Switch targets Japan's TV-less youth

Lots of time is being spent this week trying to figure out who, exactly, Nintendo's freshly unveiled Switch console is for. It's not for the shareholders, that's for sure; Nintendo stocks fell steadily after the announcement, so we can be fairly certain that mid-50s investors who have never played a game in their lives don't like it. It doesn't really seem to be for kids; compare its sleek and inevitably fragile casing to the robustness of the 2DS. It's not for the sliver of the core market that still held out hope, against all reason, logic and evidence, that Nintendo was going to rejoin the graphical horsepower fight with Sony and Microsoft.

There are, of course, lots of markets that it may well be suited for. It's launching mid-cycle, with a significant line-up of first party software exclusives, and thus fills the role of "second console" for most core consumers - a role Nintendo has been far more comfortable in ever since ceding leadership of the core market at the outset of the PlayStation era. It's also got a much more appealing and catchy "gimmick" than the Wii U (which never quite escaped the trap of being seen as Wii 1.5) offered, and there's an argument that the "gimmicky" nature of the Wii, so sneeringly dismissed by its detractors, was actually a pretty big factor in catching the eye of the mass market.

There's also one possible market, or at least, one possible motivation for Switch's design philosophy, that has so far gone unmentioned. Consider how much has changed in the evolution of Nintendo's design thinking from Wii U to Switch. Superficially, they've got a similar idea behind them; the Wii U Gamepad is a controller with a screen built into it, and the Switch is a similar concept that's just been unshackled from the box under the TV.

"The only piece of the Wii U's philosophy that has survived into the Switch is the most simple of all; the device in your hands has to have a screen"

In practice, though, Switch is a radically different system. The Wii U's Gamepad was designed as a second screen that would complement on-screen play; the ability to play (some) games on the Gamepad without using the TV at all was a nice extra but not the raison d'être of the system. Switch, on the other hand, simply won't let you use the device as a second screen. When it's plugged into the TV, the screen is hidden inside the docking station. Wii U was a dual screen system; Switch is a single screen system that simply has the ability to switch between a TV and a handheld screen. In a sense, the only piece of the Wii U's philosophy that has survived into the Switch is the most simple of all; the device in your hands has to have a screen.

Why? Why is it so important that we should have a screen in our hands? Why, with Switch, has that philosophy evolved from "an extra screen that complements the TV" to "an extra screen that can be used instead of the TV"? The answer to that lies in a market development which has been largely invisible to a lot of gamers and people in the industry, but which is very obvious in the Japanese market and may presage a trend overseas; the rapid rise in the number of young people who don't have a TV in their households.

It's hard not to notice this trend in Japan, where it's definitely far more advanced than in other developed countries. Large swathes of the under-30 cohort - students and young professionals - simply don't have TVs in their apartments. Their media consumption, which is still prodigious, is done primarily through smartphones and, to a lesser degree, laptops. In part this is down to economic factors; Japanese apartments are notoriously small and real wages, especially among young people, have been stagnant or falling for years, so a TV is a major investment of both space and money. If you're already carrying around a smartphone with a big screen or a laptop, that's hard to justify. It's also down to cultural factors; young people in Japan are prodigious consumers of streaming media like YouTube and its local analogues, which are generally consumed on smartphones and whose popularity has displaced TV media to some extent.

To anyone whose living room revolves around a large TV - which probably encompasses most of the readership of this site - this is probably a deeply alien concept. It's also a fairly dramatic shift in a country whose 20th century economic success was built to some degree on the manufacturing of TV sets; but its effects are undeniable and can be readily seen in a number of different areas. The national broadcaster, NHK, which operates on a license fee system similar to the UK's BBC, has pushed for legislation allowing it to charge a license fee to smartphone owners who can stream its programming online - reflecting the declining proportion of the population from whom it can collect license fees due, in part, to a rising proportion of households without TVs. DVD rental stores like Tsutaya and GEO, whose counterparts in other countries long ago went out of business, are finally hitting rough seas in Japan; an acquaintance recently pointed out that they've started offering "unlimited rentals" deals that have echoes of the desperate measures western chains like Blockbuster employed to stave off the inevitable. They, too, face serious trouble engaging younger consumers who may not even own a TV or DVD player.

"Look at the fate of PlayStation 4 in Japan. Sony's home market should be an easy win for the console, which boasts a strong line-up of locally developed software... but in reality, PS4's Japanese performance lags behind the rest of the world"

Within the games industry, look at the fate of PlayStation 4 in Japan. Sony's home market should be an easy win for the console, which boasts a strong line-up of locally developed software - right now we're in the midst of a window which sees the launch of everything from PSVR to Persona 5 and Yakuza 6 - but in reality, PS4's Japanese performance lags behind the rest of the world. Where it's doing victory laps around the USA and Europe, the recent bump in Xbox One's figures notwithstanding, in Japan it's failed to keep pace with past generations of hardware. Japanese consumers have instead turned to handheld consoles (Japan is the only market where PS Vita still turns in respectable numbers) and smartphone games. Most analysis puts this down to shifting tastes, but there's an underlying factor that requires far less handwaving over cultural difference; you can't sell home consoles to people who don't own or want a TV. Even among those who do own TVs, most young people seem to have small, outdated LCD models (20" to 24" is the most popular size for LCD displays sold in Japan, according to a Nihon Keizai Shimbun report earlier this year). That neutralises much of the value proposition of a console like the PS4, which is all about HD (or even 4K) graphical fidelity.

It's not that big TVs and 4K sets aren't being sold in Japan; it's just that they're being sold to an older audience who still have the disposable income to follow Japan's '90s trend of replacing home electronics regularly with the latest model, but who do nothing to expand the actual market for media consumption, especially for games. The launch of 4K sets in Japan boosted revenues from TV sales, but unit volumes declined; smaller numbers of more expensive TVs were being sold to more wealthy, thus generally older, consumers.

Circling back around to the Nintendo Switch, it's hard not to see this - and to some degree the Wii U before it - as a response to this trend. Wii U was designed with family homes in mind, allowing children or teenagers to play games while the living room TV was occupied; on paper a good strategy in an era when kids' bedrooms are less likely to have TVs of their own, given the dominance of smartphones. Switch is a more concerted effort to disconnect from the TV; a best of both worlds approach that gives large TV owners a good experience while also being worthwhile for those who don't own a TV, or whose only TV is an ageing 20" set in the corner.

There are a few unknowns in this. For one thing, we don't know whether Switch is actually fully functional without a TV to connect it to. If you can treat the dock purely as a charging stand and the Switch as a gaming tablet that plays full-strength console AAA titles, then that potentially opens up a market that would otherwise be closed to home consoles. It also makes clear the USP of Switch compared to existing tablets and smartphones; as a high-end gaming tablet that's targeting the niche of people who want console-strength experiences that are not, or cannot be, offered on iOS or Android devices. It will also be interesting to see whether Switch's dock is tied to a single console or if it's simply a dumb dock you can slip any Switch into, which might make the console more interesting to people living in share houses or dormitories with one TV shared between a number of people.

"Nintendo could be doing a good job of skating to where the puck is going to be, and Switch could be the shape of things to come for dedicated game hardware"

Of course, Nintendo isn't solely targeting the TV-less market - for Switch to be successful, especially outside Japan, it has to satisfy the legions of core gamers whose living rooms do still revolve around a big-screen TV, as well as proving the worth of its central gimmick of portability. The jury's still out on that one, and honestly, until such time as we see whether the launch window software justifies the console's innovations, any hot take predicting success or failure is little more than personal preference wearing analysis drag. However, consider for a moment the possibility that Japan isn't an outlier in terms of young people dropping TVs from their living arrangements. Consider that, as in so many other social technology trends, Japan is actually just out in front; that the same underlying factors in terms of smartphones making TVs increasingly less important or relevant to a whole generation of consumers apply equally to other developed countries.

I'm not entirely convinced that this is the case; I'd point to things like the sky-high quality of US and European TV drama at present, and its high engagement rates, as a potentially important distinguishing factor from the Japanese market. However, if western countries follow the Japanese trend, Nintendo could be doing a good job of skating to where the puck is going to be, and Switch could be the shape of things to come for dedicated game hardware. It's by no means certain and there are plenty of reasons to be dubious; but out there in the realms of possibility there exists a future where game consoles are killed off not by smartphones killing demand for console-quality gaming devices, as has been so often predicted, but by smartphones killing the installed base of televisions to which those consoles might be connected. In Japan, at least, that seems to be coming to pass; and whatever else it may be, Switch is a much more convincing attempt than Wii U at bridging that market divide.