When the original Nintendo Switch was revealed in 2016, perhaps the biggest moment of that reveal was the inclusion of an old game from 2011: The Elder Scrolls V: Skyrim. This game was a blockbuster of a game in its time from third-party publisher Bethesda Softworks, and its reveal for Switch implied that Nintendo’s long-standing problem with third parties could finally be resolved.
But does the Japanese company even need third parties? It’s an interesting question to ponder as Nintendo gears up for the launch of the Switch 2, and there’s a strong case for either answer. Let’s dive in and find out what Nintendo truly needs to stay competitive in the next generation.
Nintendo’s rocky relationship with third parties
In the early days of the video game industry, Nintendo was a clear market leader. Its original console, the Nintendo Entertainment System, held control over major third-party game publishers like Capcom and Square. Its first major rival in the space, Sega, eventually left the console business entirely due to declining sales and shifted to only creating games — leaving Nintendo once again with a dominant position over third parties well into the 1990s.
However, nowadays Nintendo is not the market leader anymore. Sony’s PlayStation has steadily gained the title of king of consoles this century, meaning a lot of third parties make games for Sony above all else. Microsoft’s Xbox consoles have similar specs and control setups to PlayStation, and are still popular. To reach as much of the market as possible, it’s better to publish on both Xbox and PlayStation.
In terms of hardware, Nintendo has often created underpowered technology, starting with the Wii in 2006. The Wii was designed intentionally to be accessible to families and casual gamers, and its motion controls and lesser tech made it a cheaper and more widely appealing proposition, which helped the Wii soar to success.
That said, the Wii’s motion controls would lead to other subversive choices in future generations. Nintendo’s next console, the Wii U, featured an obtuse GamePad controller, and the Switch followed with a hybrid setup. Each of these unique twists on control methods made any efforts to release top-of-the-line blockbusters on Nintendo platforms more difficult. It is hard to release in-depth games with a standard Nintendo controller, which typically has fewer buttons and heavily incorporates motion controls.
With its unconventional controllers and technology that strategically lags behind its competitors, Nintendo heavily relies on the success of its systems in order to lure third parties in. Regardless, the company has still been missing out on a piece of that third-party pie for years.
At the same time, Xbox and PlayStation hold third-party games only on its platforms that are now forces to be reckoned with, and Nintendo is perceived by many to be falling behind on third parties.
It is a common thread throughout Nintendo history for the company to have difficulties with third parties. It is a tradition that goes back to Square’s decision to put Final Fantasy VII (1998) on PlayStation instead of Nintendo 64 due to its underpowered specs — a well-known and historic switch-up from a longtime Nintendo ally. Today, this difficulty persists through issues like Electronic Arts’ modern reluctance to publish most of its games on Nintendo Switch.
The case for third parties
Any conflict with third parties negatively impacts Nintendo’s business. After all, selling more games only helps a business like Nintendo’s, since it gets a cut of every release sold on its consoles.
Take the aforementioned Electronic Arts (EA) as an example. Its blockbuster sports franchises are usually missing, like Madden NFL — which has not seen a Nintendo release since 2012 — or are consistently inferior on Switch, like its EA’s FC soccer franchise. Then there are EA’s action titles, like its Star Wars adaptations as well as Battlefield and Dragon Age, which consistently miss Nintendo platforms. EA is one of the most valuable gaming companies on the planet, and Nintendo is continually missing out on profiting from such a collaboration. .
One of the biggest knocks against buying a Switch as opposed to a PlayStation or Xbox is that these big third-party games are never a guarantee for Nintendo. Even the recently announced Split Fiction, from It Takes Two developer and the rare EA-Nintendo ally in Hazelight Studios, has only been confirmed for PlayStation 5 and Xbox Series X/S.
If a consumer is deciding which console to buy, that consumer is usually thinking about the games they want to play, and what console will house those games. Right now, Nintendo cannot promise that every big new game will arrive on its console.
Right now, Nintendo could miss out on all of this hypothetical consumer’s future purchases. Multiply this situation by potentially millions of undecided consumers — whose concerns over missing out on a big game are quite common — and suddenly, a small deficiency turns into a big missed opportunity.
It is good timing for Nintendo to act aggressively, especially as the idea of a major “third party” studio could be dying at this moment. Bethesda and Activision Blizzard are now subsidiaries of Xbox, and rumors have been swirling for years about the future of fellow big publishers like Ubisoft and Square Enix. It is possible that eventually, game publishing could look a whole lot like the music industry, with the three console makers resembling the three major record labels.
Nintendo should establish a Switch 2 that will take advantage of this new reality instead of waiting for the games to come to them. There is a slate of upcoming games that are absolute musts for Switch 2. They include Bethesda’s next DOOM title, the next Dragon Quest from Square Enix and future Call of Duty games from Activision — a deal which is already in place, but just needs some tangible results. It might even be worth exploring a purchase of a major third-party studio that aligns with its values..
In the business of gaming, the goal is to keep as much of a consumer’s money and attention as possible. It stands to reason that Nintendo could get even more out of each consumer.
The case against third parties
On the other hand, Nintendo is already dominant in a different business: family-friendly and accessible gaming. From Mario and Zelda to Pokémon and Animal Crossing, Nintendo’s best software has reliably come from within its own studios for decades. It has built a strong demographic of loyal fans.
Nintendo has faced the issue of third parties before and has not only survived, but thrived — the Wii is one of the best-selling consoles ever largely on the back of just one game: Wii Sports (2006), sold with the console, made by Nintendo’s in-house development team.
To Nintendo’s credit, progress has already been made on this front. Relationships with Bethesda — the aforementioned Elder Scrolls publisher — as well as other third-party behemoths like Capcom and Square Enix have improved considerably since their falling-out in the 1990s. Nintendo touted 2024 as its best year “ever” for third-party partnerships, and its boast is fairly accurate because of its slate of successful partnerships with major studios like Ubisoft, Square Enix and Capcom.
Plus, Nintendo may not be the market leader for major third-party titles, but it is undeniably the king of indie games. From Hollow Knight (2017) to Balatro (2024), Nintendo Switch has been a cheap and accessible haven for small, independent projects to make millions. Couple that with a decent amount of third-party blockbusters — though not as many as it could or should have — as well as its own major series, and Nintendo has a model that made the Switch one of the most popular consoles ever made, at over 150 million units and counting.
While making a huge bet on its own success instead of just courting third parties is a risky endeavor, Nintendo just keeps succeeding, so its strategy works! Landing Monster Hunter Rise (2021), one of Capcom’s biggest series, as a Switch exclusive was a coup that heavily banked on the Switch’s huge consumer base to sell units.
Plus, Nintendo’s gotten Ubisoft to work directly with them on the crossover Mario + Rabbids franchise, a pair of Switch exclusives. Nintendo has practically stumbled into a slate of valuable third-party relationships where it does not have to do much work to recruit big studios.
This can be seen in “Super Smash Bros.,” Nintendo’s mega-crossover fighting game that also serves as an unstoppable power broker. When Sora from the Kingdom Hearts series came to Super Smash Bros. Ultimate (2018), so did his entire series. Big studios like Square Enix, Capcom, Konami and even Microsoft are now lining up at Nintendo’s door when the time comes to pick the next roster. Part of the deals that arise afterward often involve porting some of its games to Nintendo.
Nintendo is the king of family games and indies, and it might not even need to actively recruit third parties to continue to prosper.
Final verdict
Where does Nintendo go from here? Sure, the company could rest on its laurels and continue to wait for the relationships to pour in. After all, it already has a chokehold on indies and a slew of popular in-house series.
But as major titles like the forthcoming Grand Theft Auto VI and consistently easy value propositions like the Madden NFL series loom, and the nature of major third parties keeps changing, Nintendo’s got a big strategic decision to make.
Early reports indicate that the Switch 2’s power will roughly equal that of the PlayStation 4 and Xbox One – and while that tech may still be a generation behind the current consoles, it has been well-documented that the upgrade to this generation is less important than it has ever been. Games as demanding as God of War: Ragnarok (2022) and last year’s best-selling game in the U.S. Call of Duty: Black Ops 6 (2024) still released on last-generation hardware.
Thus, the groundwork is there for a strategy that marries these pros and cons into a very doable middle ground. Nintendo could get a few more major studios to believe in its vision for the Switch 2, and make more deals to please hardcore gamers who are about to reach for a different console. That way, Nintendo can take a bite out of Sony and Microsoft’s cake while still eating its own too.