With Nintendo (NASDAQOTH:NTDOY) Switch off to a solid start, management is hoping to build maximum awareness for holiday sales by releasing a new title every month heading into the fall. This marks a change in strategy from the disastrous performance of Wii U. They also plan to launch two sets of downloadable content for The Legend of Zelda: Breath of the Wild to capitalize on the game's success.
New games designed to sell Switch's versatility
One of the key selling points of Switch is its versatility in how it can be set up to play with others. In addition to letting you play against other gamers online, Switch can be used as a tabletop system where multiple friends can engage with it anywhere they want. Each Switch comes with a Joy-Con controller that can be split apart and used as two controllers for two people playing with each other. Switch allows up to eight players to link their systems and sit together to battle it out, four-against-four.
According to Nintendo's consumer survey, about two-thirds of Switch buyers said multiple people in their household are interested in playing Switch, opening the door wide for Nintendo to market the multiplayer features of its new console with its new games this summer.
Nintendo has three games lined up that are designed to show off Switch as a system to be enjoyed wherever and whenever. Toward the end of April, Nintendo released Mario Kart 8 Deluxe, a classic racing game. In June and July, the company will launch ARMS, an innovative boxing game, and Splatoon 2, a crazy turf war game where you try to cover your opponent's territory with your own color of paint.
It is a perfect strategy to release these titles over the summer when school is out. For those who haven't been able to get a Switch yet, they may see a friend who has one. They play Mario Kart, ARMS, or Splatoon together over the summer, and parents will be hearing "Switch" in their sleep from July until December.
This plan also perfectly fits the data the company has from the consumer survey. The primary Switch buyers early on have been adults in their 20s and 30s, with 37% being 15 years and younger. Nintendo wants to appeal to all ages and particularly reach a new generation of Nintendo fans. The competitive nature of these games and the timing of their release date seems like a great way to accomplish that.
Downloadable content for Zelda
The attach rate between sales of Switch and The Legend of Zelda: Breath of the Wild has been "unprecedented," in the words of Nintendo President Tatsumi Kimishima. Through March 2017, about 90% of Switch buyers also purchased The Legend of Zelda: Breath of the Wild, one of the best reviewed games on any game system right now -- and all-time.
In the recent quarterly earnings release, Kimishima explained the opportunity the company has to grow Switch's audience through the popularity of Breath of the Wild: "By listening to what players are saying and looking at the circumstances surrounding their actual play, we are finding that a growing number of consumers who do not usually play dedicated video game systems are purchasing Nintendo Switch to play this title or are taking an interest in doing so. By leveraging this opportunity, we sincerely hope to be able to reach consumers who have never played a game in The Legend of Zelda series before."
To strike while the iron is hot, Nintendo will be releasing two pieces of downloadable content for Breath of the Wild through an expansion pass for $19.99, which management hopes will attract new players to want to play Zelda and, therefore, buy a Switch. As we've seen with other game publishers, like Activision Blizzard, digitally delivered add-on content is a great tool to keep players engaged with games longer and expand profit margins as well. This should help Nintendo earn a nice penny off Zelda, given the success of the game so far.
Breath of the Wild is a deep gaming experience on a similar level of other massive games like Bethesda's The Elder Scrolls V: Skyrim and its Fallout series. Nintendo should have plenty of opportunity for more add-on content over the next few years that could expand the game with extra side quests off the main story, as one example.