"Nintendo needs to show consumers why they need a hybrid console"

We've heard your thoughts and provided some of our own on the Nintendo Switch following last night's press event, but what are the analysts saying about Nintendo's newest hardware now that we know the price and more about its features and content lineup? Generally speaking, the consensus among analysts is that Switch will perform better than Wii U (which, of course, isn't a high bar) but will face numerous challenges in proving its worth to a mainstream market.

"This is not an impulse purchase or as cheap as other recent Nintendo consoles and at this price point Nintendo will be competing with existing consoles and tablets. As a result, communicating the unique aspects of the Switch - particularly the capabilities of the Joy-Con controllers - and its exclusive content through marketing spend will be key to gaining market traction. Unlike the Wii, this is not a product that will necessarily sell itself through word of mouth as its proposition is still relatively complex," noted IHS Markit analyst Piers Harding-Rolls.

EEDAR VP of Insights Patrick Walker agreed that beyond the base, which will run out to buy Zelda and Mario in a heartbeat, Switch could have some difficulty in gaining traction. "The press conference added support to my prediction that the Switch will have a strong launch, but has challenges to long-term success. An appealing first-party lineup will likely drive strong initial sales. The Switch will appeal to core Nintendo fans in both the West and East with the smartly paced lineup of major IP, most notably including Zelda, Mario, Splatoon, and Dragon Quest. However, the announcement of a relatively high price point and lukewarm third-party support will present challenges to mainstream adoption," he said.

"The market fit with the casual audience is immediately less clear than it was for the Wii and Wii Sports"

Patrick Walker, EEDAR

"The price of the base SKU was $50 higher than the rumors of $249.99, and much of the equipment and services to get the full experience are sold separately. And apart from FIFA and Skyrim, there was little presence from the major third-party publishes, such as Activision, Ubisoft, Take-Two, Square Enix, and Capcom. Most importantly, to recapture the mainstream market Nintendo needs to show consumers why they need a hybrid console, much like they famously did with motion gaming and the Wii at E3 2005. While the party game 1-2 Switch is innovative and interesting, the market fit with the casual audience is immediately less clear than it was for the Wii and Wii Sports."

IDC Research director Lewis Ward isn't hugely concerned about the price tag, saying that $300 "makes sense" and "the distinctive control paradigm, coupled with Switch's portability, will open up some new gameplay opportunities and open up 'console' gameplay to more environments that will appeal to many gamers." That said, he's in agreement that the content lineup isn't quite up to snuff.

"I'm a bit worried about the depth of the launch window catalog, although Nintendo stresses the importance of cadence, meaning that big releases should come every couple months throughout 2017. Right now I'd say they're better positioned for sales than Wii U was at the same point in its launch cycle... and I'll want more color on the third-party launch window lineup before making firm predictions about how much better Switch will do in 2017 than Wii U did in its first year," he remarked. "I'm glad they're embracing a subscription model and will be interested to learn if they make it materially different from PS+ and XBL - right now I don't see much difference though."

Digital overall would appear to be far more important for Nintendo this generation. This could have an impact on Switch's market performance in the long run. "Nintendo is de-emphasizing physical cartridge sales," SuperData's Joost van Dreunen said. "The cartridge system for the Switch is based on the 3DS more so than the Wii U, suggesting that digital distribution will play a bigger role for the upcoming platform. Consumers generally find it is easier to expand the memory and download titles directly to the device than having to carry all of their games separately. The challenge here for Nintendo centers on providing a seamless experience in its eShop."

Nintendo's ability to offer a number of classic titles via its online service could play a big role in adoption as well, he said: "Even as Nintendo continues to innovate on its existing titles, for many consumers the classic titles remain an important selling point. Providing access to this library of games will help drive adoption to the paid online service for the Switch. By comparison, the combined earnings for the subscription service for Sony and Xbox--PlayStation Network and Xbox Live, respectively--generated around $3 billion in revenues last year, and has proven a key component in transitioning consumers to the higher-margin side of the business in digital distribution. Total earnings for digital downloads on console last year, including full game downloads and micro-transactions, was $7 billion, worldwide."

"Switch reflects a company that is in cultural flux as it seeks to find a balance of approach between its traditional console games business and to cater for a new population of smart device gamer"

Piers Harding-Rolls, IHS Markit

Market positioning is still going to be important for Nintendo. On the one hand, thus far the company has only shown videos of 20-somethings or 30-somethings playing the Switch, but the type of content the company is offering suggests that the Nintendo "kid-friendly" vibe isn't being shed. "The emphasis on gaming consoles as a toy is a smart, and proven, strategic move," van Dreunen continued. "While we don't anticipate games like 1-2-Switch to become breakout sellers in comparison to the announced Mario and Zelda titles, they do a great job differentiating the Nintendo device from other consoles. It continues the company's legacy as a toy-maker and shows Nintendo's strength in providing innovative gameplay that integrates both hardware and software."

Ultimately, we don't really know if the market wants or needs a console that's also a handheld. It's an interesting proposition that Nintendo is selling in an era of smartphones.

"Nintendo's new hybrid console Switch reflects a company that is in cultural flux as it seeks to find a balance of approach between its traditional console games business and to cater for a new population of smart device gamers," added Harding-Rolls. "The Switch's form factor literally embodies the tensions at play here as it seeks to satisfy traditional Nintendo console gamers and also engage a new set of consumers that routinely want to use smart devices - and more specifically tablets - for gaming. A hybrid device strategy such as this is unproven in the market - previous gaming tablets that can dock to TVs have found very little sales traction but significantly have not had the backing of a company such as Nintendo.

"Is this a device for the mobile gamer that plays on the move? To a segment of the mobile gamer population yes, but the Switch is more naturally a direct challenge to the use of tablets in the home or perhaps on family holidays."

IHSMarkit is currently forecasting 4 million units sold for the Switch in 2017, "although this may be revised in the coming days based on the earlier than expected launch date and likely stock availability through the year."