The holiday shopping season is in full swing. And it couldn’t be more important for Nintendo (NTDOY). The video game giant has set a self-imposed goal of selling 20 million Switch consoles by the end of its fiscal year, which wraps up in March 2019. But as of October, the company had sold just 5 million systems.
“The holiday selling season — October, November and December — critically important to our company,” Nintendo of America President Reggie Fils-Aime told Yahoo Finance.
The Americas are the company’s most successful region by revenue, and the holiday season is the region’s biggest driver. “We typically do, in the Americas, about 60% of our revenue during that time frame. The reason that it’s so significant is first, our products make great gifts. Whether you’re talking about Nintendo Switch, whether you’re talking about Nintendo 2DS, we really do well with that gift- giving occasion,” Fils-Aime said.
It’s nearly Black Friday, and Fils-Aime is ready to sell, sell, sell! In a hotel suite overlooking Manhattan’s Central Park, Fils-Aime put out a spread of Nintendo’s holiday offerings, including a Switch bundled with “Super Mario Kart 8 Deluxe” for $299 and a Nintendo 2DS with “Super Mario Maker” for $79.
But with heavy hitters like “Marvel’s Spider-Man” and “Red Dead Redemption 2” helping to push sales for Sony’s (SNE) PlayStation 4 and Microsoft’s (MSFT) Xbox One, Nintendo has its work cut out for it in the coming weeks.
A comeback from the brink
But it’s a no small miracle that Nintendo is even in a position to sell 20 million consoles in a year. It wasn’t long ago that the company was almost written off entirely. Its Wii U console was a commercial flop, and sales of its traditional handheld systems were slowing.
The Switch, however, made Nintendo the comeback story of 2017— and a force to be reckoned with in 2018. But as Fils-Aime explained, the lessons of the past aren’t lost on the company.
“With innovation there is always risk,” Fils-Aime said. “And as one of our company presidents said, ‘We run toward risk, not away from risk.’ With risk, sometimes you have tremendous success, sometimes not so much. One of our other company presidents one time said, ‘When things are going well, don’t get caught up in that, and when things are going poorly don’t be too sad about that either.’ ”
The gaming industry, though, is in flux. There are more gamers than ever before — and they’re more connected. And Nintendo isn’t one to jump on the latest trend without studying it intently, which can be to the company’s detriment. The company’s online offerings have historically been behind the curve compared to Sony’s and Microsoft’s.
Gaming in the cloud
But Nintendo’s hesitance may be changing. The company is investing in game-streaming technology, which allows players to stream games Netflix-style to virtually any device with an internet connection. The tech will reduce the need for consumers to buy expensive hardware, while allowing them to access any game they want, as long as the developer has a deal with Nintendo.
Sony has its own PS Now service that lets players stream games, while Nvidia (NVDA) offers its GeForce Now streaming service. Microsoft and Google have also announced that they’re working on similar offerings.
Nintendo, Fils-Aime explained, is currently testing the technology in Japan, since that country’s internet infrastructure is more robust than that of the U.S. The hope is to ensure that streaming is as rock solid as possible if and when Nintendo begins offering the service to consumers.
“We’re certainly observing everything that’s happening in the western markets form a streaming technology standpoint,” Fils-Aime said.
“I myself have tried the Google experience, and so it’s something that absolutely we’re all looking at. In the end though, it has to be a great experience for the consumer, and the Google experience that I had, there’s a bit of lag, and when that happens, as a consumer, you get frustrated,” he said.
It would also stand to reason that if Nintendo were to deploy a streaming service of its own, Switch owners would be able to play the kind of resource intensive games that the PS4, Xbox One and high-end gaming PCs can only provide.
Playing well with others
Nintendo has also jumped into the cross-play arena, a move that allows “Fortnite” players who have a Switch to get online and play against Microsoft Xbox owners. That’s something that would have been virtually unheard of in previous years.
To be clear, Nintendo and Microsoft aren’t necessarily working together. Rather, they are working with game developers to ensure that they have the tools needed to enable cross-play.
And it’s not out of the kindness of Nintendo’s heart that it enabled cross-play compatibility. It’s a way to ensure that gamers who want a Switch don’t avoid purchasing one because their friends have Xboxes.
After taking serious heat from the gaming community, Sony eventually agreed to enable cross-play compatibility as well.
Nintendo isn’t resting on its laurels, either. In his final pitch for the company, Fils-Aime seemed to channel Steve Jobs when discussing how Nintendo will move forward.
“You need to run the company on an even keel, and you need to be thinking about the company long-term and how to drive your next innovation,” he said. “And so as I look at our current performance, and I’ve been with the company for 15 years now, our mentality remains the same. We are going to continue to innovate.”
Fils-Aime points to the company’s Nintendo Labo cardboard crafting setup, as proof that the video game giant is set on continuing to try new things even if, like the Wii U, it backfires.
“The consumer didn’t know that there was fun to be had with cardboard kits in an interactive experience, and the ability to create your own types of experiences using cardboard,” he said.
“But we delivered it, and the consumer went wild. The consumer didn’t know that they wanted a gaming system that they could play on their big screen TV, but then take it with them and never leave the game behind. But we did that and the consumers want more.”
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