Nintendo's Conservative Strategy Proves Right Amid Gaming Industry Turmoil

- 2026 is turning into the worst year for video games in decades. I mean, just look at what's happened over the last 18 months. The PS5 and Xbox Series X are more expensive by $150 to $300. PlayStation Plus went up. Valve finally shipped the Steam Machine that costs over $1,000. GTA 6, the game that's supposed to single-handedly save gaming, is 80 bucks and doesn't even come on a disc. Speaking of discs, Sony just straight up killed physical PlayStation games outright.

You know, the same day they also announced they're killing the PS3 and the Vita stores as well. (suspense music) - (beep) No. - You've probably heard a lot about the RAM crisis and how it's pushing prices up, but there's something different happening in gaming right now. The crisis is just making it a whole lot worse. So as Sony and Xbox compete to see who can blow things up the fastest, there's one company who's been flying under the radar, Nintendo.

No gutted studios, no massive layoffs, no killing physical games, well, mostly. Now sure, they did hike the Switch 2 price, but by a lot less than the competition, and they gave everyone a four month heads up. I never thought I would say these words, but Nintendo kinda looks like the good guy right now. - What the (beep) did you say? - To understand how things got so bad in 2026, you don't have to look too far back. For basically a decade, gaming only went up.

More players, more money, pretty much every single year. Then the pandemic hit, everybody got locked inside, and the line didn't go up. It went stratospheric. Record player numbers, record spending. So, are you surprised that the gaming industry went on an absolute binge? I know I did. Of games, of course. The big guys bought studios, they hired thousands of staff, and greenlit a ton of games chasing the next Fortnite.

I mean, PlayStation alone committed to something like a dozen live service titles. I mean, Sony also bought Bungie, while Microsoft bought both Bethesda and the absolutely massive Activision. The entire industry made a bet that the pandemic wasn't a spike, it was the new normal. Who's gonna tell 'em? Now, a lot of the info for this video is sourced from Matthew Ball's yearly State of Gaming report. It's an enormous 167-page PDF, which basically the entire gaming industry reads, and this year's edition makes the hangover incredibly clear.

Things are not healthy. Also, side note, just a few months after releasing this year's report, Xbox hired him as their new Chief Strategy Officer. And for some reason, the 2026 report says that Xbox is winning? I don't know how that happened. There's one stat that makes the contraction in gaming clear. Fewer Americans game regularly today than before the pandemic. Not before the peak, fewer than before. The sugar rush didn't just wear off, we're below where we started. Now, the thing is, across the entire gaming industry, revenue is actually at an all-time high. Which kind of begs the question,

where is all that money coming from anyway? Well, not new players. It is really about squeezing existing gamers harder by making in-game currency like V-Bucks more expensive really leaning on monetization like subscriptions. If you take out mobile, growing markets like China, and Roblox as a platform, all you really have left are forever games like Counter-Strike, Fortnite, and Call of Duty. Big swings on brand new games doesn't even make a dent. Xbox's own CEO admitted that they were losing 64 cents on every dollar they were investing.

Meanwhile, the consequences of this huge spending binge are finally landing. There's been a truly enormous amount of layoffs across the industry. I mean, you've got huge titles like Concord straight up imploding after launch, Bungie and Turn 10, legendary studios have largely been gutted at this point, and Xbox are spinning off studios they bought just a few years ago. 44,000 layoffs in just four years. And Xbox, just added 3200 more. Yeah. Then add the RAM crisis to inflate hardware out of reach for most people, that it just makes all of these problems so much worse.

Now gaming isn't dying, it is absolutely coming off of the sugar high of happier times. Sony did this, Microsoft did this, but Nintendo kind of didn't. Now it's not because they have a crystal ball, it's because they've already been through their own disaster and it nearly killed them. Let's take it back to 2011. - What are we supposed to do? - Party Rock, we discussed this. - I didn't know that was on us.

Let's take it back to 2011. Nintendo was coming off of the Wii and the DS, two of the best selling consoles of all time. Over 250 million units combined, the money printer running at full speed. Sound familiar? Then they launched the 3DS at $249, and nobody bought it. It really is one of the worst console launches in Nintendo history. Within five months, Nintendo does something unprecedented, cut the price by $80.

Remember when consoles could get cheaper instead of more expensive? That price cut blew a hole in Nintendo's. (laughs) That price cut blew a hole in Nintendo's finances. In 2012, they posted their first annual operating loss in decades. The pressure to do what every other company does during a downturn was real. Cut staff, close studios, "restructure". But instead, their CEO at the time, Satoru Iwata, cut his own salary in half. The board also took a 20% to 30% pay cut. And then the Wii U happened and things went from bad to worse. Now look, I'm not gonna tell the whole Wii U story again, but the numbers were truly awful. For context, the Wii sold over 100 million consoles.

The Wii U sold 13. Not 113, not 13 million, they sold 13 Wii U's. (staff laughing) Okay, it was 13 million, but it was basically 13, okay? So what did Nintendo do, besides probably panic? Well, Iwata-san cut his salary again. Now, I don't want to overstate this because his salary was certainly not saving Nintendo. Japanese CEOs, it turns out, do not make Activision money. That's kind of the point. It wasn't a financial move, it was a message.

Iwata said straight up that mass layoffs destroy employee morale and scared developers don't make good games. That's a hell of a signal to say that "I, the CEO of the company who got us into this mess I'm gonna take a cut instead of punishing employees." Imagine if certain other CEOs took that kind of approach instead of racing to see who can become a trillionaire first. (clears throat) This was one of the biggest generational collapses in gaming history, and it was a very, very dark time for Nintendo. Sony and Microsoft have other parts of their business to chip in when times are tough, but for Nintendo, gaming is the company. When no one buys your console, you're in trouble.

Now, the Switch largely bailed them out of this, but picture being Nintendo in this era. The pandemic hits, and the world is gaming like never before. You've just gotten out of the bad times, and everyone around you is buying studios and chasing Fortnite, but you're the company that just survived a near-death experience. Going all in on risk is not in the cards. Being a boring and responsible company is. And here's the thing, even with the massive success of the Switch 2, Nintendo are still being conservative.

Just this month, Nintendo's current CEO was asked about employee pay, and his answer was pretty much exactly Iwata's philosophy. "Salaries are the foundation of people's livelihoods, and if pay swings around with business results, developers can't take creative risks without fear of failure." When was the last time you heard a response like that from Sony or Microsoft? Now, I do wanna be clear that Nintendo does not deserve a free pass here. Let's not forget, this is the company that introduced the world to $80 games.

Mario Kart World did it before GTA 6 was even priced. You've also got the issue of Game Key Cards, which sure, they're absolutely better than nothing, but they're also confusing and largely just a physical download code. Nintendo will also sue a fan project or an emulator into the ground without a second thought. And personally, I still don't trust Nintendo's online at all, I mean, the account system is complicated, Virtual Game Cards, which are not the same as Game Key Cards are confusing, and my wife legitimately lost a ton of her save data when at one point I changed what Switch was our home console, and then it didn't sync and save and it was gone.

Like, look, Nintendo's digital ecosystem is genuinely the worst in the business. But it's all about context, and viewed through the garbage town lens of 2026, Nintendo doesn't actually look too bad. The Switch 2 is the second fastest selling console in US history. when they did announce they were gonna raise the price, it was only by 50 bucks, and they gave us four months of warning. And more importantly, no mass layoffs. No graveyard of dead studios. They're about to be the only game in town when it comes to physical games. Everyone else has made physical games worse and worse as games get bigger than the discs themselves, they take forever to install,

and sometimes still require a big mandatory download anyway. Now look, I don't think physical games are dying because players stopped wanting them. They're dying because companies made physical worse than digital. And it just so happens that you make a whole lot more profit selling downloads on a store than a box on GameStop's shelf. So here's the thing, Nintendo is not a charity. They charge full price forever, they lawyer up if the wind blows the wrong way, and they re-release the same games every few years like it's the damn Disney Vault. And yet, they didn't gut a single studio and somehow still keep cranking out innovative,

fun games year after year. In hindsight, Sony and Microsoft, I think got a little greedy. Nintendo played it safe, and they're in a much better place because of it. Now, look, being conservative looks like a genius move when the industry is on fire like it is right now. But during the good times though, they risk falling behind. But that's the thing about Nintendo. They're not thinking about the next five years. They're thinking about the next 50. Which brings us to 2026, and the one thing that pretty much everyone agrees on.

GTA 6 is carrying the entire industry at this point. It's almost certainly the biggest game ever made. It's 80 bucks, no disc, and it'll probably make more money in the first weekend than most studios make in a lifetime. But after that, I mean, look, I know there'll be great games to come, but it really does feel like GTA 6 is the capstone on this whole era of gaming. Look, I don't know what comes next, but if I had to bet on who's still standing when the dust settles, it's the boring, careful company that everyone's spent a decade making fun of. By everyone I mean me, and mostly of the Wii U. Now if you want to stay up to date on this wild, wild year, make sure to subscribe to the channel and ring-a-ling that ding-a-ling.

Stay tuned my friends, there's a fresh disaster to talk about every week at this point. Yay! That price cut blew a hole in Nintendo. (laughs) (all laughing) Blow a hole in their finances was the rest of that sentence. Read the entire line, don't stop half way through. (laughs) It's 2011, you just said (beep) first this time. All right. (puffs) That price cut blew a hole in Nintendo's finances, I said without smiling, but it's not in the right cadence. Focus, focus, focus, focus, that's. (all laughing)