Nintendo Switch: Stocks Fall After Recent Reveal Video — Are Hybrid Consoles The Future Or Just Another Nintendo Flop

Nintendo gave us a look at the Switch last week, and like previous Mario-and-company consoles, it showed off its innovative design. When the Switch was first announced, Nintendo stock rose 3.3 percent, which is good for a company that often seems to struggle to keep third place in a three-way race. However, after the recent video reveal, stock in the company dropped 7 percent. According to TechSpot, critics and consumers reacted well to the video, but enough investors bowed out to cause the stock price to dip.

The company is pushing the envelope of console gaming. The Nintendo Switch offers several innovative features that are not found on any other gaming system. Rather than pursuing two different markets, Nintendo is looking to combine the console and portable gaming markets by offering up a hybrid portable console.

The Nintendo Switch features a tablet-like screen that sits in a charging cradle when not in use. While in the cradle, the Switch acts as a regular console, allowing users to play games on their television with a wireless controller. However, the controller comes apart, and the control pieces can slide onto the cradled screen, instantly transforming the console into a handheld portable gaming unit. If the video is accurate, this transformation can occur without even turning off the game. The Joy-Con Grips, as Nintendo calls them, can also be used while detached from the screen, making for a near weightless game controller. Additionally, each Joy-Con can be used independently on specific games to allow a second player to join in the action.

The Nintendo Switch is taking gaming in an entirely different direction than Sony’s PlayStation and Microsoft’s Xbox. It is a new and seemingly exciting direction for gaming that its competitors are certain to be paying attention to and planning similar designs, all while watching for the mistakes that Nintendo is sure to make.

However, the video apparently failed to impress investors, as evidenced by the immediate drop in share price. It was already known that that Switch would not boast as much power as the PS4 or Xbox One. In fact, when these details were revealed, Nintendo stock was on the rise. It was also known that the device would not be backward compatible, but that did not negatively affect investors. So what did investors see in the video that turned them off?

It is no secret that with the exception of the Wii, Nintendo has always struggled to keep up with the PlayStation and Xbox. The Wii was the first console to offer motion-sensing controllers, which Microsoft and Sony mimicked to some extent in their follow-up consoles. This ingenuity made the Wii a real contender against its competitors and led the company to outsell Xbox 360 and PlayStation combined, but it was short lived.

According to Business Insider, “Nintendo’s Wii U is a tremendous flop.”

The Switch looks to break the mold again like the Wii did. While attempting to combine console and portable markets is a questionable ploy, a much more direct issue is apparent after viewing the video.

One could make that argument that Nintendo struggles with console sales, not because of the consoles themselves, but because of the content to be played on them. Nintendo, by its design and decisions, has created a stigma for itself that has the company continually struggling in mainstream gaming. Traditionally, Nintendo has focused on G-rated entertainment. It has milked its signature property and mascot, Mario, for everything he is worth. The Mario line of games has over 100 titles under its belt.

These games are all fun, but Nintendo failed to get on the boat when developers noticed that gamers had grown up. Games are not just for little kids anymore, and the kids that used to play Super Mario Bros. are now playing Call of Duty and Assassin’s Creed. Sure, Nintendo ported Resident Evil to the GameCube years ago, and it looked gorgeous, but it didn’t help. The reason is that Nintendo only seems to promote games rated Teen or lower by the ESRB. While they may have a few Mature titles on the books, bad marketing practices prevent them from truly taking off, and the company does not have an exclusive mature title to its name.

This reluctance to market anything edgy or adult in content has hindered Nintendo, and it can be seen in the Switch video. All the games featured in Nintendo’s Switch reveal seemed to be geared toward the teen-or-younger audience even though it had adults playing the games. Portraying an adult playing a game that looks like it has been developed for a younger audience does not sell consoles to adults. So again, Nintendo with their reveal video showed the world that they are still marketing to kids. Investors figured out a long time ago that kids do not buy $300-600 consoles. This could be why there was a sudden dumping of stock.

Also, the games featured in the video appeared very cartoonish, which added to the kiddie-game element even more. While the graphics looked sharp and clean, they still looked very 1990s. The game that appeared to be Skyrim looked beautiful when it appeared on the large HD display in the video, but on the tiny screen, it just looked dated and bland. So screen size might play a factor in the perception of the unit.

TechSpot also reports that several questions went unanswered regarding the Switch that it feels may have let down investors. Since one of the key selling points for the Switch is portability, battery life is a big concern that Nintendo did not address.

Another issue that consumers are interested in is whether the screen will have touch capabilities.

When asked if the Switch would have touch functionality, Nintendo said, “We have nothing to announce on this topic. We will make additional announcements about the Nintendo Switch hardware later, before the launch of the product.”

The price point is another major concern that went unaddressed.

According to TechSpot, game industry consultant Serkan Toto stated, “They must find a way to release the Switch at US$299 to stand a chance; that’s the threshold. It’s not impossible by offering the device in multiple versions.”

Toto also voiced concerns that the Switch would not have a very broad appeal and that it might only be “diehard Nintendo fans” that purchase the hybrid console.

Nintendo still has plenty of time to address these concerns. The Switch is not due out until March of 2017. Between now and then, there is sure to be more information released and leaked. However, questions aside, Nintendo needs to put more energy into marketing to the adult demographic if it wishes to change its image of making consoles for kids.

[Featured Image by Nintendo]

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