Posted by: seanmalstrom | April 8, 2017

Bloomberg: Traders think Switch will outsell Wii

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Above: Master Malstrom

Here’s the link:

Traders are sending signals that Nintendo Co.’s newest console Switch may be on its way to becoming a bigger hit than the Wii, the company’s best-selling home console of all-time.

But on the January 13, 2017 conference, the most experienced of gamers, our good friends, the hardcore of the Internet, declared the Switch was ‘dead on arrival’. The hardcore gamers missed the NES revolution, the Gameboy revolution, the DS and Wii revolutions, and now this.

But if you were reading this site at that time, you read, “Small bull, then big bull.” When Nintendo President Kimishima said that Switch to outsell the Wii, the Internet laughed. But at this site, you read that Kimishima was probably right.

Why?

The DS and Wii will never be fully understood because of the ‘casual gamer’ kindergarten explanations written by those who do not understand Blue Ocean strategy or Christenson’s disruption.

The Switch will never be fully understood by ‘analysts’ because they refuse to understand the portable gaming console market. The Switch cannot be understood without understanding the entire history and future of portable gaming.

“But Nintendo says Switch is a home console.”

It is when they sell you $60 games. Analysts have ignored the handheld market. Why? Because Sony cannot win in it. Therefore, it ‘doesn’t matter’. In the handheld market, there is only one victor: Nintendo. Sega, NEC, Neo Geo, Atari, Sony… all made competing handhelds. All failed against Nintendo.

Instead, the focus has been on the home console market which has been Sony majority but not Sony domination. In the handheld side, it isn’t even close. Nintendo has full scale domination in the handheld game market. Now, Nintendo has a monopoly. The analysts do not see that.

Since the analysts do not see handhelds, they do not see Japan being handheld gaming market dominant with home consoles declining. They also didn’t see Japan being smartphone dominated before the iPhone was ever invented. Only after the iPhone did they see smartphones.

Worse, the younger demographics are growing up gaming on handhelds like smartphones and tablets. To them, a handheld is the norm. Gaming on TV is not the norm. I see the traditional game forums filled up with guys talking about being a parent and such… They have become old. They are not the future.

With Microsoft dropping out, we have traditional home consoles with Sony and handheld consoles with Nintendo (but Nintendo’s consoles can be home consoles too). Switch is a perfect bridge console. One has a future, the other does not. I see the home console ultimately going away. I see the Switch as the future for all consoles. And Sony doesn’t know how to win in a handheld market (though that might change if Sony is forced to put all their software development onto a handheld as opposed to splitting up development on two consoles).

Can the Switch outsell the Wii? Certainly. Due to Switch’s mobile and personal nature, there will be multiple Switches per household. There was only one Wii per household. But there were multiple DS systems. I expect Switch to perform similar to DS… in terms of momentum. I do not think Switch will get to DS numbers due to different macro-economic realities.

DS had a great launch and then, after a year, blew up in Japan, few months later, blew up everywhere else.

Switch has a great launch, and I expect Switch to be in stock soon enough at stores. But then Switch will blow up again… this time with MASSIVE numbers. It may be this holiday or later.

I also think a significant part of Switch’s success are the physical cards. There is growing gaming angst over the disc-then-install-and-download method of today.

“But what about Western AAA gaming??? OMG!”

Western AAA gaming did not make Atari 2600 a success. Western AAA gaming was not responsible for the success of NES (Super Mario Brothers and Japanese games) or Gameboy (Tetris, a game from Russia and considered ridiculously primitive during its time). Western AAA gaming did not make the classics of the Super Nintendo. Western AAA gaming did not create the DS and Wii phenomenons. So why would Western AAA gaming be responsible for the Switch rising?

The real question is why are investors pouring money into AAA gaming when it isn’t bringing in the returns anymore? How can AAA gaming be considered AAA anymore?

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