Nintendo of America President on Switch’s Big Risk, ‘Smash Bros.’ Success and Classic Consoles’ Future

It has been a big year for Nintendo.

In its second year of launch, the Nintendo Switch has already shipped more than 20 million consoles (it also became the fastest-selling home console of all time in the U.S. in January) and this year’s holiday season has already delivered massive sales for the gaming giant. Over the five-day period between Thanksgiving and Cyber Monday, Nintendo Switch had the best-selling five days in its history, with overall Nintendo sales topping $250 million.

“When you look at it compared to a year ago, we basically doubled our business over those five days,” Nintendo of America president Reggie Fils-Aime tells The Hollywood Reporter.

Notably, those numbers came before the release of arguably Nintendo’s biggest title this year, Super Smash Bros. Ultimate, which hit shelves on Dec. 7 and was met with critical acclaim and big sales (the fighting game is currently on the top of Amazon’s best-sellers list). 

In addition to the Switch, Nintendo is also circling a big holiday with its family of DS handheld systems and two classic consoles — the NES Classic and the SNES Classic — released in 2016 and 2017, respectively, but both available during the same holiday season for the first time this year.  

Below, Fils-Aime speaks with THR about the company’s plans for the holiday and beyond, including third-party games on the Nintendo Switch, the future of classic consoles, whether or not there will be more deals for the Switch, the growing popularity of e-sports and why Red Dead Redemption 2 isn’t on Nintendo.

What made the five-day period surrounding Black Friday such a huge success this year?

I think it’s a number of things. First, consumers look at Black Friday as an opportunity to get their holiday purchasing going. They look at values out of the marketplace and for us, it was really important to message the type of value that we will have with Nintendo Switch during the holiday season. For Black Friday, specifically, we had a hardware bundle that included Mario Kart 8 Deluxe — arguably one of our best-selling games — a game that consumers are already voting with their wallets that they want. That bundle sold out immediately. Then, we had a strong dedicated offer for Cyber Monday and this was offering $35 in e-shop credit when you bought through the dot-com retailers. What we saw that was gratifying is that both of those deals sold out quickly and then consumers started buying stock at regular price. That’s what we expect to continue. There’s going to be no more significant deals for Nintendo Switch. We’re only in our second holiday and the consumer is indicating that, for them, this product, with this great alignment of software really is a must-have product and something that they need to have now.

How do you maintain that success?

The key driver is the steady pace of software. We’re very thoughtful of how do you sequence out the software. How do you make sure that you’re constantly giving the consumer a motivation to participate in the platform? And not only to buy the latest new thing, Super Smash Bros. Ultimate, but we’re great in having a library of high-quality games that they’ll go back and purchase and experience. Whether that’s last year’s game of the year, Breath of the Wild; whether it’s one of our newest franchises in Splatoon 2; whether it’s Super Mario Odyssey, the consumer will go back and gravitate to those games as well, and for that new consumer it’s new to them. That’s a really good business driver for Nintendo.

Given Nintendo’s long history, many of its franchises have endured for more than three decades now. Why do people keep coming back to Mario, Zelda, et cetera?

This is where I have to give our game developers the credit. I think the best example of this is Breath of the Wild. The Zelda franchise — which I love, my favorite franchise of all time — there was a formula to Zelda games. You would go into a dungeon, you would beat the miniboss, you would get a weapon that would allow you to progress to the next stage of the game, and that would continue. The development team for Breath of the Wild blew open all of those conventions with a brand-new construct. You could start right at the very beginning, go and try to beat Ganon — good luck to you, it doesn’t work very well. Even the weapon construct, you would progress, get these ultimate weapons, that was the previous Zelda formula, but in Breath of the Wild there’s tons of weapons. The only problem is they break. It’s that kind of thinking, to understand what is foundational in the franchise — in this case, it’s Link, Zelda, the legends of Hyrule — and constantly look to innovate and provide something new. That’s Zelda, that’s Super Mario Odyssey. It’s constantly taking that approach. That’s why these franchises endure and that’s why these franchises become must-have products of [each] generation to experience and to share with others.

What are the priorities internally at Nintendo in terms of maintaining established brands, courting third-party developers and choosing which ports to bring onto your consoles?

First, let’s talk about third-party. From our perspective, we want all of the best third-party content to make it to our platform, whether that’s coming from the big publishers and developers or whether it’s the independent community. As an example, we’re thrilled that Celeste won [best independent game at the Game Awards] and Overcooked 2 won [best family game] and Dead Cells won [best action game]. These are all games that are on our platform and are performing exceptionally well for us. So, we want that content on our platform and we’re thrilled when Bethesda gives us the level of support that they have or Take-Two gives us the level of support that they have. Now, when it comes to games from previous Nintendo generations — It’s a statement of fact that the Wii U was not as successful as we hoped it would be and yet that platform had fantastic content. Now that the install base of Nintendo Switch is so much larger, it gives us an opportunity to bring those great games back and share it with consumers that maybe hadn’t participated in the previous generation. For us, we’re clear that, in terms of Nintendo-developed games, we want to bring new experiences from our best franchises to Nintendo Switch, and that’s what you see with Smash Bros. and Pokemon. We also want to make sure that if a consumer didn’t experience a great game, like Captain Toad, that we make it available on the platform as well. For third-party, big or small, we want all that best content to come.

That being said, when a game like Red Dead Redemption 2 comes out, is that something you’re interested in having on the Switch?

Absolutely. We’d love for it to be there. But again — and this is where there needs to be an understanding of just the development process — Red Dead has been in development for years, time that predated any communication of Nintendo Switch. So, from the developer’s mentality, they need to move forward and finish the game they’ve been working on and then be in a position to look at other opportunities. Any game from a key third-party that’s coming out now, typically that development started well before any conversations about Nintendo Switch. What happens moving forward? We’ll see. But that’s how you wind up with a situation with Red Dead not being available on our platform.

Do you monitor how your customers play their Switch, docked or handheld? Is there a preferred method?

From our perspective, whether they’re playing docked or undocked, we want the consumer to play and we want the consumer to spend time on the platform. What happens is certain games lend themselves to a certain type of experience and that’s what drives whether it’s predominantly docked or undocked. In the end, a much more important key metric to us is how much time is the consumer spending playing, what are they playing, and how do we launch our games and provide an ongoing string of content to maintain that engagement?

Does the ability to take the Switch anywhere I go bite into the sales of your dedicated handheld consoles like the 3DS?

What we see is that the Nintendo Switch and the current Nintendo 3DS demographic are becoming very, very different. What I mean by that is for our dedicated handheld business, which starts at a price point of $79, we’re seeing that it’s gravitating much more toward kids, and it literally is becoming their first dedicated gaming device. From our perspective, that’s great because it gives them experience with Mario and Zelda and Pokemon and Smash Bros., all of these wonderful franchises. We’re confident that as they continue in their gaming journey they’ll gravitate to Nintendo Switch someday in the future.

If we can talk about Smash Bros. for a bit. The amount of content in this game is unbelievable. How does that become a reality?

I’ve had the good fortune to meet me Mr. [Masahiro] Sakurai, the key developer, many times, and Mr. Sakurai is a student of video games — and what I mean by that is he not only loves and plays Nintendo content, he loves and plays content from all game developers, all platforms, all systems. So, Super Smash Bros. emanates from that love for video games and video game history. He and his team are so skilled to be able to create this experience and really to make it fun. Oftentimes, fighting games, maybe because the balance between characters isn’t quite right, can end up being not a lot of fun. But he’s a master of making this type of experience fun, compelling, introducing different modes and different elements. The spirit component [collectible cutout caricatures of video game characters that lend bonuses to the player’s fighter] that’s been added in is a wonderful feature. It’s almost a way as a player to hack the game, by adding spirits and adding different abilities, changing the nature of a particular character and how they play. It is due to [Sakurai] and his skill that Super Smash Bros. as a franchise and Super Smash Bros. Ultimate, in particular, is as compelling an experience as it is.

Has he ever come up with a character he wants and you have to go, “How do we make that happen?”

That becomes his challenge, right? (Laughs.) In terms of, “How am I going to do this? How is that character going to play?” We have found that as Nintendo has approached the owner of the intellectual property they’re excited for that character to be a part of Super Smash Bros.

And that’s pretty much across the board?

I personally have not been involved in those discussions, but as I have talked with Mr. Sakurai and others in the development area I’ve never heard of a story where we’ve been turned down as we pursued a particular character.

You introduced the first DLC character, Joker from the Persona series, at the Game Awards. How many more new characters can fans expect?

What we’ve announced is that there’s going to be five characters that are going to be part of our DLC content. Each character will come with a stage and a collection of music. You can buy them individually or you can buy them in a fighter’s pass, so all five for effectively, in the U.S., $24.99. So, that’s going to be the DLC. The reason it was so important to showcase Joker was really to help the player understand that the net has been cast very wide for the different new fighters who will enter Super Smash Bros. Ultimate. From that perspective, it’s going to be very exciting. As it gets closer to the launch of the next fighter we’ll reveal that, so stay tuned for that.

As e-sports become more and more of a thing, how close is Nintendo monitoring that arena? There are already Smash tournaments, but is it something you’re looking to get into even more?

This whole competitive play space is something that we are looking at and continue to participate in. What I’ll tell you is that Nintendo approaches it in a very unique way, and it starts from the foundation of the intellectual property that’s being leveraged in this competitive space. Let’s take Super Smash Bros. as an example. There’s a well-developed competitive circuit, there’s a number of key competitive players, the community is robust. Our approach has been to encourage and enable the community but beyond that to be fairly hands-off. We have put on invitational tournaments. We have worked with broadcast partners to broadcast that out. We just had a series of three broadcasts with TBS showcasing the Super Smash Bros. Ultimate Invitational we held earlier this year [in November] here in L.A. For us, it starts with the intellectual property. It is about how we will push this forward in a way that is smart and meaningful and for each of the different games we take a different approach. We do something different with Splatoon. We’ve held Nintendo World Championships in the past, which has been more of what I would call a decathlon of gaming versus a focus on any one particular title. For us, each of these are unique, but it stems from the nature of the intellectual property.

In terms of physical sales versus digital sales, do you think we’re moving to a place of exclusively digital copies of games? Do physical sales still rival digital?

Nintendo’s philosophy is we want the consumer to buy the content in the way that they want, whether it’s physically or digitally. Additionally, we work with our retail partners to enable them to sell the product physically or digitally. Earlier, I touched on Amazon and their best-sellers. Their number one best-seller last time I checked was physical copies of Super Smash Bros. Ultimate. The number three seller was digital versions of Super Smash Bros. Ultimate. So, we enable them to sell it either way, we enable the consumer to buy it either way, and from that standpoint we’re agnostic. Maybe what’s driving digital, broadly speaking, are things like indie games, which are largely digital-only; DLC and other added content which is digital-only; you’ve got each of the major players offering some sort of subscription program which is digital-only. These are unique elements that you can’t buy physically that help move the percentage a little bit further from a digital perspective.

Do you have plans for doing another classic console in the future? Do you expect to release any more games on the classic consoles that have already been released?

There’s no ability for add-on content with our classic consoles, so when you purchase the console it’s coming with that set roster of content. We worked very hard, both for the NES Classic and the SNES Classic, to really have the best games that defined that generation. We’ve said that the current systems are the extent of our classic program. We’ve also been clear that, at least from an Americas perspective, these products are going to be available through the holiday season and once they sell out, they’re gone. And that’s it. The way that consumers will be able to continue participating with our classic content is going to be through Nintendo Switch Online, and we just released three new games (Ninja Gaiden, Wario’s Woods and Adventures of Lolo) from the NES generation onto that platform. We look at that as the main way that consumers will be able to experience that legacy content.

I love the Nintendo Labo because it was so creative and weird and different —

That’s classic Nintendo! (Laughs.)

That’s what I love about it, and the Switch, too. You don’t do what anybody else is doing. Is that a conscious decision and do you feel that Nintendo influences the rest of the industry?

It is absolutely a conscious decision to innovate and to do things differently, to do things that are unexpected, to do things that consumers didn’t know they wanted but once we deliver that innovation it becomes, if you will, the new way of doing things, the new normal. Going back in our history, whether it’s the D-pad, which Nintendo introduced; our controller was the first with a joystick; we first introduced touchscreens to gaming with the Nintendo DS; we made AR broadly available to tens of millions of consumers, first with the 3DS and then it went to a whole new level with Pokemon Go. There are so many innovations that we have brought, not just to the video game industry, but to entertainment at large that it is core to our DNA to constantly innovate and constantly bring new things to bear. Taking those risks doesn’t come without a potential downside. One of the quotes that I love, and this is from [deceased former Nintendo CEO] Satoru Iwata, is that, as a company, we run toward risk. It’s a mentality of always pushing the envelope to be trying something new.