Is there love in the air after years of war? It would certainly seem so as Microsoft and Nintendo now have closer ties than what is normal between fierce competitors in the console space.
It started with Minecraft
Ground zero for this new relationship was no doubt Minecraft, and as new owners of Mojang and Minecraft, Microsoft inherited a cross-platform strategy it made no sense to abandon. Instead, it has been expanded and through Mojang collaborations in the shape of hardware bundles and crossover characters have been introduced. It may be an anomaly, but in many ways, Minecraft's enormous impact on the bottom line of Microsoft's gaming division must surely rub off on the strategy the company will employ moving forward. The notion that Microsoft doesn't really care where you play your games is here to stay.
Another area where Nintendo and Microsoft have seen eye-to-eye is cross-platform multiplayer. While Sony has been sitting on the sidelines (for the most part), Nintendo and Microsoft have both been willing and happy to exchange the needed details and open up their platforms (somewhat, at least) in a move that is mutually beneficial. Reaching critical mass in terms of players online has and will always be a struggle, particularly for smaller and niche titles, and with Microsoft and Nintendo charging players a monthly fee for online play it makes a whole lot of sense to improve that experience.
First Xbox Live, then xCloud and Xbox Game Pass?
Word leaked ahead of GDC that Microsoft is to expand their Xbox Live offering to new platforms, namely mobile and Nintendo Switch. Now, this may not be as dramatic as it sounds. At least not as a first step, and it is highly likely you'll need both Nintendo Switch Online and Xbox Live in order to make practical use of this. It could also simply be a case of facilitating players with both platforms. The long term play here is that Microsoft could be ready to serve up their streaming cloud service (xCloud) to run on both mobile devices and Nintendo Switch at some point.
It's easy to see why it would appeal to Nintendo to get high-quality cutting edge games streamed onto Nintendo Switch as the lovely device itself isn't quite as capable as PS4 and Xbox One and nowhere near as capable as their successors. In Japan, Nintendo and third-parties have already toyed with cloud versions of games like Resident Evil 7 and Assassin's Creed Odyssey. Is it much different if Halo Infinite and Gears 5 would be made available? Microsoft wants to expand the reach of their Xbox Game Pass. To limit what's dubbed as "the Netflix of gaming" to 50 million devices (give or take) would be setting yourself up for failure as the real money is to be had when your reach extends into the hundreds of millions. Mobile devices, Switches, desktops, laptops, and eventually television sets themselves are obvious targets. You'll never see the near-mythical handheld Xboy, but Microsoft isn't primarily a hardware company, they never have been, and spreading their software as far as possible is really taking a page out of the MS-DOS, Windows, and Office book.
For Nintendo the upside is that they could appeal to a wider demographic, sell their hardware and peripherals (remember, Nintendo doesn't take a loss at anything they sell, unlike their console competitors) to more people, but the downside is if Switch players focus on playing games via Xbox Game Pass there's no software revenue coming in. Therefore one would have to presume a Nintendo Switch Online subscription would be a prerequisite for using Xbox Game Pass on Nintendo Switch. Is that enough to offset the potential risk of lost revenue? It sure is difficult to imagine Nintendo willingly walking into such a potentially damaging situation, especially given how reluctant they were to let Netflix onto the Switch, even though Netflix is a competitor for the consumer's time rather than their spending on games. Could this collaboration be limited to Japan where Nintendo has had trials with streamed titles? That's certainly a possibility, but the big potential for Nintendo is naturally to be able to provide best in class shooters and racing games to Western audiences where these genres are key. Could Xbox Game Pass help Nintendo retain Switch users across what's bound to be a problematic generational transition (we fully expect Nintendo to go into the next generation a distant third as the Switch is enjoying great success)? It could certainly be key to what has been a very viable strategy in the past with Nintendo handhelds, namely gunning for multiple units per household.
Crossovers and Cameos
Perhaps we are a few years away from the streaming scenario with Xbox Game Pass on Nintendo Switch, but in the meantime, there is plenty of opportunities for collaborations that will test the waters and gauge reactions from fans on both sides. It's been suggested that some Rare characters like Banjo could make it into Super Smash Bros. Ultimate (perhaps even Master Chief), and now that Microsoft has a bigger stable of smaller and mid-sized development teams some titles (like the rumoured Ori version on Switch) could make it onto Nintendo's platform. It's easy to see the potential in that direction, but for Microsoft who plan to build the gaming equivalent of Netflix, Nintendo is clearly the equivalent of Disney and getting their content onto their subscription service would be the ultimate goal. Is it feasible? Maybe. It would make a ton of sense for Nintendo to make a future Virtual Console service platform agnostic and available on multiple platforms. Would it be unthinkable then to see some NES or SNES classics on Xbox Game Pass? Nintendo should really look to utilise their library of classic titles better than they do today; there's money left on the table.
A shared future?
What we arrive at when looking at the gaming portfolios of the two companies is that they do fit neatly together. There's not a great deal of competition and by collaborating they could potentially dominate a market that Sony has ruled the last generation. However, the only way this could be possible today would be through an outright takeover from Microsoft. It's no doubt tempting for the Redmond company, but if there's one thing Microsoft knows it is that it needs to be consensual. After all, it's not hard assets, but rather intellectual properties, know-how, and tradition that makes Nintendo what it is. Time and time again Microsoft has failed at making a meaningful connection with the Japanese market and Japanese developers, maybe it makes more sense to embrace a competitor instead?
In a future where content is likely going to be key to success, it's not impossible for Nintendo to swell into a Disney-like corporation, where instead of risking getting picked up, Nintendo would be the one capable of furthering its portfolio by buying companies. This is a future Microsoft no doubt sees as likely, with their Xbox Live/Xbox Game Pass/xCloud strategy, they need to attract premier content in order to reach critical mass and truly establish themselves as "the Netflix of video games". Step one may have been to add companies like Obsidian, InXile, and Ninja Theory to Xbox Game Studios, but one day they'll want even more significant content to drive subscriptions across a plethora of platforms that houses Xbox Live and Xbox Game Pass.