As we slowly go into 2024 and a new era for Nintendo with the expected arrival of its next platform, it is the perfect time to sit and think about Nintendo's current position in the gaming landscape.
Exceptional momentum
2023 was supposed to be a pivotal year for Nintendo. It is the year that marked the company's expansion in Movies, with its most iconic brand, and the launch of the much anticipated sequel of Breath of the Wild.
So on the one hand, you had a big unknown despite Mario and Illumination's pedigree. On the other hand, you had one of your master cards, the follow-up to a breakthrough hard to dissociate to the Switch success story itself.
April: From Mister Videogame to Mister Movie?
The Super Mario Movie project was in the works for several years. As you well know, Nintendo's first foray into the movie scene was a failure. It pushed the company to pull the plug on that initiative and encouraged them to keep a tighter leesh on their IPs.
When their partnership with Illumination was announced, it both raised financial hopes and concerns. The studio was famous for both its BO successes (The Minions, Despicable Me...) and its critical shortcomings.
Saying that the anticipation and apprehension was high before the first trailer of the movie would be an understatement. It eventually happened through a dedicated Direct (a great symbol of the synergies between Nintendo's gaming culture and its movie initiatives).
I could go on and on about the Movie's roaring success but it is a topic for another day. What's certain is that the movie grossed $1.3B worldwide, and expanded Nintendo/Mario reach beyond what gaming can offer.
It was the first punch, in April, that would put Nintendo's business into an exceptional shape during that quarter and generate ton of momentum.
May: Tears of the Kingdom
Breath of the Wild was a breakthrough for The Legend of Zelda series, far exceeding previous entries. During the 6+ years gap, it continued to sell steadily from less than 3m units in its launch quarter to more than 10 times that amount.
Expectations were high for its direct sequel, Tears of the Kingdom, as fans waited impatiently for years as Nintendo slowly revealed more detail on the latest entry.
(Credits to Peleo, numbers by the end of 2022)
However, there were some questions too, the novelty factor faded away and the Switch was just entering its 7th year on the market by showing more and more signs of its aging hardware. How important Tears of the Kingdom would really be for Nintendo ?
It didn't take much time for the answer to come, from the launch of a special OLED edition, to the actual launch and Nintendo's official PR only two weeks passed by.
Tears of the Kingdom managed the extremely difficult feat of matching BotW's critical reception, set a record for launch sales for Nintendo during one of the calmest month of the year (most records were set in the Holidays previously) and of boosting hardware more than 6 years after its launch:
Zelda significantly raised the Switch baseline, defying cyclical decline
Switch sales rose worldwide during the quarter, to reach a very strong 3.91M units during Mario & Zelda launch quarter, a 12% growth YoY and simply the biggest outside of the Covid boost in 2020/2021. It puts Nintendo into a very comfortable position to reach their 15M forecast for the whole fiscal year since already 26% of the target is reached.
Even if it utlimately slowed down, at least on the hardware front, the momentum is very strong for an ecosystem that old and the reveal (+ now launch) of Super Mario Wonder confirmed that Nintendo would ride this wave throughout the Holiday season. They are therefore ending 2023 in a very favorable position.
So, with 2-3 significant launches in 2023, did Nintendo blow off their load and is going into 2024 empty handed ?
A remake of Paper Mario: The Thousand Year Door was Nintendo's biggest announcement during September 2023's Nintendo Direct
2017-2024: Waiting for MarioIt might sound ludicrous, given the amount of Mario related content we got since April 2023, between the movie, a new 2D Mario, a new Peach subseries coming this March, and a meaty slate of remakes. However, there's Mario and Mario, and for Nintendo, two Mario subseries are treated very specially. Those two Mario subseries have been mostly dormant since 2017, at the exception of new (but mainly outsourced) content between 2021 and 2023.
For waiting right ? (excerpt of the final Mario Kart 8 Deluxe Booster Pass credit scene, November 2023)
Mario Kart and 3D Mario have been two of the biggest cards of Nintendo's playbook:
- The Mario Kart franchise has hit incredibly massive mainstream appeal ever since its shift to 3D. However, ever since the DS/Wii, the franchise reached new heights, being the best-selling games on every Nintendo platform ever since (3DS, WiiU, Switch).
- For 3D Mario, the return to the sandbox formula combined with the Switch's incredible success has put the subseries to a new level. Trailers of Super Mario Odyssey remain, to this point, the most watched for a Nintendo game (55M for the reveal trailer, 41M for the E3 one in Nintendo of America YT account).
Those two massive assets for Nintendo, among the top 5 of best-selling Switch games with 57m units sold for Mario Kart and 27m for Odyssey (as of September 2023), are however pretty much dormant every since. The studios behind these games have not released a new console game since June 2017 (ARMS from the MK team) and October 2017 (Odyssey, from EPD Tokyo). There have been some work done tho, as mentioned before.
They are two of the cards, on Nintendo's sleeves, to deliver a smooth and exciting transition. For Mario Kart, the anticipation is even grander since 8 initially launched in 2014.
2023 : Pivotal year for big Western IPs ?
Funnily enough, it is partially when the Switch entered its last years (and with PS5/Xbox gaining momentum) that the signs for upcoming and meaningful Western 3rd party support were the clearest.
- The latest FIFA entry, called EA FC 24, has been moved to the Frostbite engine after years of Legacy support (since 2019)
- Hogwarts Legacy, 2023's highest selling game, has been released on Switch despite initially being PS5/XB/PC only, a clear sign of the effort invested in order to make the port happen. Sales of the game on Switch have been extremely strong since its launch.
- As the ABK acquisition closed this year, it is now confirmed that Call of Duty will make its grand return on Nintendo console(s) next year after a decade+ of nothing.
While the reasons behind each of these Switch ports are different, it does position the upcoming platform into a very favorable position. They won't get everything, but they'll get the games that matter the most for mainstream audiences (with GaaS support being also strong). The only remaining member of the holy trifeca, which carried the PS/Xbox since the PS3/X360 era, is Grand Theft Auto. Its presence or absence will have an impact for 2025 sales and beyond.
GTA VI is a big question mark, with a 2025 release date, it is ideally placed to generate momentum for a new console, only a dream ?
A few risks
- Risk of delay - while the mometum is very strong for a console that old, the Switch still slowed down significantly this Holiday season despite the release of Super Mario Bros. Wonder. If the successor slips to 2025 (because software isn't ready for instance), then 2024 might be a big struggle.
- Pricing - The Nintendo Switch released in 2017 at 299$/330€/32.980Y but since then, there has been a big inflation happening and the OLED (which is a bit more expensive) is still the model with the lower margins. An increase is therefore expected, at the risk of cutting a part of Nintendo's audience. The low Yen might also make the jump higher in Japan, which would threathen domestic sales (on which several 1st/3rd party franchises on Switch relied on). The way they'll handle the Switch after its successor launches will be a key aspect to make the smooth transition they are looking for.
- No new Zelda game for a while - Tears of the Kindgom released in 2023 with a 6 years gap with Breath of the Wild. This is one of Nintendo's biggest assets both comercially and critically, putting the franchise in the league of other huge hardware movers. This also fills a big hole in Nintendo's library, with very few open world games coming from 3rd party publishers (those don't usually scale down well on lower powered devices). So when will the new open air Zelda release ? Probably not before 2028, and that's with Aonuma confirming that no DLC will release for Tears.
To conclude, it does seem like Nintendo is potentially in a very good position to launch a new platform in 2024. 2023 is ending on a high note for the firm, which closed the year at the highest market cap of its whole history. Confidence is high but I'd like to take this occasions to ask you, in your opinion, how Nintendo could ensure the best transition possible, and how could it solve the risks I mentioned and/or the ones you have in mind ?
2024 will be a very exciting year for that very reason, speculating and ultimately knowing Nintendo's grand plan for a very important "smooth transition".
