Seemingly made for COVID, Nintendo rides the crest of the pandemic wave
During COVID, Nintendo emerges as the big winner in the video game industry by doubling down on familiar brands and casual experiences.
Stay-at-home orders and travel restrictions during the COVID-19 pandemic sharply increased demand for video game consoles, as people looked for more entertainment options at home. But among the many companies within the industry that experienced growth in sales, one has achieved particular success. Japanese gaming giant Nintendo saw its profits to more than triple in the 6-month period ending in September 2020. [1] For comparison, in March 2020, sales of its main console Nintendo Switch more than doubled, while Microsoft’s Xbox and Sony’s PlayStation 4 had an increase of “only” 25%. During the holiday season, Nintendo’s console – which had been in the market for already three years, surprisingly sold twice as many units as did Sony’s newly released and long awaited PlayStation 5.
Perhaps the most obvious reason for this outstanding performance was the fact that Nintendo’s console provides more options for a family to play together, while its main competitors have focus on titles to be played by a single player at home. As people found themselves locked down with their entire families, they turned to gaming options that allowed multiple household members to participate. Also, Nintendo’s tradition of famous, easy-to-play titles such as Mario Kart and Super Smash Bros made it attractive for casual players who didn’t play video games before the pandemic and wanted to explore a new entertainment alternative.
Being a console manufacturer and a game studio at the same time allows Nintendo to build and distribute lots of Switch-exclusive titles. Because of that, when one of these titles becomes massively popular, it helps to boost console sales. More consoles, in turn, lead to higher sales of other titles, in a very profitable virtuous cycle. A good example of this was the launch of Animal Crossing: New Horizons game in March. The title is a social simulation game in which players collect and builds items on an island, while they interact with other players. Right after its release, sales of the game skyrocketed, exceeding 13 million copies in the first 6 weeks. The game became the fastest-selling title for Switch. Animal Crossing showed itself particularly appealing to gamers and non-gamers who enjoyed this form of socialization, as they couldn’t meet people in the real world during lockdowns. In the game, players have a chance to reconnect with friends and get to know more people, while having a very casual and collaborative experience and performing activities such as decorating houses, fishing exotic fish, digging up fossils and looking for messages in bottles. [4] Additionally, Animal Crossing was a hit on social platforms like Twitch and YouTube, as digital influencers streamed their actions in the game to their legion of followers. This, in turn, created one more entertainment opportunity for people at home and added more awareness to the newly released game.
Later in the year, Nintendo released another game that seemed to fit perfectly the new covid-19 reality. Launched in October, Mario Kart Home Circuit is a racing mixed-reality game, in which players build racetracks at their own home and control a real-life toy car, while seeing the race on the TV or on Switch’s screen. It’s the same Mario Kart race, but with a real stage, built by the player. Through augmented reality, gamers can see the racing opponents, special items, and visual effects, interacting on their own house. People now had one more reason to enjoy their increased time at home. The game was an instant success and boosted console sales even further. The following video shows the game experience.
As the pandemic possibly declines, Nintendo’s main challenge is to keep their newly converted gamers from switching to competitors or abandoning gaming whatsoever. A possibly good strategy is something that Nintendo knows very well how to do: mixing famous brands and repeating experiences that have proved to be successful in the past. That way, the pandemic-acquired customers will keep enjoying the familiarity and casualty which they have learned to appreciate during times of isolation, increasing their chances to stick to Nintendo’s brands.
[1] https://www.bbc.com/news/business-54813841
[3] https://econsultancy.com/the-animal-crossing-phenomenon-marketing/
Very interesting case and I must say that A LOT of my friends started to play Animal Crossing during the pandemic! It was surprising to know that other companies weren’t capturing the value as much as Nintendo. It makes a lot of sense that people are choosing games that they can play with family, instead of something ones they play on their own.
I also have a sense that Nintendo did a quite good job of incorporating fitness into games. By doing so, the company succeeded in transforming the image of playing games from something “unhealthy” to something “healthy”. It has really worked well in the pandemic as people have been focusing more on their wellbeing and more people wanted to have a way to be healthy while having fun.
Definitely agree that Nintendo has been a winner during the pandemic! I remember playing Animal Crossing as a kid, but when I saw started seeing clips of the game show up in my social media, I was completely surprised to see that the game had taken on a new life in the pandemic. One particular clip I remember seeing was around the time of the election. The Biden/Harris campaign had made their own Animal Crossing campaign headquarters in the game that you could visit. The clip had 5 million views at the time. A video game that manages to serve as a political tool to motivate young people to vote is next level winning.
https://www.cnn.com/2020/10/18/business/biden-animal-crossing-island-trnd/index.html
I grew up with Nintendo and continue to be a fan — I’m happy to see them emerge during the pandemic. Their strategy of “mixing famous brands and repeating experiences” has definitively been the factor that keeps me hooked. I keep going back to play the latest Legend of Zelda games or the Mario franchise (Kart, Party, etc.). In addition, one of the competitive advantages of Nintendo, in my opinion, is their ability to reinvent themselves with the launch of their latest console. While Xbox and PlayStation have focused on enhancing graphics and maintaining the standard gaming experience (with a hand-held controller), Nintendo has not been afraid to innovate. The Wii, for example, introduced motion-sensing technology, the Switch integrated tablet-like elements to their console, and now you see them leveraging AR to create a more immersive gaming experience. This willingness to innovate their gaming experience is what keeps some of their established franchises fresh and relevant. Here’s a short article on Nintendo’s innovative culture: https://www.theguardian.com/games/2018/apr/25/nintendo-interview-secret-innovation-lab-ideas-working
I think Nintendo did an amazing job at taking advantage of famous franchises that people love to encourage people to play more during the pandemic. I understood that playing video games can be a bonding activity with family and friends, and that can make a huge difference in a time where leisure venues are closed.
Think makes me wonder whether other consoles, like Playstation or Xbox, suffered from that. On the one hand, people were more at home and had more opportunities to play, but on the other hand, Nintendo seems best positioned to appeal to the numerous casual gamers and people quarantined with their family.