$50 Switch Online: Aggressive pricing now, aggressive value to follow

Nintendo's new $50 Switch Online pricing tier introduces game DLC for the first time, signifying a shift to hybridized availability. This aggressive pricing model should spark an aggressive push towards value-oriented content past the current offerings.

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Now that the Switch hardware install base has matured with over 84 million shipments worldwide, Nintendo pushing harder into digital capitalization. The new $50 Switch Online + Expansion Pack is a clear example of Nintendo's plan, which was first implemented with NSO's original launch. After all, the Switch doesn't have Virtual Console because Nintendo would rather lease you games rather than let you buy them. That way you are in a state of continual service renting--think of it like Blockbuster without late fees.

The $50 Switch Online tier is kind of a hard sell. Compared to the $20 version, you're not getting a whole lot extra outside of a handful of Nintendo 64 and SEGA Genesis games. That will change over time. Not only will the games library continue to expand and more DLC will be added. How long that will take is totally up to Nintendo, and based on recent trends, it could take a while.

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The real value comes for new subscribers. Switch Online + Expansion Pass includes everything in the base sub--all NES, SNES, and promo games--alongside the new content. It's good that the sub is additive and technically compounds the value. At the same time, this aggressive price model deters fans who have already bought these games multiple times over across various generations.

Indeed it seems the current $20 Switch Online subscription was a kind of test-run for its real game plan, which sees the digital subscription evolve past classic game re-releases and online play towards more value-oriented content aimed at higher player retention.

To me, the most interesting part of the $50 Switch Online tier is the inclusion of in-game DLC for Animal Crossing. This is a carefully thought-out strategy for Nintendo. The original NSO was a kind of hook, and the $50 tier is aiming for bigger fish--dedicated core gamers who play the Switch's top hits.

The idea is simple: Give gamers access to DLC for heavy-hitting games so players invest time in the content and will have to continue paying to keep subscriptions active in order to keep playing said content. It also helps that Animal Crossing is dependent on Switch Online for multiplayer. That's two hooks. The ultimate end goal for subscription services is retention.

Netflix, PlayStation Plus, Xbox Game Pass--all of these services want to perpetually sell you something you don't really want to own. They're priced in a way that you don't want to actually buy the content because it's cheaper just to renew your sub--that way you get access to everything else, too.

In Switch Online's case, it's selling you something you can't own, namely NES, SNES, and soon N64 games that aren't for sale separately on the Switch storefront. The DLC, on the other hand, isn't exclusive to the service and can be bought separately...but the idea is that it's cheaper just to renew and get access to all the other stuff.

Including DLC for free in Switch Online is a new trend that should continue with upcoming Switch games, possibly even existing mega-hits like Mario Kart 8, which has sold over 37 million units worldwide (Animal Crossing isn't far behind with 33.8 million). In short: Don't expect Animal Crossing to be the only game that gets included DLC free with the $50 Switch Online Expansion Pass membership.

Nintendo is clearly gearing towards maximum subscriber retention in an aggressive way. The price is off putting right now, but Nintendo should sweeten the pot and offer more DLC over time to help convince people to jump in.

This is just the beginning of Nintendo's hard push into premium digital subscriptions and it has a lot to learn. Fortunately Nintendo is very patient...gamers, however, are understandably anxious about the price hike.