Felix Gillette:

Within hours of its arrival, Pokémon Go was a sensation. The game sent countless players wandering giddily around neighborhoods, shopping malls, and parks to capture Pokémon who’d been digitally embedded around the Earth, appearing on users’ screens when they drew near. Technically, Nintendo had played a peripheral role in the advent of Pokémon Go, but the phenomenon had some investors diagnosing early stage Nintendo Mania.
 
 More symptoms emerged in November, when the company released the NES Classic Edition, a miniaturized, rebooted version of the Nintendo Entertainment System, the console that had made the company a household name in Europe and America in the ’80s. The updated version was carefully calibrated to rekindle the latent passion of lapsed fans, with 30 of the most popular NES games built in. (Unlike the original, there were no cartridges.) From the start, supplies were scarce. Stores were constantly sold out, so customers lined up for hours to await shipments of even a few units. But what seemed to some like a supply-chain disaster looked to others like a calculated strategy. At $59.99 per unit with no additional games, NES Classics were a low-margin item; much more important for the company was to whet the world’s appetite for Nintendo games in preparation for the Switch. To that end, Nintendo and DeNA also released Super Mario Run for iOS and Android, giving hundreds of millions of people an opportunity to help Mario scamper across their smartphones or tablets.
 
 The strategy worked. By the time the Switch arrived in the spring of 2017, legions of people had been enticed to reconnect with their favorite childhood game characters on a proper Nintendo device. Over the next fiscal year, the Switch accounted for $6.8 billion of revenue. Nintendo’s existing handheld platform, the 3DS, kicked in an additional $1.7 billion, and sales of smartphone games rose 62 percent, generating $354.9 million.
 Behind the white walls in Kyoto, Nintendo executives were already pondering how to stave off the next bust. At a news conference this April, Kimishima announced that he would step aside on June 28 and that Shuntaro Furukawa would succeed him. It was time, Kimishima said, for the next generation to take the lead. Furukawa, 46, had grown up in Tokyo playing Nintendo games; where Kimishima unwinds on the golf course, the new president plays Golf Story on the Switch. He joined the company in 1994, after completing a degree in political science, and spent 11 years at Nintendo of Europe before returning to Kyoto to take over corporate planning, working closely with Iwata and then Kimishima.
 
 When it was Furukawa’s turn to speak, he noted that Nintendo makes “playthings, not necessities” and that if consumers stop finding its products compelling, the company could be swiftly forgotten. “It is a high-risk business,” he added. “So there will be times when business is good and times when business is bad. But I want to manage the company in a way that keeps us from shifting between joy and despair.”
 
 Nintendo has a few plans in motion: a partnership with Cygames Inc., a Japanese developer specializing in mobile games, and the launch in September of an online subscription service for the Switch, which will allow gamers to compete against one another and play a slate of retro titles. The latter will help executives make the most difficult evolutionary step in the console life cycle: winning over the broader market of people who don’t typically play video games.