Nintendo should avoid this costly mistake with the Switch 2

Nintendo needs to avoid resetting the console generation and displacing over 130 million Switch owners in the process.

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Moving to a new console generation is a tricky thing to pull off. Asking customers to buy a whole new wave of hardware and software can be a tough prospect. Some companies like SEGA can even exit the market entirely during these transition points due to a combination of factors. Hardware-makers also have to worry about low migration rates to the new system due non-compatible games.

While the core problems of cross-gen navigation remain the same, the proposition of completely resetting game libraries is even more off-putting these days. No one wants to have to buy all new games on top of a $300-500 console. Backwards compatibility is a must for new consoles (I argued it was the single most important feature for the PS5 and Series X/S), and Nintendo isn't exempt from these pressures.

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It's vital that Nintendo does not make the mistake of a full games library reset. The numbers are just too high. Since March 2017, Nintendo has shipped over 139 million Switches across a three-product family. This led to over 1.2 billion game purchases made on the platform.

With all products, services, and content sales combined, Nintendo has made over $77 billion from the Switch platform. Carrying forward digital entitlements and games libraries isn't just important--it's a necessity. The business has simply grown too big for Nintendo to just hit the reset switch (pun intended) and start over from square one.

Reports indicate the new Switch 2 will be a powerful new handheld-console hybrid that's capable of playing games at 4K resolution on UHD display. A new-and-improved NVIDIA Tegra chip is believed to power the device, and sources tell Video Game Chronicle's Andy Robinson that devkits for the Switch 2 were shown off at Gamescom 2023, that the system had a cartridge slot, and that the system is set to release sometime in the second-half of 2024.

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So...if Nintendo does offer cross-compatible games, how will the process work exactly?

We have some ideas:

Most (if not all) previous Nintendo Switch games, including first-party games, will be backwards compatible and play natively, at improved performance, on the new upgraded Switch.

Select games will have upgraded versions, potentially as paid upgrades, that allow the games to leverage the full power of the Switch 2.

This will create a dual-SKU approach where two games are offered: a Switch version, and a Switch 2 version that's coded to take advantage of the beefier hardware and DLSS capabilities. It's possible publishers will bundle cross-gen versions together the same way they did with the beginning of Gen9.

The digital entitlements and information on the games that consumers have purchased will be stored in the digital Nintendo Account.

Nintendo president Shuntaro Furukawa was asked about new hardware in a Q&A with investors. Here's what he said:

Generational transitions of platforms for the dedicated video game business are not an easy task.

Since we have often experienced hardship in the past following a good-selling platform, we never automatically assume that our current position is solidified.

Furthermore, as you mentioned, our business is constantly subject to fierce competition. When we take a broader perspective and look at entertainment as a whole, our competitors are not just other video games but also various other forms of leisure, making it a very tough industry.