Nintendo between something incredible or total disaster

The gaming world is abuzz about Thursday night's official unveiling of the Nintendo Switch, the company's crazy new hybrid portable/TV console, expected to launch in March 2017.

Everyone at Nintendo is excited, but is nervous as well. Because in a very real way, this is a make-or-break situation for Nintendo. And depending how the Switch goes over with consumers, it could mean the end of Nintendo as we know it.

It's not that Nintendo is at risk of going out of business any time soon. Nintendo has over $5.7 billion in the bank in cash as of its last earnings report, plus billions more in other assets. That's enough to keep the lights on at Nintendo for the foreseeable future.

It's really that, after a year of disappointments, Nintendo needs a hit — badly. If it doesn't deliver the goods with the Switch, Nintendo's investors are likely to pressure the gaming legend into shifting focus away from its own hardware, and towards making more software for smartphones and tablets.
Worse yet, investors are already bearish on the Switch: When Nintendo debuted the first trailer for the console, its stock tumbled. Gamers are excited, but analysts are concerned that the Switch's core gimmick of a tablet that can hook up to a TV isn't enough to set it apart from the more powerful and well-established Microsoft Xbox One and Sony PlayStation 4 gaming consoles.

he problem is that Nintendo is coming into this from a position of weakness. The Nintendo Wii U, the Switch's predecessor, was a major flop, selling only 13 million units in its lifetime — compared with the admittedly once-in-a-lifetime smashing success of the Nintendo DS, which sold 154 million unites.
Meanwhile, investors and gamers had been after Nintendo to build smartphone games for almost as long as the App Store has existed.

Nintendo has largely been given free rein by its investors to pursue idiosyncrasies. But right now, in January 2017, Nintendo is coming off one high-profile failure and because, while it may have a lot of cash in the bank, its goodwill with investors won't last forever.

But if it works, this could be a real return to form for Nintendo — and investors will remember that sometimes, investing in the offbeat and the innovative does pay off.

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