Nintendo's Making Its Biggest Bet in Years With Switch

  • Skepticism of new console leaves little room for mistakes
  • Developers suggest plans to add different uses for Switch

Nintendo Co. is making its biggest bet in years with Switch, a new console aimed at unifying the worlds of mobile and home gaming that will go on sale this week.

To chart new territory with the gadget, the Kyoto-based company handed control of development to a team of three managers more experienced in software rather than hardware. In a departure from previous consoles, Switch was created without the direct involvement of Shigeru Miyamoto, Genyo Takeda and other veterans known for introducing Super Mario and the Wii to the world.

Nintendo Co. Switch game console.

Photographer: Kiyoshi Ota/Bloomberg

Like the Wii, Nintendo is betting that consumers aren’t looking for a machine that’s faster or flashier, but something that changes the experience altogether. The Switch is essentially a tablet sporting wireless controllers that can be used anywhere, on its own in the park or plugged into the living room TV. That versatility opens the door to more inventive software that’s aimed at distinguishing it from Sony Corp.’s PlayStation, Microsoft Corp.’s Xbox and a plethora of mobile game apps.

“The Switch is fully-loaded with many more capabilities that will allow for the kind of content you would expect from Nintendo, and I’m not just talking about games,” said Shinya Takahashi, 53, the managing executive officer who oversaw Switch’s development. “Anything is possible.”

It’s a big risk, and one that so far has investors worried. Nintendo shares are down 11 percent since mid-October, when the company first unveiled the concept behind the Switch. The stock failed to recover even after more details, including the price, were released in January.

That leaves little room for mistakes after the Switch hits stores on Friday, March 3. Looming over the new team is the failure of Nintendo’s last console, the Wii U, which was its worst-ever selling home system. On top of that, last year’s long-awaited entry into selling its own games for mobile devices is off to a shaky start.

The challenge this time around is that people are used to playing games on smartphones and TVs, fueling skepticism over whether Nintendo will find a market for a combined experience. The Switch’s emphasis on playing with others face-to-face also goes against today’s dominant trend of online multiplayer gaming and streaming, which are more focused on remote digital interaction between people.

Shinya Takahashi, left, and Yoshiaki Koizumi.

Photographer: Akio Kon/Bloomberg

“They’ve been running two versions -- handheld and console -- for a long time; here they’re finally merging the two, so just one team was working on a common goal,” said David Gibson, an analyst at Macquarie Securities. “Whether or not that product survives we’ll see.”

Takahashi, who along with 48-year-old Yoshiaki Koizumi and Koichi Kawamoto led the Switch team, is aware of those risks. But he said it’s also a result of relying on the instincts of a younger team. “Internally, we opened development in a way that was unthinkable until now,” he said. “Decisions previously made by senior people were entrusted to a young group closer to the front line. This created an environment where younger staff could share their opinions.”

Work on the Switch began in early 2014, about a year after the Wii U’s debut disappointed fans. Grappling with the poor reception, Nintendo’s top management handed development to Takahashi. An art school graduate, the 28-year company veteran was known for his people skills and expertise in 3D graphics, including his work on the company’s first 3D titles like Wave Race 64 and Pokemon Stadium.

Takahashi quickly brought in Koizumi, one of Nintendo’s most-respected game designers who was involved in numerous classics such as The Legend of Zelda: Ocarina of Time and Super Mario 64. Kawamoto is known for some of the company’s more eccentric projects such as Luigi’s Mansion, Made in Wario and brain-training games.

The trio assembled a team of about two dozen employees, mostly in their 20s and 30s and experts in programming, leading to decisions such as making sure the machine worked seamlessly with popular game-development tools such as Unity and Unreal Engine. The goal was to avoid the pitfalls of the Wii U, which failed to attract third-party developers due to its convoluted architecture.

“It’s the first time the software guys got to be in charge of the hardware,” Koizumi said.

As the device took shape, the team repurposed a large conference room at Nintendo’s headquarters into a carpeted living room. They met daily to sketch out ideas and test prototypes in various positions, such as sitting on balance balls or lounging on sofa seats. While the concept of combining home and portable gaming took hold early on, the group’s background proved to be a challenge as they sought to include more hardware features.

As a result, the Switch is jam-packed with everything from heart-rate sensors to high-definition vibration mechanics, which has inflated the device’s price to $299. Several gaming reviewers who tested the system have also reported connectivity problems with its Joy Con controllers, raising questions about hardware quality. Nintendo declined to comment on the issue.

Still, excitement has been building among gamers. Early reviews have raved about how smoothly the Switch transitions from TV to portable mode. Others have praised the machine’s more adult-oriented black-and-gray design, a departure from Nintendo’s previous toy-like aesthetics. Reviewers have also praised the decision to include two controllers, which raises costs but encourages people to play together.

Nintendo still hasn’t revealed the full extent of the Switch’s capabilities, Takahashi said, suggesting that the detachable controllers could lead to more hardware innovation later on. The console’s tablet could also be slotted into a head-mounted display for use as a virtual-reality device, according to a patent application filed by Nintendo in December.

Various accessories for Nintendo’s Switch.

Photographer: Kiyoshi Ota/Bloomberg

One scenario may include health-care applications, including infrared cameras in the Joycon controllers that can track vein patterns to measure a user’s pulse, the patent showed. Nintendo has been quietly developing its “Quality of Life” business since 2014, which includes measuring data on sleep and breathing. President Tatsumi Kimishima said last month that the company continues work on the initiative, but had few details to share.

“The removable controllers make it a very unique structure,” Koizumi said, smiling. “For now, we’ll just let the people enjoy imagining what that will mean.”

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