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The whispers that Microsoft is preparing to launch games and services on Switch are, in some ways, too fantastical to believe; a dream-come-true for fanboys-and-girls of a certain age. The rumoured deal suggests that the company is planning not only to launch Xbox Live and Game Pass integration, but also to publish ‘native’ games (including, it has been reported, Ori and the Blind Forest and Cuphead) and stream others via the company’s much-hyped Project xCloud platform. It all seems so suspiciously pie-in-the-sky that every sliver of new information has us reaching for huge fistfuls of salt. The idea that two of video gaming’s giants could come together and collaborate in such a way feels unprecedented, yet you need only glance at the history books to realise it’s really not as outlandish as it first sounds.

A quick search of this very site yields various complimentary comments about Nintendo from Phil Spencer, Microsoft’s Executive Vice-President of Gaming, and how he’s eager to reach gamers on ‘rival systems’. The companies’ US headquarters are just down the road from each other in Redmond, Washington, and Spencer always has warm words whenever the topic of Nintendo comes up.

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PHILSPENCER

This arms-open approach is very different to the previous regime, which designed the original Xbox One and bungled its launch through terrible messaging and a fundamental misread of its audience. While the company’s ‘always-online’ vision of the future is slowly but surely coming to pass, Microsoft’s effort to position the Xbox once again as a multimedia centre came too soon and involved too many compromises from the point of view of their gaming audience. Consequently, the incredible goodwill the company managed to salvage after the 360’s ‘red ring of death’ debacle was squandered through its always-online, Kinect-enabled, secondhand game-foiling foibles.

Conversely, Sony – humbled by the mauling it received after launching the PS3 for $599 – took advantage and raced ahead with PS4. Microsoft stopped officially reporting sales back in 2014, which probably tells you all you need to know, but Sony boasted in January of having sold 91.6 million PS4s to date. While Switch sits at around 32.27 million, it launched less than two years ago and shows year-on-year growth while sales of the ageing home consoles are rapidly declining. VGChartz estimate that Xbox One has sold over 40 million of its various SKUs, less than half of Sony's figure. The point is clear; Microsoft has lost this war against Sony.

It’s also worth remembering that while Xbox 360 ‘beat’ PS3 last generation, the actual numbers are closer than you might imagine. While hearts and minds were won by that console’s incredible catalogue of third-party games coupled with some strong first-party offerings, the final worldwide sales for 360 and PS3 put them within 4.4 million units of each other.

So, while we tend to look back and laugh at Sony’s incredible hubris, PS3 worked its way back to relative sales parity by the end of the seventh generation. While Phil Spencer has been fighting tooth-and-nail to get Microsoft back to those days – refocusing on core gamers and making an effort to humanise the corporation with a personable style that acknowledges the strengths of the competition – even the halcyon days of the 360 aren’t the all-conquering benchmark they’re remembered as.

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It’s also worth remembering that the Xbox brand has always been a total non-starter in Japan. Its brashness and boldness make it a hard sell in Japan where, thanks to the perception that it’s a big American product clearly not designed with the Japanese in mind, it has always struggled. In fact, ‘struggle’ is too generous a word – sales are abysmal. According to Famitsu, just 15,339 Xbox Ones were sold in the country in 2018, bringing its estimated lifetime sales to a paltry 102,931 after five years. Microsoft barely even registers in Japan, one of the world's most important gaming markets.

This puts Microsoft in an unenviable position: on the one hand, there’s little incentive to even launch in Japan – the expense of shipping, marketing, and the associated costs of supporting the Xbox infrastructure in the country (where, according to Media Create, just 68 Xboxes were sold the week ending 17th February, compared to 65,958 Switches) means the company is losing money by simply being there. However, if it ever hopes to win over Japanese gamers, Microsoft can’t be seen to abandon the territory, either. Rocks to the left, hard places to the right.

What if there was a way to make inroads into that market that would eliminate much of the expense of selling a big physical box to an audience who historically view it as the physical manifestation of the ignorant, foreign interloper? What if Microsoft could sell its games on hardware that isn’t in direct competition with its own product and that’s already been accepted by that audience, not to mention millions of others around the world? Framed in this way, collaboration rumours make more sense.

Getting games on the lower-spec devices also aligns with Microsoft’s stated intentions. We’ve heard a lot about its plans to branch the Xbox brand out into the cloud and onto a multitude of devices via Project xCloud rather than confining it to the physical box under the telly; indeed, Microsoft is already eyeing a future where we no longer buy gaming hardware, but instead pay a monthly subscription, Netflix-style, and play on pretty much anything that has a screen and a connected wireless pad. With all the processing being done server side, lag is a significant hurdle to overcome, especially with certain games and genres, but Microsoft must be relatively confident they can solve this to the satisfaction of a general audience. Control-wise, Switch is virtually 1:1 with Xbox One (analogue shoulder triggers aside), so no problems there, but streaming relies on one factor above all else: a robust internet connection.

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In Japan, we’ve seen streaming-only games on Switch from both Ubisoft (Assassin’s Creed: Odyssey) and Capcom (Resident Evil 7). The country’s digital infrastructure is lightyears ahead of most other nations, mainly thanks to its smaller footprint on the map, and while North American audiences might be eager for it, the infrastructure in that vast continent is either not fit for purpose or, in some areas, completely non-existent.

With 5G slowly rolling out, perhaps Microsoft is betting people won’t be reliant on physical networks for lightning-fast connection speeds, but if it’s putting all its eggs in the streaming basket, Japan is the place to be while the rest of the world slowly catches up.

There’s also another disconnect Microsoft addresses by publishing on Nintendo hardware. When it purchased British developer Rare back in 2002 for $375 million, its intentions were obvious: hijack some of that lucrative younger demographic from Nintendo to compliment the hardcore crowd it had attracted with the likes of Halo: Combat Evolved. The studio behind huge hits like GoldenEye 007 and family-friendly titles like Banjo-Kazooie sounded like just the ticket to expand the Xbox userbase.

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That plan never really worked, though; at least not to the extent Microsoft wanted. After the hey-day of the ‘90s, where Rare seemed to be utterly in sync with Nintendo and its audience, the developer arguably struggled to find its groove with Microsoft and the studio’s madcap, irreverent and inescapably British sensibilities have never truly shone on the Xbox platform. The endearing quirks seem to get polished away and, despite glimpses of its former character, there’s still a perception that the studio doesn’t quite fit into Microsoft’s X-shaped box.

Microsoft knows this; it knows it’s sitting on a gold mine of IP that the majority of its customers simply aren’t very interested in. That isn’t to say no-one buys them, but the Venn diagram of Halo, Gears and Forza fans simply doesn’t have enough crossover with gamers who can recite the entire Great Mighty Poo song. There’s a rich vein of nostalgia for the company’s retro output which it attempted to mine with the wonderful Rare Replay compilation but, again, it’s all for nought if the audience for your product is on another console.

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Nintendo gamers skew younger, of course, but there are also the thirty/forty-something gamers who miss Rare who’ve embraced the convenience of Switch and would jump at the chance to replay Perfect Dark on a handheld or share Banjo with their kids. Nostalgia for those early polygonal games of the PlayStation/N64 era is peaking; Rare games would sell by the bucketload on Switch.

And if Microsoft and Nintendo can work things out, they’re only a hop-and-a-jump away from – whisper it – GoldenEye 007 escaping from its N64-shaped licensing prison. Whether that dinosaur, a relic of the Cold War, could flourish in the modern gaming world is a conversation for another day, but it’s a tantalising possibility.

Let's also remember that Microsoft already publishes on rival consoles to tap into a different audience; Minecraft is the perfect example where cross-platform partnerships make financial sense, and a deal with Nintendo is similarly logical. Certain signature series already address the Xbox’s audience perfectly, so there’s far less incentive to put Halo on Switch, for example, and even less likelihood of a ‘proper’ Mario game appearing on a non-Nintendo system. The Rare angle, though, would seem to be profitable for both companies, and that's why it makes so much sense.

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And money is always the bottom line. If there’s an opportunity to access a market a company isn’t hitting, principles can go out of the window very quickly – that’s business. Exclusivity deals that seemed watertight can suddenly be bent or broken completely. Think back to illustrious ‘Capcom Five’, five GameCube exclusives announced back in 2002. Of those games, only P.N.03 remained GameCube-only; one was cancelled outright, while Killer7, Viewtiful Joe and Resident Evil 4 hopped over to other platforms. Game director Shinji Mikami famously stated he would quit his job, or “cut off his own head” as the loosely-translated Japanese colloquialism goes, if the latter ever made it to another platform. Within nine months of the GameCube release, RE4 was on PlayStation 2 and with the game coming to Switch in May this year, it’s still with us even now; more to the point, so is Mikami-san.

Even the most unlikely, unholy unions can quickly come to pass. If you’d asked a Sega fan at the turn of the millennium if Sonic could ever appear on a Nintendo console, they’d have likely thrown a VMU at you in disgust. By December 2001, though, Sonic Adventure 2 was on GameCube and Sonic Advance on Game Boy Advance. In the shortest of turnarounds, the greatest of rivals became super pals and the unthinkable was a reality.

While we doubt we’ll be seeing Microsoft’s top-tier franchises on Switch, or vice versa, stranger things have happened and there’s a lot of exciting crossover potential in the future. Who knows – a Banjo or Master Chief amiibo might not be as crazy an idea as we thought at the start of the year.

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