Here's my read of the patent, or at least my hypothesis of how it could be used in a (potentially) commercially viable product.
In late 2016, Nintendo releases a home console which we'll call the NX (forget about handhelds for the moment). The NX has performance levels less than or equal to the PS4 and XBO.
In 2018/2019, the PS5 and next Xbox are released. Nintendo releases a box, which we'll call the NX+, which effectively just holds an SoC (roughly as powerful as the PS5, etc.) and a hard-drive, and connects to the NX. The NX+ has two functions, the first being a straightforward system upgrade to allow the NX to play "next-gen" games on par with the competing consoles. The second function is to stream these games over the internet to NX owners who don't own the NX+.
Of the two major issues with current game streaming services, the NX+ would eliminate one and significantly reduce the other. On the cost side, Nintendo wouldn't have to charge a subscription fee, as they don't have huge server farms to maintain. Regarding latency, the natural distribution of NX+ units would result in massively reduced typical latency compared to a server farm approach, as it's extremely likely that you would be able to be linked to an NX+ very close to you to stream from.
If well implemented, it would give Nintendo a very powerful message at the start of the next generation: "you can play next-gen games on our current-gen console". No need for a subscription, just purchase and play as you usually would. For NX+ owners, they would be incentivised to opt-in to the streaming service by earning eShop coupons for every X hours their NX+ is used by other players. Only a small proportion of NX owners would need to buy an NX+ to make the service available to everyone.
It would also allow Nintendo to introduce a mid-gen console now in order to get back into the console race, yet still compete properly with the PS5 and the next Xbox without existing NX owners feeling hard-done by.
There would, or course, be a number of challenges, both technical and practical, that would have to be overcome for this to work. Firstly, the practical challenges:
- The ratio of NX+ owners to NX owners would ideally want to be kept in a particular range. If the ratio were too low, all NX+ units would constantly be in use and NX owners would frequently be unable to connect to one to stream a game. At the other end of the spectrum, if every NX owner buys an NX+, then it sort of defeats the purpose of the streaming solution in the first place. Fortunately the reward scheme would operate as a sort of natural balance for this. With too few NX+ units, those who do own them would be earning a huge quantity of rewards, incentivising others to purchase one. Conversely, with too many NX+ owners, they would be streamed from very rarely and the rewards would be slim, reducing the incentive.
- When the NX+ is released, there would be a natural incentive for Nintendo for the price of the NX to be as low as possible, definitely under $200, but preferably $149 or even $99, to minimise the barrier of entry to streaming NX+ games. However, they should also be looking at using the NX to re-attract third parties to their platforms before the NX+ comes around, which would be best achieved by making the console more powerful, and hence less likely to be able to hit those low price points in a few years time. It would be a delicate balance to design a console that meets both those needs.
From a technical point of view, there are the following challenges:
- The obvious one is maintaining a high-quality, low-latency stream between two residential internet connections. Nintendo's experience with the custom streaming solution used for the Wii U gamepad would be valuable here. There is also a significant advantage in the fact that the two devices will be very close together in practical terms, which makes the challenge an easier one, but it's still not trivial.
- The less obvious technical problem is what to to when I'm streaming a game from someone's NX+, and then he wants to play a game himself? Obviously if you physically own a piece of gaming hardware you're not going to want to be locked out of it, so there would need to be some way of transferring a player to a different NX+, and doing so in a relatively seamless way. This would be, to put it mildly, a significant challenge, but isn't necessarily completely technically impossible.
It would definitely be an unusual business strategy for Nintendo, but if implemented extremely well (which is a big if), it would actually be a very disruptive, and potentially very successful strategy for them. The entire thing would hinge on creating a properly seamless streaming experience, but by spreading the streaming hosts throughout the world, rather than concentrating them all in a small number of server farms, they would actually set themselves up with a reasonable chance of achieving it.