Nintendo (NASDAQOTH:NTDOY) has been on a roll following its successful entry into the mobile market and strong demand for its recently released Switch console, with these momentum drivers propelling its stock to five-year highs and creating increased interest in the company's next moves.
At this month's E3 (Electronic Entertainment Expo held in Los Angeles), Nintendo once again opted to forgo the stage shows Sony and Microsoft (NASDAQ:MSFT) favor, instead delivering a video reel featuring upcoming games and demoing its software on the show floor. With the company coming off the release of a popular new console and its stock still climbing, what should investors know about Nintendo's E3 presence this year?
Upcoming Switch games in the spotlight
The Switch's biggest game for the rest of 2017 is Nintendo's Super Mario Odyssey, and the company spent a good portion of its video presentation demoing the upcoming title. This was the second time the game has been shown off publicly, and while the game's initial reveal gave some reasons to be skeptical (namely some visuals that had people scratching their heads), the game looked great this time around. Odyssey will probably do impressive numbers following its Oct. 27 release date and also help drive Switch hardware sales.
Xenoblade Chronicles 2 made its debut during the company's presentation reel, and is also set to release this year. While the game probably won't be a huge seller for Nintendo, it should fill a niche in the Switch's software and, along with Arms and Splatoon 2, rounds out a solid 2017 lineup of first-party games from the company.
Nintendo also spent some time showing off previously unannounced Kirby and Yoshi games for the Switch -- both of which are slated to release in 2018.
Pokemon heads to Switch; Metroid returns
While it didn't have any images or footage to show off, Nintendo confirmed that it's working on a mainline Pokemon game for its handheld-console hybrid system. That's not surprising, given that the franchise is one of the company's biggest sellers, but it's still good news to hear a new installment announced relatively early in the Switch's life cycle.
As evidence that the company will continue to support the 3DS, the platform holder took the wraps off a new Metroid game for the system. Metroid: Samus Returns will be ready for release this year on the company's dedicated portable platform.
Nintendo also unveiled that it's working on a new Metroid Prime tltle for the Switch, though any reveal of the series' fourth installment was limited to a logo. While the Prime series has seen its selling power decline since its first entry in 2001, it's a franchise that hardcore gamers love and one that many Nintendo fans were upset to see skip the Wii U console.
Making sure Switch has games that appeal to hardcore fans is a good move even if individual titles don't wind up being huge sellers, as the type of player who buys a game like Metroid Prime will usually buy more games than the casual video game fan.
Downloadable content and online plans
The Legend of Zelda: Breath of the Wild has been a huge hit for Nintendo, and the company devoted some time to profiling two upcoming downloadable content (DLC) expansions for the game. Compared with other major companies in the video game industry, Nintendo has been a bit slower to take advantage of the opportunities DLC sales present, so it's encouraging to see it supporting one of its big recent hits and creating downloadable-sales opportunities down the line.
As far as the outlook for Switch's online platform, significant questions still remain. The company recently delayed the system's online gameplay service to 2018 and didn't have much to say about it at E3. News about the company's Virtual Console platform for downloading retro games on the Switch was also lacking. Given the importance of having a strong online platform in today's video game market and Nintendo's historical shortcomings in that area, the fact that the Switch's online service isn't ready to go and news is in short supply is somewhat troubling.
The third-party software outlook
Whether the Switch console will attract significant third-party support is likely to be a significant factor in the degree to which the system has longevity. The biggest third-party announcement at the show came from Ubisoft (NASDAQOTH: UBSFF), which is developing Mario + Rabbids: Kingdom Battle -- a strategy game that brings some of each company's most popular mascot characters together. Other notable upcoming third-party retail releases spotlighted at E3 2017 included FIFA 18 from Electronic Arts and Skyrim from Bethesda.
In a surprise move, Microsoft featured the Switch in its stage show this year to highlight cross-platform features for Minecraft. Switch gamers will be able to play the game with users on Xbox One, PC, and Mac platforms, and this feature will also be available in the upcoming Switch version of Rocket League -- a game that plays out like a soccer match, with cars instead of people.
Otherwise, there weren't many big third-party software announcements for Switch this year, which doesn't mean publishers won't get on board following the system's impressive sales, but it could take some time.
In summary, Nintendo had a solid showing that reinforced many of its characteristic strengths and weaknesses. The company had an appealing lineup of first-party games that should create additional momentum for its new console, even if its most exciting announcements (Metroid Prime 4 and Pokemon heading to Switch) were mostly there in name only. However, online and third-party support continue to look like potential problem points.