit slightly higher at 1.8%. In 2022, 235.07 million software items were sold worldwide. Sales of the Nintendo Switch decreased by 20% between 2021 and 2022, from 28.83 million units to 23.06 million units.
Kirby's Return to Dreamland Deluxe
Early this year (02/24/23) saw the release of Kirby's Return to Dreamland Deluxe, which saw 189,031 copies sold in Japan. This occurred after Kirby and the Forgotten Land, which as of December 31, 2022, had sold 6.12 million copies globally.
When I spoke about the Dreamland Deluxe with one of my classmates, a high school freshman who enjoys playing Nintendo games, he responded that it was only popular for "A day, then nobody talked about it since."
The Legend of Zelda: Tears of the Kingdom – Official Trailer #1
Another acquaintance claims that the upcoming Zelda: Tears of the Kingdom is the most eagerly anticipated Nintendo game right now. It will be the follow-up to Zelda: Breath of the Wild, which was published in 2017 and has a global sales total of 29 million units. On May 12 of this year, Tears of the Kingdom will be made released.
Hardware Situation
In terms of hardware, Nintendo is significantly outmatched by the rest of the console market. Nintendo's Switch was introduced in 2017, as opposed to key competitors Microsoft's (Xbox) and Sony's (Playstation) current-generation flagships, which were released in 2020. The Nintendo Switch Oled, an updated model that was produced in 2021, wasn't much better than the first gadget. Although the Nintendo Switch Oled does have a larger screen and runs games more quickly, there isn't much of a difference between it and the Switch in terms of gameplay.
In comparison when Xbox and Playstation release newer generation consoles, they are normally bounds ahead of the older model. This is accomplished through various changes, including design changes to the new console.
(On the left, PS4. On the right, PS5)
In addition to hardware improvements. However, the utilization of exclusive games is the key improvement that gives new-gen consoles an advantage over older versions. For instance, Sony also published the Spiderman video game at the same time as the PS4. Spiderman could only be played on a PS4 and required one. However, when the PS5 was made available, Spiderman could also be played on that system. Additionally, Spiderman: Miles Morales, a new game, was released. The PS5's better hardware was utilized by this new game, which could only be played on the PS5, to enhance graphics and gameplay.
By using exclusive games, the console companies push consumers towards always buying the newest console, even if the old version still works fine. Nintendo doesn’t use this tactic, however. Any game that can be played on the Switch can also be played on the Switch Lite and the Switch Oled. Without these exclusive games, many consumers see little reason to pay more for a new Switch. Since the Switch and Switch Oled look so similar, some people (including myself) didn’t even know that there was a difference between the two Switches other than handle color.
Pictured below are the Nintendo Switch Oled and Nintendo Switch.
The Switch is miles behind its rivals in terms of specs because of its unusual design. This is due to the portable option's necessity for mobility, which means the entire console must occupy significantly less space. Additionally, a built-in screen is necessary with this design. The Nintendo Switch has a built-in screen, unlike the Xbox and PlayStation, which are stationary consoles that must be connected to screens in order to be played. Additionally, because it's a portable device, it has a much lower profile than the other consoles. Due to the Nintendo Switch Dock, which comes with Switch purchases, the Switch is still regarded as a console. Despite this innovation, the Nintendo Switch's hardware is more like a portable console that can be used with a TV.
Because Nintendo is so far behind Sony and Microsoft when it comes to traditional consoles (needs a TV or other screen to be used), it would most likely be a mistake on their part to create a non-portable Switch variant or another Wii console. The traditional console market is already incredibly competitive, and Nintendo has already carved out an avenue that has been working extremely well for them. Because the Switch is portable rather than a plugin device, Nintendo has essentially cut out the largest competitors in the console market. Were Nintendo to re-enter the traditional console market, they will go from competing against rip-offs of their own device to industry titans like Playstation and Xbox, while being years behind their competition technology-wise. Many of my friends who own a Nintendo Switch also own a traditional console, but not more than one traditional console. Even though a handheld console and a traditional console are extremely similar, they are different enough that when shopping for a gaming station, it's not impossible to reason yourself into buying both a Switch and a traditional console. However, it is much more difficult to buy more than one traditional console, since disregarding games they are functionally almost identical.
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Conclusion
Given the time since the Nintendo Switch’s release, a new console should be released from Nintendo around this year or next. In my opinion, they don’t really need to make some huge new changes with the next-gen device. Because it's been nearly 6 years since the original switch, and 2 years since the Oled version, some improvements could be made fairly easily, through simple hardware upgrades, like improving the motherboard, CPU, GPU or RAM. Looking online, I found several issues the Nintendo Switch suffers from, like poor storage. However, most of these issues have fairly trivial solutions, like using a memory chip. Additionally, other issues were addressed in the Oled model, such as poor speaker quality. Despite this, there are some quality-of-life upgrades Nintendo could take advantage of. For example, many people complain about the JoyCons (controllers) being of poor build quality. Since it's the thing people are holding most of the time, it's extremely important to build it well. Sony took advantage of this in the PS5, with improved haptics and controller quality being one of the improvements many people noticed. Nintendo could also do basically the same thing, and use higher-quality materials for the JoyCons, use better buttons, and improve the haptics in the controllers.