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Nintendo Has a Bold Plan for Competing With Streaming: Exactly What It’s Always Done

The white walls of Nintendo’s E3 booth are too thin. Next door, as two dozen people try out the newest Nintendo Switch titles, the games' music and sound effects almost drown out Doug Bowser, president of Nintendo of America, as he explains where the company is headed next, while trying to tip his hand as little as possible.

"One of our goals is to surprise and delight," Bowser says, fully aware that within weeks he would be announcing two new Nintendo Switch devices that could fire the first shots in the next console war. "We take a lot of care to make sure we keep things close to the chest and in the vault until we’re ready to launch."

But Bowser's caginess also leaves him awash in questions. As gamers swarm the Los Angeles Convention Center for E3, they wonder whether the Switch is a strong enough product to compete with the next generation of consoles. And experts roaming the halls, meanwhile, question whether Nintendo is prepared for the streaming revolution that many expect will shake up the entire industry.

These concerns are building because the next console war will be unlike anything gamers have ever seen. Traditional consoles like Microsoft's Xbox and Sony's Playstation will still scrap it out for gamers' dollars, sure. But they’ll also face competitors in the impending—but unproven—streaming market, where Google, with its deep pockets and wealth of infrastructure, is poised to launch its Stadia gaming service in the fall. The tech giant's threat is so menacing that it even drove fierce competitors Sony and Microsoft to team up on cloud gaming tech.

Still, Bowser appears unworried. “The Switch delivers on a lot of the promises [of streaming]," he says, barely audible over the ambient game noise. "It’s a device where you can play anywhere, at any time, with anyone."

If anything, the former senior vice president of sales and marketing appears to be a tad too confident in his first year on the job. And maybe that's because he knows something no one else does, like exactly what was behind the E3 rumors of two new Switch models that Nintendo—and Bowser—were keeping quiet about, until now.

Switching Up the Switch Lineup

On Wednesday, Nintendo announced its flagship Switch console would be updated to provide up to nine hours of battery life. The news may seem incremental, but an FCC filing last week also revealed internal changes to the device's processor and memory, which demonstrate Nintendo's continued investment in the Switch, two years after the console was released.

In addition, last week Nintendo announced a new Switch Lite handheld console. With no way to connect to a television, the Switch Lite lacks a kickstand and its Joy-con controllers cannot be removed, forcing players to hold the new device, rather than playing it on a larger screen or a surface. The Switch Lite's hardware is also lighter and smaller than the original Switch, though it also features a better battery life than its predecessor, making it more usable away from home.

Both the updated Switch and the Switch Lite are a nod to Nintendo’s roots. With the 1989 launch of the GameBoy handheld device, the Japanese gaming company revolutionized video gaming. The GameBoy, and the subsequent DS lines, had many versions, updates, and upgrades. This is what led the 3DS, a handheld successor of the DS that incorporated a 3D screen, to stay a fan favorite for nearly a decade.

Nintendo has a history of iterative consoles, says Mat Piscatella, an analyst with NPD Group. "They have a history of tweaking, making improvements, lowering price points," he adds. "This is just an extension of what they've always done."

The handheld-first Switch Lite and battery beef-up for the original leave Nintendo better equipped against streaming services' future “play anywhere” sales pitches. And, more generally, it gives Nintendo a versatile and consumer-friendly lineup, starting at $200 for the Switch Lite and $300 for the Switch.

With further development of its handhelds, Nintendo is simply playing to its existing strengths in the face of streaming, which for even its most high-powered competitors, is still an unknown. Microsoft will roll out its xCloud streaming service in late 2019, yet it’s still unclear how well the technology will work, or if gamers’ curiosity will translate into actual buy-in.

"Nintendo is conservative with new technology by nature," Piscatella says. "They want to wait for something to be ubiquitous, cheap, easy, and something that consumers understand, before they really back it."

If Nintendo does introduce a streaming product, Piscatella says, it will be well after the technology has been proven, and people start using it. "And they can do it in a more family-friendly or cheaper way than others out there," he adds.

Back at E3, when asked about the competition's streaming services and where they could push the industry, Bowser maintains that streaming is something Nintendo is keeping tabs on, but it's not yet a priority.

“It’s obviously something that we’re closely watching, and looking at, and understanding," he says.

But that doesn't mean Nintendo will never move into up into the cloud. Rather, it appears the historic gaming company is hedging its bets, as others figure out the early adoption pitfalls—a down-to-Earth plan that, history has shown, can carry Nintendo into the future.

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