On Friday, Nintendo (NTDOY) released its newest gaming console, the Switch, and the results have been so far overwhelmingly positive. This is particularly good news for the Japanese company, for which this launch might be a make-or-break event.
Nintendo is as much a cultural institution as it is a video game maker. The company burst onto the home-gaming scene in 1983, with an 8-bit cartridge console known as the Nintendo Entertainment System (NES). Since then, the company's gaming hardware and software have become far more technologically advanced, but there's a problem: So has the competition's.
The NES formed the center of many childhood experiences, but in the past 20 years other video game companies have swooped onto the scene with better products. Technology behemoths such as Sony (SNE) and Microsoft (MSFT) have released several generations of their own consoles, the PlayStation and Xbox, respectively. And game publishers like Actvision Blizzard (ATVI) and Electronic Arts (EA) have dominated the game sales charts.
In addition, smartphone gaming has become increasingly popular and profitable for Nintendo's competitors. As titles such as Candy Crush topped the charts, downloaded by a broad audience of more casual gamers than console games attract, Nintendo's consoles sat on the shelves. The company's last next-generation release, the Wii U, was introduced in 2012 to disappointing results.
That changed somewhat last summer when Niantic Labs, a former subsidiary of Alphabet (GOOGL) , released Pokemon Go. The mobile game, which used characters licensed from Nintendo, rocketed off the charts as it became the world's most downloaded app for a few weeks. And since Niantic itself is a privately held company, many investors who wanted to profit from the Pokemon craze invested in Nintendo instead.