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<html><body><div>Lu-Hai Liang is a U.K.-based writer.It is hard to believe it now, but the initial reaction to the October 2016 unveiling of the Nintendo Switch was one of skepticism. Investors were spooked by the console's retail price and deemed it a risky proposition. Upon release, five months later, the usually enthusiastic gaming press were also hesitant as reviewers noted the lack of games, especially from third-party developers.The concerns were warranted. The Switch was the follow-up to the disastrous Wii U, which sold very poorly, confusing consumers with its odd design. Its predecessor, the Wii, had been a huge hit, but Nintendo had previously suffered for its quirky approach to hardware with the N64 and GameCube. Investors like safe bets, and Nintendo rarely does safe.It is now obvious Nintendo got it right, as the Switch has become the company's most successful home console. As of June 30, the Switch had sold 143.42 million units, bested only by the portable-only Nintendo DS and Sony's PlayStation 2 in lifetime console sales. But seven years is a long time in consoles and as Switch sales slow expectations turn to its successor.This is where new risks present themselves. Such has been the success of the Switch, with its clever hybrid design a selling point, that it has drawn rivals. Valve's more powerful Steam Deck is the newish kid on the block, and competitors are emerging, seemingly by the day. It is rumored that Microsoft could also be entering the handheld space. At the other end of the market, Sony announced last week that in November it will release the pricey AI-equipped <a href="https://asia.nikkei.com/Business/Media-Entertainment/PlayStation-5-Pro-with-AI-based-upscaler-to-be-launched-Nov.-7" target="_blank" title="">PlayStation 5 Pro</a>.My concern is that the Nintendo Switch 2 -- the unofficial name used by analysts -- could be the road to stagnation, as the uniqueness proposed by its predecessor is no longer so novel. The new console is expected to continue in the vein of the Switch; offering a more powerful processor and graphics chip, but with a similar design, and could even be backward-compatible with the older console's games.Market conditions are not favorable, either. Game sales have slowed. Industry layoffs have been abundant. Studios are shuttering and development costs are ballooning. The state of the games industry is rather different from 2017. Nintendo itself has changed, with a greater interest in multimedia and even theme parks. Yet some things remain the same.Players are still waiting for the release of Rockstar's Grand Theft Auto VI. Pokemon games still sell really, really well. The exact nature of the Switch's successor is shrouded in mystery, with few confident they can accurately predict Nintendo's decisions. The industry is eagerly awaiting 2025, with the release of GTA VI and the new Nintendo console expected to bury the misery of 2024 and refresh the market. 
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 Characters Mario and Luigi are seen at the grand opening of the Super Nintendo World at Universal Studios Hollywood in Los Angeles in February 2023.



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The Nintendo Switch was helped by stellar titles. A couple of these arrived early: The Legend of Zelda: Breath of the Wild, and Mario Kart 8 Deluxe, which were in fact evolved from Wii U games. Later, Pokemon Sword/Shield and Animal Crossing: New Horizons maintained an enviable momentum. As the Switch sold like hotcakes, third-party developers started porting their games in earnest -- which has not always been the case with Nintendo consoles -- and expanded its allure. Consoles live and die by the quality of their games, but the portability of the Switch seemed to give it an X factor. Players took their consoles on subway commutes, to cafes, even to workplaces, and thereby advertised its appeal.While the Switch's successor may struggle to repeat its stratospheric success, it is always a fool's game to dismiss the Kyoto-based company, not least as it hit on a prescient strategy. While PlayStation and Xbox have been engaged in an arms race, releasing more and more powerful machines, Nintendo chose to disengage from this. That has proven to be a discerning decision.Game development costs have soared as the time required to make games, and the people needed, have risen in line with greater graphical fidelity. In Hollywood, production budgets rose as superhero and fantasy movies required more special effects and computer-generated imagery. Something similar has occurred in video games, but Nintendo chose to prioritize gameplay rather than raw graphical performance.As Sony, Microsoft and other game publishers have grown, acquiring more studios, Nintendo has stayed lean, with a company culture focused on creativity. Staff retention is high, so knowledge is passed on and developed, and there is a craftsman-like dedication to sparking joy. Although, like other Japanese corporations, Nintendo is male-dominated and wages are low compared with many Western studios, the company's devotion to innovation to maximize fun for the player often leaves competitors awed. The physics in the highly acclaimed The Legend of Zelda: Tears of the Kingdom was a case in point.Nintendo has traditionally been cautious in terms of expansion, even as it came under pressure to explore smartphone games and multimedia. But this has changed, as it has begun to work with Hollywood on co-productions. The 2023 Super Mario Bros. Movie was a huge hit, becoming the first video game movie to gross $1 billion worldwide -- only Barbie took more at the box office last year. A sequel is confirmed and other movies are also in development.It is a smart strategy. Movies and TV shows have a tendency to boost sales of the games they are based on, and they introduce a new generation to characters often invented decades ago. In the realm of physical attractions, Nintendo icon Shigeru Miyamoto has been heavily involved in designing Super Nintendo World, which are areas in Universal Studios theme parks. Two have been completed, in Japan and California, with a further two under construction in Singapore and Florida.In July, Nintendo set a benchmark as the Switch became its longest-running console without a successor, surpassing the 1980s-era NES. But the wait could be worth it. "Nintendo has recognized that a generational transition brings risk to it," James McWhirter, a senior analyst at Omdia, told me."Especially as we're expecting Switch 2 to feature more continuity with its predecessor than Nintendo has done, transitioning between console generations in the past. Having an impressive slate of exclusive games in its launch year will be imperative to convincing players to adopt its new platform."But as McWhirter observes, the Switch 2 will be competing with GTA VI in the latter half of next year. Nintendo has a cultish following that has grown over the seven long years of the Switch's life. While these fans are hungry for something new, it will be difficult to repeat the novelty and high-quality run of games the Switch presented. To discount the Kyoto veteran from rising to the challenge, however, would be unwise.
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Don't rule out Nintendo making Switch 2 a hit

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