Nintendo recently stated that "NX" was the code name for a new game console under development. No information on this console has been given except the code name, but what does Nintendo need to do with its new game console?
The relatively new Wii U originally launched worldwide in Q4 2012, but it has faced problems since its inception, many of which can be traced to the hardware inside of the Wii U.
According to a page from an IBM manual, the Wii U uses three RISC CPU cores based off of a PowerPC architecture, which is the same architecture used inside of Nintendo's previous two game consoles. The core speeds have never been officially stated, but according to hacker Hector Martin, the cores run at 1.24 GHz.
The reason for maintaining a similar architecture is to make the new console backwards compatible with previous consoles, which is not an uncommon practice. Microsoft and Sony try to maintain backwards compatibility with older consoles as well, but they use other methods that are less restrictive on hardware, but suffer in other ways.
The Xbox 360, for example, is only able to play a portion of games from the original Xbox, and to make these games work, each one requires a separate download and may experience bugs and performance issues.
Maintaining backwards compatibility can hamper growth, though, as the best hardware for new consoles often isn't compatible with the older hardware. On the other hand, it does increase the console's available library of games.
As a result of the limited hardware, the Wii U has fallen behind the Playstation 4 and Xbox One in performance. According to the technical director on Frostbite for EA, Johan Andersson, the Wii U had difficulties running the Frostbite 2 engine, and so the company never attempted the Frostbite 3 engine on the console.
In the latest generation of gaming consoles, both Sony and Microsoft went with AMD x86 processors for the Playstation 4 and Xbox One, respectively. This benefits game developers by offering a high level of compatibility between the new consoles and PCs, making it easier, cheaper, and faster to develop and port games to these devices.
The Wii U's PowerPC CPU architecture is not compatible with the x86-based hardware and software used in other consoles, and as a result, porting games to the Wii U requires more time and is more expensive. The added cost, in addition to the limited hardware performance, has caused many companies such as Ubisoft and EA to halt production of several games for Wii U.
Despite the challenges, Nintendo has so far been able to profit off of the Wii U, but the sale of games and hardware units is much lower than the competition. The console's game library has been carried almost entirely by first-party games by Nintendo.
Although Nintendo has been able to keep its console going, it seems doubtful that the company can continue to produce first-party games at a rate that would satisfy customers long term without over-producing games in its major franchises. Too many Zelda or Mario games could drop in quality, or feature repetitive game play and ultimately leave customers dissatisfied.
Even if Nintendo is able to produce enough first-party games to satisfy customers who only buy a handful of titles a year, there are many gamers who can run through a game in a week and then want something new. No single company can produce a new high-quality game every week without the support of third-party game developers, and as a result many gamers turn to other consoles.
The only way out for Nintendo is to design a new console that can overcome the shortcomings of the Wii U. The new console would need to at least be competitive with the Xbox One and Playstation 4 from a performance standpoint, but that may not be enough to attract third-party game developers back over, as the cost for porting games would still be potentially prohibitively high.
The best solution for Nintendo is to design a console that uses x86-based processors, which would allow third-party developers to easily port games to the NX console. The largest first-party game library, combined with strong support from third-party game developers, could place Nintendo back on top of the home gaming console market.
Developing a new console could also cause Nintendo some problems, though; although a new console could be much more successful than the Wii U, the Wii U is only about 2.5 years old. Over 9.2 million Wii U consoles have already been sold, and it's a lot to ask customers to buy a new console so (relatively) soon.
Nintendo could try to support both consoles, but clearly the new system would receive the most attention and receive better content.
It's a tough situation for Nintendo to be in, but in the end a new console might be the only way to keep Nintendo in the home gaming market.