What is Nintendo's secret recipe?

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It's no surprise, of course, that Nintendo sells its hardware extremely well. These are stories we've been hearing ever since the Switch was released, reminiscent of the era when the Nintendo DS and Wii dominated. But... back then, smartphones didn't exist in the same way they do now, and the gaming industry was very much about consoles, while PCs were on the rise. A different world, plain and simple.

This week the figures came out showing that Switch is now stumblingly close to overtaking Nintendo DS (most likely it already has, because the data only extends to the end of September), and is six million behind PlayStation 2, at which point it could make history as the best-selling console of all time. This is then complemented by the data that Switch 2 is by far the fastest selling console ever, at roughly double the amount of PlayStation 5 in the same time frame.

In short, the success train seems to be continuing. But why is that? Nintendo can't boast that they're the cheapest, have the best discounts, the most powerful hardware, the most games, the most well-made online service or really any of the things we normally look for in a console.

While Microsoft and Sony are firing people on the assembly line, barely releasing any games but making more money than ever before, and launching their games into everything for formats - Nintendo is doing none of this. Instead, they are going in the opposite direction. They boast about not firing any employees, regularly release games even for the faithful Switch, and seem to be backing away from the idea of supporting other formats (smartphones got more love before). In short, it seems that all the obvious truths that exist, work just the opposite for Kyoto giant Nintendo.

If I could easily answer why this is so, I could make a living as a well-paid analyst and strategist for competitors, but the truth is of course so sadly multifaceted and not very simple. Just as reality rarely is. There is not one reason why Nintendo is doing well, but several. That being said, let's try to find a few things that make them so successful.

"Nintendo does it their own way"

You know how it is, should you dare to move to a new city, change jobs, leave your partner, have children, make that unjustifiably large purchase? Many people often choose the safe option (no criticism, we all have these issues to deal with), even though they know deep down that the change they dream of won't happen by itself. For this reason, PlayStation and Xbox have looked pretty much identical ever since the Xbox 360. If you had PlayStation 3 or Xbox 360, you got basically the same game with small differences in performance. Same with PlayStation 4 or Xbox One, and definitely the same with PlayStation 5 and Xbox Series X. They are completely interchangeable consoles that differ only marginally by software limitations set by the hardware manufacturers.

Nintendo has instead chosen to go in a completely different direction. Whenever they are about to show a new console, the dreams of something enormously powerful always seem to come true. Nintendo has really only had this once, and that was with the Nintendo 64 - which sold 33 million. About the same figure as the Xbox Series S/X is thought to be at, and that's not something we're all that impressed with. Instead, it's when they've done things their way that it's been successful.

If you or I had dreamed up what the successor to the Game Boy Advance would look like 20 years ago, we probably would have created the PSP. A big screen, games on floppy disc, analogue stick and powerful performance. Funny, but Nintendo created the Nintendo DS instead. Two screens, one of them printable. Non-existent performance. The console was like nothing else, sales were shockingly good and it was until the other day Nintendo's best selling format ever.

There are flaws with the strategy. But it is clear that Nintendo dares to do things the others do not dare, and is generally rewarded for it.

"Nintendo nostalgia brings in the cash"

Once Nintendo has released a product, they never forget it. It doesn't matter that Super Mario Sunshine was not a success. The game appears in all sorts of contexts, from Smash Bros to Mario Kart. And shame on anyone who gave up. Today, Sunshine feels classic and a little cosy, everything becomes nostalgia with time. And their whole subscription service is based on retro, where we get to return to our childhood for a cheap price.

For their competitors, old games that don't quite measure up are dead and buried forever. At best, they are sold off and we'd rather not talk about them again, because the focus is instead on that new upcoming product they have in the pipeline.

"Nintendo and the reluctance to get stuck in the past"

Sequels are a natural part of Microsoft and Sony's strategy. Yes, not just sequels by the way. Everything must fall under existing franchises. If there's going to be a new car game, it has to be called something with Forza, and if there's an MMO coming, it should be Horizon. Broaden and expand, but always with one foot in the existing.

Here, Nintendo is instead completely unsentimental. They are happy to make games in their old and faithful series, but the need for them to sit together and have some kind of common thread is non-existent. Mario's Adventures and Zelda can therefore switch between the number of dimensions, main characters, graphic styles and much more. They always strive to make something completely new out of their brands, and often succeed very well in doing so. Despite the fact that, on paper, few people milk it like Nintendo, it's usually Microsoft and Sony that get criticised.

Their brands are stronger than ever and chronically sought after, and users know that they are complete experiences that suit everyone, showing enormous trust.

"The joy of gaming as a business model"

Of course, Microsoft and Sony would also claim to have this. But the fact is that they both have a knack for releasing games that are unnecessarily large, unnecessarily complicated and unnecessarily unfinished. Nintendo still puts its games on cartridges that actually contain the entire games - which are enjoyable even without patches. This is while competitors' titles really require patches to work, and often the games are not even on physical discs.

Anyone who buys a Nintendo game knows that it is an intuitive and complete product, and there is no point in waiting two months and then buying it for a pittance, because the games are almost never reduced in price. The joy of gaming is indeed an established business model for Nintendo, and perhaps the most important one they have. They are even said to have delayed the release of Switch 2, just to make sure the games reached full potential.

"For the whole family"

While Microsoft and Sony are working hard to include online in everything, and almost seem to have forgotten that single-player exists, Nintendo seems to be doing just the opposite. They're going all in on single player, which seems to be what people want. And they're happy to make games with local multiplayer so kids can play together, you and your partner, groups of friends and so on.

This is something that has almost completely disappeared for the others. Players are clear that they don't want live service, which is almost the only thing they get. Nintendo does virtually no live service, but delivers what is asked for - and is rewarded for it. There's a huge market that other publishers have just let go. Take something like Animal Crossing: New Horizon, which sold incredibly well. Yet there are no microtransactions to buy and no battle pass requirements. People often know better than publishers think. Complete games pay off.

"All set for 2035"

What is the hottest trend in the gaming world? Publishers, of course, are fully aware of this and are jumping on everything at full capacity to quickly pump out what's hot at the moment. This creates a jerky way of working where finished games can be out of date by the time they are ready, and plans change in a hurry. Lots of people need to be hired and lots of people need to go. Speed is key.

Nintendo works Japanese in the best possible way. It's calm and methodical. No plans are hastily changed just because pistachio ice cream happens to be the community's favourite flavour this week. Consequently, no VR venture (which cost others a fortune) ever materialised, cloud gaming will have to wait, live service they barely know what it is and NFTs have been completely dropped. Nintendo seems really uninterested in mud wrestling and focuses on sustainability. Games that can sell a whole generation, where others take to the sales already after a few months.

Thanks to extremely good economics, they tend to calmly carry on as planned, even when disaster strikes. Many (very many) thought that the Wii U was the end of Nintendo as a hardware manufacturer after a magnificent belly flop, but they kept on working, analysing and going. People were sceptical even when the Switch was unveiled, and for that matter the Switch 2... but how has that worked out?