10
Jan
2017

Why Switch could be Nintendo’s next step toward download-only games

Could the Switch, Nintendo’s upcoming gaming console, be the company’s next big step toward a downloadable-games-only future?

Nintendo has been methodically expanding sales of digital games since 2012, slowly adjusting player expectations as it increases capabilities to support those sales.

It’s also a company that seems to increasingly struggle with the process of delivering acceptable levels of physically manufactured goods.

And it stands to reason that one day, gaming consoles won’t be systems that use physical media. That’s where music, television and movies are all headed. If anything, it’s a little surprising that games won’t get there first.

It’s clear why Nintendo hasn’t done this yet. While the company pushes hard on increasing download sales, it is also hampered by a lineage of poorly conceived approaches to online gaming and digital rights management.

Downloaded games are still tied to the physical hardware on which you purchased them — something that other companies, like Valve with Steam, have moved past with resounding success.

Just playing with friends can be a challenge on a Nintendo console, though that seems to be slowly improving with each new system.

Nintendo Switch hardwareNintendo Switch hardwareNintendo

That may sound like an argument against the Switch moving toward a download-only future, but this console could also be an opportunity for Nintendo to clear the deck of its mistakes and start with a new, responsible approach to online interactions and digital rights management.

Nintendo plans to further detail its new console at an event in Tokyo on Thursday, followed by a press event in New York on Friday. But right now, most of what we know is based on a high-touch promo video that doesn’t actually explain anything. Instead, it shows a bunch of examples of how the system can be used, and allows viewers to jump to their own conclusions.

The company did follow up with some basic details in a press release, and then answered a few questions sent via email. Notably, while Nintendo did confirm that the system will use “GameCards,” the company, through a third-party PR person, declined to say what the specifications of the card are. It also declined to comment on whether games would be sold only via download in some cases, saying that the company would “discuss the specs of Nintendo Switch at a later date.”

Nintendo did confirm that the Switch won’t support two other sorts of physical media: Nintendo 3DS cards and Wii U discs. In fact, there does not appear to be a disc slot anywhere on the Switch unit or its docking station.

Back in 2012, then-president Satoru Iwata announced that Nintendo would soon start selling all of its games both in stores and online. That was followed up by Nintendo telling Polygon that it was aiming to “significantly expand its digital business,” starting that summer with the launch of New Super Mario Bros. 2 on the 3DS.

“From that perspective,” Iwata said at the time, “for our digital business to grow drastically, it is imperative for us to expand the exposure of the digital download products to potential consumers.”

Nintendo has even played around with download-only game sales for titles like Picross 3D Round 2.

These aren’t moves to ditch physical retail sales, but to prepare for a future when perhaps those sales begin to slump.

Recently, Nintendo has taken to outlining the growth of its online sales, breaking it out as a specific note in comments to investors.

Nintendo download sales trends bar graphNintendo download sales trends bar graph

“We have focused on expanding the digital business, both to keep up with changes in the industry and as a new business opportunity,” said Nintendo president Tatsumi Kimishima in an April 2016 earnings statement. “This shows that we have made steady progress in the digital sphere.”

Nintendo

Last April, Nintendo president Tatsumi Kimishima pointed out the company’s increasing download sales trends, noting that “we have focused on expanding the digital business, both to keep up with changes in the industry and as a new business opportunity.”

In October, Kimishima said that “as a result of our continuing efforts, the ratio of consumers who purchased software digitally when a packaged version is also available has increased year-on-year.”

Microsoft tried to go online only with its Xbox One, leaning heavily into downloadable games as well. But it was a disastrous unveiling that likely caused a number of companies to reassess their own approaches to the eventual death of physical media.

I’m not suggesting that on Thursday, Nintendo will declare the Switch a cart- and disc-free system. We know it uses GameCards. But I do think Nintendo has built into the Switch the ability to make this particular system one that can easily vault the transition from physical to digital when that moment comes.

To do that, Nintendo will have to, on some level, reinvent itself as a more online, digitally progressive company. It will also have to ensure that the hardware can support that sort of content, with substantial built-in storage and perhaps an affordable way to upgrade storage. Both approaches are part of the PS4 and Xbox One systems.

For those of you who are download-only naysayers, take heart that my opinion may be in the minority. Well-known, and often accurate, Wedbush Securities analyst Michael Pachter doesn’t see things my way at all.

I asked him if he thinks Nintendo is “aiming for a future of downloadable-only games and if so where does the Switch fit into that future.”

His reply was blunt: “I don’t. They don’t do a good job cultivating indie developers, who tend to produce the bulk of download only games. They need retail to sell hardware, and still consider themselves a hardware company first, so I think they will cling to packaged software to support retail.”

Look out during our coverage Thursday night, for telltale signs of a future-proof system designed to survive without GameCards, to see which one of us was more right.

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