Nintendo escaped the console war. Now Microsoft and Sony want out, too.

Nintendo is proof you don’t need Call of Duty to survive

The fastest-selling Nintendo game of all time in Japan is a different kind of shooter. Instead of bullets, Nintendo’s iconic Inklings shoot colored ink in a zone battle for territory control in Splatoon 3, which launched last week in Nintendo’s home country to an astounding 3.45 million units sold in its first three days.

The number is notable because it's the highest ever Japan launch for any Nintendo game in history, and performance in Japan is often a good indicator of how a game will perform globally. Animal Crossing: New Horizons, for instance, last held the record at nearly 2 million units sold in Japan, and the game went on to sell nearly 40 million copies worldwide and emerged as a pandemic-era bestseller.

The launch underscores just how successful Nintendo’s strategy has been over the past five years, and why it undermines Microsoft and Sony’s increasingly bitter console rivalry.

Nintendo is often treated as an outlier in the console industry because of the company’s focus on kid-appropriate games and refusal to compete on performance. But as Microsoft and Sony fight over the future of console exclusivity rights to franchises like Call of Duty, Nintendo's strategy is proving to be more dominant than we thought.

• Nintendo has proven that even its newer IP, like Splatoon, can sell at the same rate and in some cases even better than household names like Mario, Zelda and Pokémon.
• Although Nintendo does not disclose budgets or profit margins for individual software products, its games are often produced with smaller teams, lower marketing spend and without costly production techniques like motion and facial capture.
• In an era of ballooning game budgets and rising prices, Nintendo’s shrewd and efficient game design approach lets it enjoy high returns on its investments.

Microsoft and Sony are fighting over dollars from the same consumer. Because PlayStation and Xbox often compete on price, performance and market share of third-party releases like Call of Duty and FIFA, the two companies ultimately borrow each other’s strategies.

• To better compete with the PlayStation during Sony’s dominant run over the last decade, Microsoft has gone on an unprecedented acquisition spree to scoop up dozens of studios, including Bethesda and a proposed purchase of Activision Blizzard.
• Sony, seeing the growth of Xbox Game Pass and the threat of cloud gaming, launched a revamp of its subscription service and eventually caved on its longstanding restrictions on cross-platform play. It’s also begun publishing its games on PC to expand its audience.
• Both Microsoft and Sony are now in a bitter feud over console exclusivity as Microsoft tries to complete its purchase of Activision.
• Hanging in the balance is the fate of major moneymaking properties like Call of Duty, which Sony is terrified of losing (and called “essential”) because of how much third-party revenue it reaps from the shooter series every year. Regulators are deep in review of the Microsoft deal to try and assess whether it might harm competition.
• Nintendo, on the other hand, has not distributed a single Call of Duty game on the Switch console over its five years on the market. Instead the company prioritizes its own portfolio, caters to indie developers and markets its ecosystem on the appeal of portability.

Nintendo escaped the console war, but so, too, can Microsoft and Sony. And by all accounts, Microsoft is certainly trying to break away from the traditional market share battle by focusing less on sales and more on Game Pass subscriptions, cross-platform play and cloud gaming.

• But Microsoft still needs to sell consoles to compete with PlayStation, for which it needs exclusive games that necessitate acquiring new studios and paying developers for Game Pass deals.
• Sony is also dependent on selling as many hardware units as it can and constantly feeding its exclusive software pipeline to ensure people don’t gravitate toward Game Pass or just resort to PC gaming. Because of increased pressure from Xbox, Sony is also arriving flat-footed to subscription and cloud gaming.
• Nintendo’s position of strength shouldn't be considered an anomaly. The company plays by all the same rules as its competitors. But it has offered a consistently compelling reason to buy its products to people of all ages all over the world since the launch of the Switch. And 111 million units later, Nintendo is showing little sign of losing steam.

The console war rages on. Sony is now intent on developing live service hits that can compete with Fortnite, and it acquired Destiny developer Bungie to help it do so. Meanwhile, Microsoft is taking the approach of buying its way to ecosystem growth using its Big Tech war chest. Both still desperately want to be the primary destination for playing everything from Assassin’s Creed and Call of Duty to Fortnite and Apex Legends.

But perhaps both companies should take a page out of Nintendo’s book and study closely the success of a game like Splatoon 3. Nintendo does not have a monopoly on playful design, all-ages content or products that appeal to both Eastern and Western audiences. But it does develop games you can’t get anywhere else that stand the test of time, all on a device you can put in your backpack.

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Overheard

“With the cheap labor of a developing country, you could use people in the Philippines as NPCs [‘non-playable characters’], real-life NPCs in your game … [to] just populate the world, maybe do a random job or just walk back and forth, fishing, telling stories, a shopkeeper, anything is really possible.” — Mikhai Kossar, a Web3 enthusiast and consultant, suggested a grim and exploitative future for blockchain gaming to Rest of World as part of a report on the downfall of Minecraft NFT project Critterz.

"We have done a lot and I think we are a company that can be proud of itself. We can always do better and so the people that are saying we should fix this and that are helping us to do better. We are open to criticisms, and when they are valid points, we go after them to solve them." — Ubisoft CEO Yves Guillemot offered the latest in a long series of mea culpas for the company’s history of sexual harassment and abuse in a wide-ranging interview with GamesIndustry.biz. Employees have called on the company to do more to address its systemic issues.

In other news

The Meta Quest Pro leaks. A new VR headset from Meta has surfaced in images and videos posted online showing branding for a “Meta Quest Pro.” The company’s Connect conference, where it’s expected to show off the final version of its Cambria prototype, is set for Oct. 11.

Netflix is all-in on Assassin’s Creed. The streaming platform has partnered with Ubisoft to release three exclusive mobile games, including an original entry in the Assassin’s Creed series. Netflix is also making a live-action show based on the franchise.

A new era for Battlefield. Lars Gustavsson, one of the longest-tenured Battlefield designers, left his role as creative director last week. The company is placing its faith in Halo co-creator Marcus Lehto, who’s now in charge of a new Battlefield studio called Ridgeline Games.

Why Amazon’s “Lord of the Rings” MMO got canned. Amazon Games chief Christoph Hartmann revealed to GameSpot that a planned “Lord of the Rings” multiplayer game was canceled because its development partner was sold to Tencent.

Blockchain gaming gets a boost from Square Enix. The Final Fantasy developer, a known proponent of NFTs, is now a so-called validator for the Oasys blockchain platform, which means it will help maintain the network and partner on future Web3 projects.

Streaming is having a moment of crisis. Streaming services are getting more risk-averse, leading to a lot less interesting programming, according to industry insiders.

Niantic is making a Marvel game.Marvel World of Heroes is an AR game built on the same tech stack that powers Pokemon Go. The game is supposed to get released sometime next year.

Why Disney didn’t buy Twitter. Former Disney CEO Bob Iger explains why he passed on the social media service. Spoiler alert: Twitter’s hate speech problem didn’t help its case.

Nintendo’s moment of silence for the Queen

Nintendo fans were left scratching their heads on Monday when the U.K. division of the Zelda and Mario creator said it would not be streaming Tuesday’s Nintendo Direct presentation “as a mark of respect during this period of national mourning.” Instead, the company will post the presentation as a VOD on YouTube after the event.

It's understandable Nintendo is treading carefully in response to the news of Queen Elizabeth’s death; brands all around the world have been scrambling since last Thursday to find tasteful ways to comment on the situation (and score social media points) without crossing the murky lines of online etiquette. Some have succeeded; others have not.

But for Nintendo, as one of the most anodyne and yet beloved children’s brands on the planet, it does seem a bit strange to cancel a livestream in a single market while still carrying on with the news announcement given the unlikely event any of it will cause offense. Giant Bomb’s Jeff Grubb, who has a strong track record for scooping these reveals before they’re made public, said last week the company might have been planning to host the Direct at an earlier date and more understandably may have shifted plans upon the Queen’s death.

Whatever the case, Nintendo fans in the U.K. should plan on watching … well, one of the dozens of other streams that will likely be available.

— Nick Statt

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