Nintendo's stock price increases by 6% after the company announces that future Switch games will be compatible with the console's successor.

• The successor of the Switch console will enable current games to be played, in an effort to generate excitement among its user base and increase anticipation for the device.
• Shares of Nintendo closed 5.8% higher in Tokyo on Wednesday.
• When new devices are launched by console makers, backward compatibility is crucial.

Nintendo announced on Wednesday that current Switch games will be compatible with the upcoming successor console, in an effort to generate excitement among its existing user base for the highly anticipated device.

On Wednesday, Nintendo's shares in Tokyo rose by 5.8%.

According to Serkan Toto, CEO of Kantan Games, investors believe that Nintendo's next device will not be a risky experiment but rather a continuation, as indicated by this sign.

"I think investors prefer Nintendo to follow the iPhone strategy of incrementally enhancing a successful product rather than drastically altering its console generations."

Console makers must prioritize backward compatibility of games for several reasons, including the fact that new consoles often lack a significant number of games at launch. Offering older games on the new Switch will enhance its appeal in this area.

If current Switch users are considering purchasing new games before the new console launch, they may want to wait until after its release. This is because the successor of the Switch will make current games playable, eliminating the need to purchase new games.

The Nintendo Switch, despite being Nintendo's second-best selling console ever, has surpassed the sales of the Nintendo DS.

The demand for the Nintendo Switch, launched in 2017, is gradually decreasing, although it was initially high. The company has stated that it will reveal information about the successor to the console in its fiscal year ending March 2025.

Last year, Nintendo revitalized its nearly decade-old console through the release of popular games featuring renowned brands such as Zelda and Pokemon, and by venturing into new territories like film.