By Jacky Wong

Nintendo knows a thing or two about sequels. With the long-awaited Switch 2, it has decided not to mess with a winning formula.

The Japanese gaming giant unveiled its highly anticipated console on Thursday, though only through a 141-second trailer. Frustratingly little has been disclosed: There were no details on pricing, tech specifications, game lineup or a launch date. But from the brief glimpse offered, the new console looks conspicuously similar to its predecessor with a few improvements: a larger screen, an extra USB-C port and magnetically attached controllers.

The innovative design of the original Switch -- combining a hand-held device with a home console -- has proved to be a money spinner for Nintendo. The company has sold 146 million units of Switch, making it the third-bestselling videogame console ever, after the PlayStation 2 and the hand-held Nintendo DS. More important, Nintendo sold 1.3 billion game copies for Switch -- the most for any of its consoles.

So it makes sense for Nintendo to stay the course. The last time the company had a smash hit, selling 102 million Wii consoles, Nintendo followed up with a flop. The confusingly named Wii U, hampered by a weak game lineup and muddled marketing, kept Nintendo in the red and led to operating losses in fiscal 2013 and 2014, and the company never really recovered until the Switch arrived.

Investors, however, seem disappointed by the announcement: Nintendo's stock dropped 4.3% Friday. Still, Nintendo's shares have surged in recent months, rising 15% in the past three months, and remain just below record highs.

Ultimately, the success of the new consoles will depend on games. Nintendo's platforms live and die by their first-party titles, and the trailer seems to suggest a new "Mario Kart" is coming. The racing game was Switch's bestselling title, with 64 million copies sold, so it is a good choice for the launch.

Nonetheless, Nintendo will need to deliver a broad and compelling game lineup to persuade gamers to upgrade.

This highlights how intellectual property is Nintendo's real competitive advantage. Its venture into filmmaking with the smash hit "Super Mario Bros. Movie" points to the same. Nintendo's back catalog of games and characters, not hardware design, is what sets it truly apart.

Write to Jacky Wong at jacky.wong@wsj.com

(END) Dow Jones Newswires

January 18, 2025 06:00 ET (11:00 GMT)

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