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Nghe/Video/CNBC International/Why Nintendo Stopped Chasing Power — and Changed the Game

Why Nintendo Stopped Chasing Power — and Changed the Game

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0:06Nintendo is the king of handheld consoles.  It's no exaggeration to say that with the  
0:10NES in the 1980s, Nintendo revitalized  the entire console gaming business.
0:15Nintendo because of the way  it has innovated um console  
0:18hardware has had an influence on game design.
0:21They have like decades of experience  developing games for handhelds,  
0:25but they also have decades of experience  developing games for traditional TV consoles.
0:30Nintendo's enduring success in video  games has been built on the powerful  
0:34combination of timeless character-led  franchises and innovative hardware.
0:48I'm Arjun Kharpal and in this  episode of Built for Billions,  
0:52I'm exploring Nintendo's console evolution.
0:55From the NES to the Wii U and the Switch,  
0:57the Japanese game makers bold experiments have  produced both hits and misses alike. But that  
1:04very willingness to experiment is what has  so often left rivals racing to catch up.
1:16Nintendo entered the home console market  with the Famicom in Japan in 1983,  
1:20which became the Nintendo Entertainment  System - NES- internationally in 1985.
1:26Its launch came just after the video  game crash of 1983 when poor quality  
1:31consoles and games flooded the market  and nearly wiped out the industry.
1:40By pairing strict quality  control with iconic titles,  
1:44the NES restored trust in video games and  created the blueprint for Nintendo's future.
1:49And it wasn't long before Nintendo followed up  with another game changer, the handheld Game Boy.
1:55The Game Boy and the Famicom and what they  did, it brought Nintendo to living room. Um,  
2:00Game Boy and Tetris were very  iconic moments in the early '90s.
2:03I think that the Game Boy was the first  commercially successful console. So, it was  
2:08portable, affordable, the battery life was pretty  good because the screen was just monochrome.
2:14Nintendo back then was very clever  in bundling it with Tetris with which  
2:19is until today one of the most  iconic video games that we have.
2:23But Nintendo's hardware success wasn't  always guaranteed. In the mid '90s,  
2:27the company suffered a major  setback with the Virtual Boy,  
2:30a premature attempt at 3D gaming that  was discontinued after less than a year.
2:35By the early 2000s, they faced even more  pressure with the GameCube. It was a powerful,  
2:40capable machine, but it was ultimately  overshadowed by Sony's PlayStation 2.  
2:45The GameCube sold just 21.7 million units,  while the PS2 moved a staggering 160 million,  
2:53becoming the bestselling console of all time.
2:56And yet, while Nintendo struggled in the living  room, its handheld dominance remained untouchable.  
3:02The Game Boy Advance and the  dual screen DS revolutionized  
3:06portable play with the DS eventually  selling more than 154 million units.
3:11At the time PlayStation was trying to get into  portable gaming. They launched the PlayStation  
3:15Portable and um and Nintendo rather than just  create a more powerful Game Boy, they went and  
3:20created a dual screen device and a touchcreen.  This is before the iPhone popularized all that.
3:24So when Dragon Quest came out in  in the late ' 80s, early 90s, um,  
3:29and this was the first iteration of a Japanese  RPG and had all the elements that we know today,  
3:33sort of these manga characters in a sort of  a fantasy world with a turn based combat,  
3:39a single player sort of story line  that can be followed. All of a sudden,  
3:43we get the ability of playing a game across  two screens. So for um a role playing game,  
3:48that means then you can have map access all the  way through your game on a second screen. So it  
3:53can actually sort of declutter the main world and  and allow for more um transparency. And so I think  
3:59yeah that that's what draws people in is sort  of Nintendo's ability to push these innovations.  
4:04For instance, with the Wii, all of a sudden  people are playing tennis in their front rooms.
4:09On paper, the Wii was an underdog. While  Sony and Microsoft chased raw power and  
4:14cutting-edge graphics, Nintendo moved in a  different direction, unlocking a new market. 
4:20The Wii wasn't a powerhouse, but  its simplicity, motion controllers,  
4:24and irresistible packing game Wii  Sports, made it a cultural phenomenon.
4:34There was Xbox, PlayStation, Nintendo, and  they were all doing very similar things,  
4:39and they were trying to compete with  one another. And Nintendo realized  
4:42they couldn't play this game. And with  their next machine, the Nintendo Wii,  
4:46it wasn't actually much more powerful than the  GameCube. In fact, it wasn't even a HD console.  
4:49Everyone moved to HD at that point. Nintendo  did not. They made they they made a motion  
4:54control device. And waving a controller around  was a lot less complicated than using an analog  
4:57stick and a controller. It made games more  accessible, broadened it out to the family.
5:01But the Wii's massive success was followed by one  of Nintendo's most baffling chapters, the Wii U. 
5:07It was a console caught between two  worlds, part tablet, part home system,  
5:11with a marketing campaign that left  consumers more confused than excited.
5:16"Here's why we need Wii U."
5:18It ultimately became one of  Nintendo's biggest misses,  
5:21selling just 13.5 million units, a tiny fraction  of its predecessors, more than 100 million units.
5:28The Wii U was a flop, and Nintendo has  um acknowledged as such. People felt  
5:33it was an update of the Wii, but didn't  quite realize that the new controller,  
5:37which had the touchscreen, was  allowing different play options,  
5:40which weren't possible on the Wii or  any other consoles for that matter.
5:44I think that in the case of the Wii U, uh  Nintendo learned not to be arrogant, not to  
5:48be too complacent, and they learned also there  was still something in that idea of the Wii U,  
5:54uh to disconnect the TV from portable gaming and  
5:58kind of have like an almost hybrid  device in the case of of the Wii U.
6:03Meanwhile, mobile gaming exploded. Smartphones  and tablets were suddenly everywhere,  
6:08and with them came a new wave of low  cost games that kept users coming back. 
6:13Titles like Angry Birds, Clash of Clans,  
6:15and Candy Crush created an entirely  new audience of casual gamers.
6:20For the first time, Nintendo wasn't  just competing with other console  
6:23makers. They were competing with  the phone in everyone's pocket.
6:27In 2012, mobile gaming was just a small  slice of the pie, accounting for 18% of the  
6:33$70 billion dollar global games market, while  consoles represented nearly half of revenues.
6:39But just four years later,  everything flipped. By 2016,  
6:43mobile had shot past both PCs and consoles  to claim 40% of the rapidly growing industry.
6:50Almost overnight, smartphone games  were dominating the headlines,  
6:54investor calls, and everything. And people  were questioning whether the company's handheld  
6:58consoles like the 3DS and its brand of casual  games aimed at young gamers even had a future.
7:04Even Nintendo started thinking about  its own um business model back in the  
7:10time. So they I think during that time  wanted to appease investors to some  
7:14to some extent by going into mobile by  kind of like breaking their own rules.
7:19And then in the summer of 2016 came  Pokémon Go. While the augmented  
7:24reality hit wasn't actually developed by  Nintendo. It features some of their most  
7:28iconic creatures and became  an overnight global sensation.
7:32I remember the absolute madness.  Crowds of literally hundreds  
7:35running through parks to catch rare Pokémon.
7:38Suddenly, Nintendo's worlds  felt alive in the real one,  
7:42and it completely reshaped the perception of  what the company could be in the modern era.
7:51At that time, Nintendo um uh released Super  Mario Run, which which was a mobile game. So,  
7:56that was, they were prepared at  that point to take their character  
8:00IP out from the console space into other  areas into almost competitive platforms.
8:05The timing couldn't have been better. While  Nintendo's mobile games didn't deliver huge  
8:09revenue, they achieved something more  important. They brought back old fans,  
8:14created new ones, and reminded the  world why Nintendo's characters  
8:18mattered. Just months ahead of one of  Nintendo's biggest hardware gambles.
8:26In 2017, Nintendo launched the  Switch, a hybrid console that  
8:31could be played at home or on the go.  It was the culmination of decades of  
8:35experience merging Nintendo's legendary  handheld DNA with home console power.
8:40I think that when the Switch came out in 2017,  
8:43you could see that Nintendo radically  transfer transformed internally.
8:47They've harnessed some of the things that  they did well with the Wii U but didn't  
8:51sell particularly well to put that  in innovation into the Switch and and  
8:55actually do a good job at marketing that  and bringing that to a broader audience.
8:58Nintendo had redeemed itself. The  original Switch went on to become  
9:02Nintendo's bestselling console ever  with over 155 million units sold,  
9:07fundamentally reshaping an industry that many  thought had outgrown dedicated handhelds.
9:13Now Nintendo is building on that momentum  with the Switch 2, a console designed to  
9:17carry the hybrid philosophy forward while giving  developers more power and fans more flexibility.
9:23The Switch 2 mainly seems to be an upgrade, a  hardware upgrade of the Switch. And many people  
9:29felt like, okay, it was kind of necessary.  The Switch was getting to 8 years um old.
9:34It's quite hard to follow a successful  machine with another successful machine.
9:38More than 40 years after the NES pulled  the industry back from the brink,  
9:42Nintendo still faces the same fundamental  challenge. How do you keep reinventing the  
9:47hardware without losing the simplicity and charm  that made you a household name in the first place?
9:53Their creativity is at the heart of  everything they do. They're always  
9:57often trying to do something innovative  or new with everything they create.
10:00I don't think they can just put out a  Switch 3 which is going to be another  
10:04hardware improvement. People don't want  that. They don't so much expect Xbox or  
10:08um Microsoft or Sony to to radically innovate  something. But we still expect it from Nintendo.
10:15My concern for Nintendo is maintaining momentum,  
10:17it's how can you keep that audience coming  in, How can you keep them um engaged?
10:21In the final episode, we'll look at Nintendo's  boldest gamble yet. From movies to merch,  
10:28find out how the company's leveraging decades  
10:30of nostalgia to build a universe  that exists way beyond the console.