The NPD Group will report its US video game retail data this Thursday, and in a preview note Wedbush Securities analyst Michael Pachter commented that he’s expecting Nintendo to post yet another weak month of Wii U sales. For the Wii U’s fifth month on the market, he’s forecasting that Nintendo sold just 55,000 units, which would represent a 17 percent decline month-over-month. Moreover, Pachter’s expecting this slide to continue for Wii U, even if Nintendo chooses to implement a price cut.
“The only key hardware device to under-perform our expectations was the Wii U,” Pachter said of last month’s numbers, “and its fortunes appear unlikely to improve for several months, even if Nintendo decides to drop price, as there are an insufficient number of core titles that are generating interest in the console. We think that core gamers are far more likely to turn their attention to the PS4 (due in the holiday season) and the next Xbox, which we believe will be unveiled before E3 and have a launch alongside that of the PS4, and believe that the long-term appeal of the Wii U will be severely limited by the perception that the PS4 and next Xbox will be much more powerful with greater online integration and multimedia functionality.”
And if the pricing on the PS4 and next Xbox is reasonable, it could really put Wii U in a bind, Pachter added: “Should the new consoles from Sony and Microsoft be price competitive, we think that Wii U sales may continue to stagnate.” In fact, Pachter believes that next-gen consoles are likely to be subsidized and will therefore look even more affordable to consumers.
“We think that the next-generation consoles will perform a wide range of multimedia functions. We should learn more in the coming months, but we expect the next Xbox to have an IPTV tuner that will allow an MSO to deliver services over the Internet outside of the MSO’s regulated geographic boundaries. If we are right, any of Microsoft’s MSO partners will have an incentive to subsidize the purchase of the next Xbox in exchange for a long-term service commitment (similar to the cell phone model). If the subsidies are steep, it is likely that the next Xbox will appear more affordable to many consumers than currently anticipated, and it may capture market share faster than many expect. We don’t expect Sony to sit idly by watching, and believe that the PS4 will follow Microsoft’s lead in short order, suggesting to us that next-generation consoles could have lower starting prices than any in history,” he said.
As for March retail game sales overall, Pachter expects the numbers to be up slightly (just one percent) thanks to big AAA releases like Gears of War: Judgment, Tomb Raider and BioShock Infinite.
Video game research firm EEDAR, which already has a proprietary database of over 100 million internally researched data points from more than 90,000 physical, digital, mobile, and social game products, is gearing up for the launch of a new service to assist mobile and social developers. EEDAR said that its new suite of mobile. Tablet and social products will aim “to improve sales potential and game quality for titles utilizing in-app monetization.”
EEDAR said that one of the most important things a developer can do is to optimize a game before launch. “EEDAR is able to provide an assessment at any point during the development cycle and accurately project key performance measurements of the final product, in addition to a qualitative assessment that provides feedback from the perspective of a professional game critic and consumers,” the company said about its new product suite.
Jesse Divnich, VP of Insights at EEDAR, to get an overview of the key takeaways from the firm’s research on the mobile and social markets. Divnich stressed that developers must be prepared with their in-game monetization strategy for retention and boosting conversion rates before a title is released into an app store.
“When the mobile game market was emerging, developers could optimize key monetization features after a game’s launch. The onboarding acquisition process had a long tail. Today, due to competition and larger consumer awareness, the time to peak engagement is rapidly shortening,” he noted.
“Facebook/Social games are a perfect example. Games like Farmville took nearly a year before they reached their peak users. It gave Zynga ample enough time to adjust game features to increase engagement monetization rates. Now, Social games are peaking within weeks and this idea of always being in ‘beta’ quickly shows its weaknesses when you are onboarding the majority of your lifetime users in only a few weeks,” he continued. “The mobile market is beginning to reach that point. Mobile games are making more headlines, consumers are becoming aware of hit titles faster. Simply put, consumers are engaging mobile games closer to a game’s release date and sleeper hits are becoming less prevalent.”
Even getting highlighted by Apple doesn’t mean what it used to. Developers can squander a great opportunity if they don’t make an effort to optimize. “Being featured by Apple no longer means weeks or months on the top charts. At most you have seven days and if your title is not fully optimized, you will leave money on the table,” Divnich added. “Going forward, developers must ensure they’re launching with maximum optimization, both from an artistic and scientific perspective. This means dedicating more resources to pre-launch analytics and qualitative testing.”
So what are some other notable mistakes developers are making? Well, mimicry certainly isn’t helping. Just because something works in one game doesn’t mean it can be successfully “borrowed” for a different game.
“There are still a large chunk of developers that are still too short-sighted. Clash of Clans has been a top seller for a few months and nearly 50 percent of the concepts and vertical slices that come across my desk in some way or another have an 80 percent overlap of Clash of Clans’ engagement loop. After we perform our assessments, some developers are disappointed to learn their retention, conversion, and monetization rates potential are a fraction of the results Clash of Clans has produced,” observed Divnich.
Even if your game is successful at the start, retention is a real problem, as it’s hard to create a game that has legs. “Competition within the mobile markets is at its fiercest, and every week there are at least seven high-quality releases trying to fight for our attention. The increase in competition, media coverage, and consumer awareness has driven down retention rates, for some genres, to dangerously low levels,” Divnich explained.
The key, he said, is to drive connectivity with a very attractive multiplayer component. “Right now, the tried and true method for improving retention has been multiplayer and social features. The correlation between retention rates and the inclusion of multiplayer and social features is ridiculously high,” Divnich noted. “We do issue caution, however. Just because games with strong multiplayer and social support sell well doesn’t mean slapping on a multiplayer component will automatically make your game a success.”
“We’ve seen this trend occur in the traditional HD gaming space. Call of Duty: Modern Warfare created a multiplayer frenzy and everyone thought by cuffing on a multiplayer component their game, too, would be a success. While it helped for some, those that tacked it on were met with lukewarm or disappointing reception. We still encourage our developers to implement new ways of approaching multiplayer and social features, but how they are implemented is key to improving retention rates,” he continued.
While the mobile/tablet space is getting all the attention these days, and social gaming on Facebook has seen sharp declines, that doesn’t mean developers should automatically ignore the social space. There can be opportunities there as well, especially if developers optimize their titles.
“The social platform is still viable and profitable for many developers,” Divnich remarked. “Two years ago developers were fanatic about releasing on the social platform, but they oversaturated the market. There was too much choice in a market, there were no switching barriers for consumers, and there existed too many rip-offs of the standard Farmville or Bejeweled engagement loop. Additionally, Facebook couldn’t keep up with the demand for innovation. Being a platform where consumers violently resist change (e.g. Timeline), it’s difficult to support new tools and back-end features for developers without changing the whole experience altogether.”
“Developers can still be profitable on social platforms, but we certainly approach that space more cautiously,” he concluded.
Just days after a scandal where a South American hospital was staffed by phantom doctors who used silicon fingers of their colleagues to convince administrators’ finger print readers that they were working, Apple has decided that they are the perfect form of security.
Word on the street is that Apple is said to be planning to introduce an iPhone that can be unlocked by the owner’s fingerprint. Speculation about Apple’s plans for fingerprint recognition began last summer when the iPhone maker bought bio-metric security firm AuthenTec for $335 million.
It is believed that the iPhone 5S will have a fingerprint chip under the Home button, to “improve security and usability.” Meanwhile in an engineering journal, two Google security experts outlined plans for an ID ring or smartphone chip that could replace online passwords, which is a lot sexier than fingerprint scanning.
A federal jury found that video game company Nintendo infringed an inventor’s 3-D display technology patent with its handheld 3DS video game system. The jury awarded the inventor, Seijiro Tomita, $30.2 million in compensatory damages.
The technology involved provided 3-D images without the need for 3-D glasses. Last month Tomita’s attorney, Joe Diamante, told the jury in U.S. District Court in Manhattan that Nintendo used technology that Tomita developed for its 3DS. Tomita worked for Sony.
Nintendo said that 3DS doesn’t use key aspects of Tomita’s patent and added that a 2003 meeting with Nintendo officials that Tomita cited in his argument was merely one of several the company held with vendors selling 3-D display technology. Lindvall declined to comment following the verdict. Nintendo officials were not immediately available for comment.
The supercomputer is currently performing “residencies” at several hospitals around the country, offering its data analytics capabilities for diagnosing and suggesting patient treatments.
IBM is also working to program Watson so that it can pass the U.S. Medical Licensing Examination. Yes, the “Dr. Watson” moniker used in the media will someday be applicable.
Even today, a Watson supercomputer with the same computational capabilities as the system that took on Jeopardy!’s all-time champions, is a fraction of its former size. And, the smaller Watson is almost two-and-a-half times faster than the original system, according to Dan Pelino, general manager of IBM’s Global Healthcare & Life Sciences business.
“It was the size of a master bedroom, but now it’s the size of a bathroom,” Pelino said “It will get to be a handheld device by 2020 based on a trajectory of Moore’s Law.”
By then, Pelino said, he can envision Watson being capable of image recognition sophisticated enough to determine the difference between a life-threatening bug bite and a rash on a child in a developing nation. It could then recommend treatment based on its diagnosis, Pelino said.
It’s not so far-fetched, considering IBM has allocated $7 billion toward the Watson supercomputer’s research and development.
Today, Watson is developing its resume working with oncologists at Memorial-Kettering Cancer Center in diagnosing and treating patients.
That project, announced a year ago, follows efforts by IBM and WellPoint to jointly develop applications that will essentially turn Watson into an adviser for oncologists at Cedars-Sinai’s Samuel Oschin Comprehensive Cancer Institute in Los Angeles.
Sources that we have spoken with from several studios have indicated that their publishing partners are pulling back a bit for the time being on the development of additional Wii U titles. The reason is simply the lack of sales on the Wii U console.
Despite coming out of the blocks fast, sales have not been that strong; and both the Xbox 360 and PlayStation 3 had sales numbers in January that topped the Wii U. This, of course, has not gone unnoticed by publishers and developers alike.
As one source told us, “While planning for the platforms that our next titles would be released on, it was obvious that our titles for this year and at least the first half of next year would be primarily focused on the Xbox 360 and PlayStation 3, with several titles for the next-generation systems. Talk of Wii U ports for any these projects was met with a negative reaction, saying there just was not enough sales to warrant the development cost associated with it.”
Another source said to us, “We are only planning the couple of Wii U releases that we are already committed to doing and we might do one or two ports, but right now there just does not seem to be a demand. Our thinking is that the safe bet is to focus on the 2013 releases for Xbox 360 and PlayStation 3, and a couple of those will be converted to the new next-gen systems. In 2014, however, we expect our titles that come out after mid-year to be focused on the next-gen consoles, with only a few those being released for the Xbox 360 and PlayStation 3, as well, unless sales of the next-gen consoles don’t go well. The Wii U would have to make very significant gains to figure into our 2014 and 2015 planning at this point.”
Nintendo needs something to happen to help get the Wii U flying off the shelf again; but many are now waiting to see what the Next-Generation Microsoft and Sony systems are going to offer and at what price before trying to choose which one to buy or if they will ride it out. If cost is the main factor, we could see a lot of gamers waiting, as long as they continue to get ample software flowing to their current systems, which is no real help to sales of the Wii U.
Is this another nail in the coffin of the dedicated games consoles? Nintendo’s Dreamcast had it’s moment. The vultures were out in force to greet Nintendo’s latest revision of its sales forecasts, circling the Kyoto-based company with a naked and unseemly hunger. Wii U has missed Nintendo’s own sales targets; the clouds are gathering, the doom-mongers are checking their funeral outfits.
The headline figure that drew absolutely everyone’s attention was this – by the end of March, Nintendo will have sold 4 million units of the Wii U, which is significantly down from the 5.5 million it had originally expected to sell. 3DS sales are also down somewhat on projections, at 15 million rather than 17.5 million for the full financial year, though less attention has been paid to that stat, largely because 3DS is already solidly established in the market, with a 30 million installed base.
So here’s the bleak scenario – the Wii U, with only 4 million installed at the end of what might reasonably be considered its “launch window”, has failed to capture consumer imagination and isn’t a viable platform for third parties. Software projects get cancelled, publishers draw back their support, sales slow down even further and the platform enters a death spiral. Within a few years, Nintendo is forced out of the hardware business and follows Sega into third-party publishing – on tablets and mobiles, most likely.
I have quite a lot of problems with that scenario (and with some of the more moderate versions of it which have also been floating around). For a start, it may not match Nintendo’s targets, but 4 million units sold after a few months on the market isn’t actually that bad for a new console. It’s very significantly better than either the PS3 or the Xbox 360 managed; in fact, the only home console that has outperformed the Wii U’s launch window, in terms of units sold, is the Wii itself.
“Nintendo’s new home console is always going to be stacked up against its old home console, and that’s a tough thing to measure up against.”
That’s what you might call a tough comparison, even if there’s a harsh fairness to it. Nintendo’s new home console is always going to be stacked up against its old home console, and that’s a tough thing to measure up against given that its old home console was the fastest selling and most profitable home console in history. Old hands at Sony might wince sympathetically; the PS3, despite matching the Xbox 360′s worldwide sales curve at almost every step on the way, has often been portrayed as a bit of a failure due to comparisons with the all-conquering PS2. The 360, by contrast, is enshrined in conventional wisdom as a triumph, because it built so strongly on the not-terribly-successful original Xbox business.
Comparisons like those are useful for building narratives – especially bull-and-bear market narratives, in which a company’s actual performance is vastly less important than its trajectory. They’re not, however, very useful for building an accurate picture of a product’s viability. Wii U has missed its targets (Nintendo’s own, so the company can’t even accuse analysts of over-egging the pudding in this case) and hasn’t performed as well as the Wii did; there’s a bearish narrative about decline in there. On a practical level, though, Wii U has sold more units than Xbox 360 or PS3 did at launch, it’s lost far less money (in fact, Nintendo will record a full-year profit, compared to multi-billion dollar losses for Microsoft and Sony’s games divisions in their launch periods) and, crucially, it can’t lose the support of its largest developer and publisher, because its largest developer and publisher is Nintendo itself.
Is this to say, then, that all is rosy in the Wii U garden? No, of course not. The console clearly hasn’t captured consumer imagination to the extent to which Nintendo expected, and a major push will now be needed both in terms of software and in terms of marketing and communication. The biggest risk Nintendo faces is that of failing to address the huge audience of casual consumers who bought in to the Wii, which would confine the firm to its core audience – but that core audience is itself quite significant, on the sale of 20 to 30 million consumers worldwide. Capturing additional casual consumers (or core consumers who fall more readily into the Sony and Microsoft camps, but may be swayed by certain software titles) would drive the console past those levels; even if it achieves only half the success of its predecessor at this task, it’s hard to see the Wii U ending up with an installed base much south of 50 million.
The stock market won’t like that, and that’s fair enough. Nintendo was ludicrously overvalued in the previous generation – at one point becoming Japan’s most valuable company, ahead of the world’s top car-maker, Toyota – and if the Wii U and 3DS don’t match up to the sales trajectory of their predecessors, the next generation will see an undervaluation that may be equally ludicrous. There will undoubtedly be grumbling at this from shareholders, but Nintendo is more insulated from shareholder discontent than many other firms, thanks to the large shareholdings of former president Hiroshi Yamauchi (who owns the single largest voting bloc in the firm) and of Japanese banks and institutions, who are generally less activist as shareholders than their western counterparts.
Share price decline, however, does not equate to product non-viability, nor does it precipitate a collapse in a company’s own market – or even its profits. The viability of a product needs to be considered in more solid and less sentiment-driven terms. Does it make a profit? Does it have a large enough installed base to justify continued development?
These are, of course, moving targets. Profitability rises as a console’s lifespan continues, with production costs generally dropping off faster than hardware price cuts reduce revenue (although there are exceptions, the 3DS being an obvious one). Rising software sales also increase profitability – note that the Wii U, despite being Nintendo’s first console to launch as a subsidised piece of hardware, is comfortably in the black after its launch, having sold 3.8 units of software for every console so far. That can be expected to rise significantly; the Wii, often decried as the console that sat unloved and gathered dust, actually has an attach rate of 8.7 software units for every console sold. Finally, foreign exchange movements also influence profitability, and after a few very tough years, the Yen is finally nudging in a positive direction for Nintendo (and Sony). After trading at under 80 Yen to the dollar for most of 2011 and 2012, it’s now over 90 Yen to the dollar, a level it hasn’t reached since mid-2012. It’s still a long way from the pre-financial crisis levels, which rarely dipped below 100 Yen to the dollar, but it’s enough to win Japanese manufacturers some breathing room in their profit figures.
Installed base viability is also a moving target. Bigger is better, but it’s not as simple as that; you can’t simply say “well, there are half a billion iOS devices out there and even more Android devices, so games consoles are irrelevant now”, even though some commentators try to do exactly that. For many types of software, a machine with a 30 million installed base made up entirely of active gamers who are willing to spend $40 on software every few months is more viable than a system with a 150 million installed base whose users aren’t hugely engaged with game software and only spend sporadically, in smaller amounts. Conversely, there are many types of software which absolutely thrive in the latter environment, and would fail utterly in the former. Development costs are also a big factor, because if your development budget soars, you must be able to address a bigger market (or somehow charge them more money) in order to counterbalance that.
In other words, when it comes to Nintendo, stop trying to bring everything back to bull and bear market perspectives. Those have their place, but they’re not terribly useful in attempting to predict the shape of the games industry as we proceed towards an uncertain future. They tend to give us extremes and ignore subtlety; where any individual with a shred of intelligence and insight can look at the news that “Wii U isn’t doing as well as Wii” and interpret that in context as a decline but not necessarily a catastrophe or a herald of collapse, a market-led approach allows for little if any of that subtlety.
Nintendo has a lot of work to do on Wii U, but we’ve been here before – it had a lot of work to do on the 3DS as well. While 3DS’ price cut helped a great deal, much of the real work was done through significantly improving and bulking out the console’s software line-up, and a similar process is underway with Wii U. One need only look to the rapt response which the recent Nintendo Direct broadcast received from media and Nintendo fans alike to see the truth of Nintendo’s situation. This is a software company at heart. Its consoles are enabling hardware for its software, and as such, they sell in parallel with major software launches. Of course, this is a valid argument in favour of Nintendo’s ultimate destiny outside the hardware market entirely, but for now, the company isn’t willing to give up that level of control – and for now, it doesn’t look like it needs to. I don’t expect Wii U to match the success of Wii, in the medium or long term – but equally, I don’t count myself among those who expect it to be Nintendo’s last console. Sentiment is negative right now, but fundamentals aren’t, and for a business like Nintendo, it’s the latter that counts.
Nintendo has cut forecasts for its consoles, expecting to sell 4 million Wii U units by the end of March – down from a prediction of 5.5 million units.
It also said it projected 3DS sales to hit 15 million rather than 17.5 million and dropped DS expectations from 2.5 million to 2.3 million.
“Wii U hardware sales have a negative impact on Nintendo’s profits”
The company has raised its full-year profits expectations to ¥14 billion ($153.8m) following the launch of the Wii U console. The system sold just over 3 million units from November to the end of December.
That’s up from the ¥6 billion it predicted back in October following slow sales of the 3DS handheld.
For the nine months ended December 31, the company recorded net profits of ¥14.5 billion ($159m) compared to a loss of ¥48 billion the previous year, with sales of ¥543 billion ($5.9bn). Nintendo noted that “owing to the fact that the Wii U hardware sales have a negative impact on Nintendo’s profits, the operating loss was ¥5.8 billion.”
The Wii U has sold 3.06 million units since launching in November and December last year, with 11.69 million game sales for the system.
New Super Mario Bros U had sold 2.01 million units and Nintendo Land 2.33 million.
The original Wii is still outselling the Wii U, with 3.53 million hardware sales and 45.08 million software sales.
During the nine months Nintendo sold 12.71 million 3DS consoles and 39.56 million games for the systems. The company noted success with the 3DS console cut in to sales of the regular DS, with only 2.15 million sales of hardware and 30.24 games.
Many insiders are reporting that despite no official word yet from EA nor developer Criterion, the release of the Wii version of Need for Speed: Most Wanted looks to be set for mid-March for North America and Europe, with a Japanese release expected for March 14th.
The Japanese release seems to be backed by an EA press release in Japan, but the North American and European releases have yet to be confirmed. Sources believe that we could see the North America release on March 12th, with the European release to arrive on March 15th. Whispers suggest that we will see an official announcement from EA confirming the North American and European releases soon.
The Wii U version is said to support Off-TV Play, which translates into the entire gaming experience able to be played on the Wii U GamePad screen in addition to the regular TV on screen play. Special Wii U features beyond that remain unknown at this time.
Still no news about the expected release date for the PlayStation Vita version, but our sources tell us that it is still in development; and despite rumors, it has not been cancelled.
There is no “perfect answer” to doing business with video games. Let’s call a halt to the pointless “zero-sum” debates that blighted 2012
A day in which you learn nothing is a day wasted; by which standard, a year in which we learned nothing would be a pointless waste of time indeed. It’s worth, as 2012 draws to a close (all that’s left now is the few days of indulgence before the year, in harmony with our waistbands, croaks its last), thinking about what we’ve learned. What did 2012 teach us that we did not before? Never mind, for a moment, the money we earned or lost, the games we played or made; did we grow? Did we advance? Did we learn?
From a business standpoint, certainly, we learned a great deal. 2012 cemented the place of mobile in the gaming ecosystem, forcing all but the most ardent refuseniks (so Nintendo and… er… that’s about it) to recognise mobile as an important part of their business – and even those who were slow to react to the rise of mobile gaming seem determined not to be left behind as tablets gain steam, with 2012 having shown us pretty clearly that the iPad and its myriad imitators are on track to become the primary data device of many consumers in the coming years.
We also learned some things – although not enough, I reckon – about where price points are heading. Freed of the artificial barriers to entry which define console platforms and physical retail, the App Store and Google Play have shown us where prices for digital content will inevitably trend towards – zero. In 2012, more entertaining, successful games than ever before launched at the princely price point of absolutely nothing. Plenty of others didn’t debut at far above 99p, and several of my favourite games of the year would have given me change from a £10 note. Free to play, with all that it entails, remains in its infancy, but is clearly going to be with us for the long haul; hopefully 2013 might be the year when the industry stops having ill-tempered hissy fits about this fact, and starts engaging with making F2P work better rather than loudly and pointlessly damning or exalting it at every turn.
That, perhaps, is a reasonable lead-in to something that I don’t think we learned this year, as an industry – we didn’t learn to stop being afraid of zero-sum games that don’t really exist. Discussions about mobile gaming, even among supposed professionals and experts, often descend into abject ridiculousness due to an insistence that mobile games will come to replace all other kinds of games, or that they are doomed to be a cynical, low-quality niche – neither of which position stands up to the slightest moment of intellectual scrutiny. The same applies to the vitriolic arguments about free-to-play which have washed over and back across 2012 like a stinking, polluted tide – when one side insists that everything will eventually be F2P, and the other insists that F2P is intrinsically evil and wrong, you’re no longer dealing with professional debate, but with dumb fanaticism.
I’m not saying, by the way, that we should all be cautious fence-sitters – there’s no virtue to sitting on the fence simply because it’s comfortable. Strong beliefs are good, but meaningless unless tempered by reason and fact. The fact is that cinema did not kill theatre, television did not kill cinema, video games have yet to viciously murder books, home recording did not kill music and video did not kill the radio star. Media and entertainment industries are ecosystems that accommodate an extraordinary range of different kinds of product and different business models – and that is not ever going to change. The idea that one form of entertainment, one form of business model or even one form of distribution will emerge to Rule Them All, is simply an idiot’s fantasy.
I say that with absolute confidence, not just because it is supported by countless years of history and the sheer wealth of culture and entertainment they have bequeathed to us, but because I recognise where the belief springs from. It’s the unique curse and blessing of the games industry that it teems with “left-brained” people – logical, analytical, mathematical, and quite different from the “right-brained” people who often dominate other creative industries. Video games were born with both feet firmly in the sphere of technology, only gradually moving to straddle the worlds of both technology and art – a marriage which is superbly creative but often fraught, as evidenced by the hissing recoil of many gamers and industry types alike when presented with the (stonkingly obvious) fact that games are an artform.
Left-brain people (yes, modern psychology dismisses this terminology, but it’s so much more polite than grouping you all as “geeks” and “arty types”, isn’t it?) love perfect answers. They like problems which have a correct solution, and see the world in those terms. In many industries, they’re perfect business leaders – there absolutely is a single most efficient way to extract oil or metal from the ground, to build an aircraft, to lay out a road or rail network. In entertainment, though, the idea of a “perfect” solution runs into a huge set of problems which utterly stump the left-brained – sentiment. Emotion. Irrationality. Sheer outright bloody-mindedness.
The fact is – nobody needs entertainment. Not really. If video games, films, books, music, plays, TV shows, paintings and sculptures all disappeared tomorrow, we’d be a much diminished species, but nobody would die. People need shelter, food, clothing, transport, protection, fuel – but entertainment is “discretionary”. It says so right there in your accounts. It’s spending at your discretion – and what that means is that it’s spending guided not by optimisation, but by sentiment.
Is free-to-play the most efficient way for money and experiences to change hands between developer and player? Is mobile or tablet gaming the most cost-effective route for consumers to engage with video games? Yeah, maybe – but what so few of us seem to really grasp is that this doesn’t actually matter. Is MP3 music the perfect balance of quality, convenience and file size? Probably – but vinyl shops thrive and specialist services offering “lossless” quality music files are on the rise. Is Kindle the best way to consume books? Yes, undoubtedly – but I don’t think of myself “consuming” books. Some books I just read; some I own; some I treasure. Sentiment; emotion; irrationality. I went to a shop and bought a leather-backed volume of a book I already own in paperback and Kindle alike. I’ll probably never read it. I love it. Am I an idiot, failing to see that this is not the optimal consumption path and bound to realise the error of my ways eventually? No, because this is my discretion; this is how I choose to enjoy and to spend on my pastime.
That’s why the zero-sum game will never come to pass – not as the strident debaters of 2012 believed. A very large number of consumers will still want things like dedicated gaming hardware, expensive full-price releases and physical products, not because this makes “sense” in an economic or logical way, but because they love those things and because, beyond straightforward questions of affordability, “economic sense” isn’t a welcome guest in deliberations about your hobbies and your passions.
The industry evolves and changes – never as rapidly as it did in 2012, though 2013 will probably make our heads spin just as fast – but little is truly lost. We don’t sell petrol, or sliced bread, or concrete, or train tickets. We sell experiences and emotions, and people will choose to consume those in the way that makes them feel best, not the way that is most coldly, mathematically efficient. Nobody fears that releasing Shakespeare adaptations on DVD will shut down theatres, or that allowing buskers onto the streets will eventually lead to concert halls being demolished. It’s time that we, too, learned that the expansion of the games business leads to more opportunities and more diversity, not to an existential threat to things we love – or worse, a chance to gloat over the imagined demise of things we hate. If you’ve got one new years resolution to make for 2013, make it this one – no more zero-sum arguments. Mobile won’t kill console. F2P won’t kill full-price. Cloud won’t kill local. The forest grows ever bigger; the old tree doesn’t block the sunlight from the new trees, the new trees do not strangle the roots of the old.
IGN is going up for auction, according to a Wall Street Journal report. After a year of fruitless talks with potential bidders, parent company News Corp. is working with investment bank Allen & Co. to auction off the group of entertainment and video game websites.
News Corp purchased IGN in 2005 for $650 million. Last year, the company also acquired online gaming network UGO and folded its properties (including 1Up.com) into its one-time rival. IGN has also sold a handful of businesses in recent years, including Rotten Tomatoes, Direct2Drive, and GameSpy Technologies. The Wall Street Journal (another News Corp. publication) reports that IGN is expected to sell for about $100 million now.
The paper reports that a number of companies have expressed “at least some interest” in picking up IGN, including Break Media and SAY Media. Recent turnover in IGN management, including president Roy Bahat and News Corp. chief digital officer Jon Miller, was said to have hampered the sales process.
Sources have whispered to us that Nintendo is going to be spending heavily this holiday season to promote both the Wii U and 3DS XL. The advertising push will not be limited to just North America, but Europe and Japan will see a very significant spend as the company will heavily promote using TV, social media and print.
It is believed that Nintendo’s plan is to promote the 3DS XL very hard, with a bit of the Wii U sprinkled in. Nintendo is expected to be targeting both first time buyers as well as upgraders this holiday season. It is believed that Nintendo is looking to place a lot of focus on the 3DS XL because inventories for the unit are good; whereas the Wii U does seem to be much tighter than anyone expected it to be. The Wii U inventory shortage is already leading to wait lists, and some retailers are telling customers that they honestly don’t know if they are going to be able to fill all the requests they have for Wii U hardware.
Nintendo, of course, has a lot riding on this holiday season and the company is hopeful that they will be able to see significant sales increases over what they have seen the last couple of years; which will show that Nintendo had the right strategy all along. We just don’t know how well the Wii U and 3DS XL will do this holiday season, but Nintendo seems poised for it to be a successful holiday selling season if they can deliver enough product.
The Q4 debut for Nintendo Wii U signals the coming of the next-gen consoles and the final hurrah for the Xbox 360 and PlayStation 3 – before the debut of their replacements next year, at least. Is it a time to maximise userbase, slashing prices and recouping the investment through software sales? Or alternatively, should the platform holders play it safe and keep prices high? Initial indicators seem to suggest that it’s the latter strategy that is being pursued, provoking some level of controversy within the industry.
It’s Nintendo’s pricing on Wii U that has surprised many, with the 8GB pack coming in at $299 while the 32GB premium version with Nintendo Land pack-in weighs in at $349. As launch prices go, this isn’t bad in comparison to the precedents set by previous console releases, and Nintendo will point to its innovative tablet controller and exclusive games to set it apart from the competition.
However, it’s safe to say that the Wii U isn’t a typical launch – at its core, the guts of the unit itself has far more in common with current-gen consoles than Nintendo would probably care to admit, improved by various measures in some regards, but noticeably weaker elsewhere. There’s also the fact that a lot of the launch software will already be available on consoles that cost significantly less.
To a great degree, price-points are defined by BOM – the Bill of Materials. On the plus side, Wii U benefits from a significantly more modern graphics core, equated by many with an entry-level enthusiast GPU a couple of generations old, provided by AMD. Our sources tell us that the hardware is rich in features compared to the Xenos core within the Xbox 360 (also supplied by AMD) but somewhat lacking in sheer horsepower: still a useful upgrade overall though. However, on the flipside, the tri-core IBM “Espresso” CPU is an acknowledged weakness compared to the current-gen consoles – the processors consisting of revised, upgraded versions of the Wii’s Broadway architecture, in itself an overclocked version of the main core at the heart of the ancient GameCube. Nintendo clearly hoped that tripling up on cores, upping clock speed and adding useful features such as out of order execution would do the trick, but key developers are saying otherwise: GPU-heavy games get a boost, but CPU-dependent titles are challenging to bring over to the new platform. Debate still rages over the extent to which Wii U is a next-gen console at all, and whether its pricing fits accordingly.
The overall conclusion one can draw from the core components here is that Nintendo hasn’t really paid so much attention to competitive forces, targeting a spec that can be mass-produced relatively cheaply. Areas where we know Nintendo easily outperforms Xbox 360 come to down commodity items such as RAM and flash storage: these are upgrades that won’t significantly affect the bottom line. We also know that the silicon is manufactured in the 40-45nm range, giving the platform holder significant leeway to cut costs going forward in the medium to longer term (next-gen consoles will all be fabricated in the region of 28nm next year).
Wii U is a console built to a budget, its silicon almost certainly produced at the same 45nm process as the Xbox 360 and PlayStation 3. While some may argue its premium comes from its tablet controller, even the build cost there is very modest indeed.
Of course, Nintendo’s key point of differentiation is the tablet controller – which obviously adds to the bill of materials, but once again we see a piece of technology built to a price. In a world where Chinese no-name manufacturers can develop capacitive 7-inch touchscreen Android tablets with ARM processors, 8GB of flash storage and 512MB/1GB of RAM priced at $85.00, Nintendo’s resistive screen tablet produced in the millions would clearly be significantly cheaper to mass-manufacture – even factoring in the latency free AV transmission tech.
Bearing in mind the challenge Nintendo faces in competing against Microsoft and Sony – with a significant amount of its launch titles already out on the rival platforms – the pricing on the Nintendo console does look a touch on the expensive side, and I expected price-points closer to the original Wii -$250 was instrumental in Nintendo’s success back in 2006. Up against the $249 4GB Xbox 360 (where prices fluctuate downwards significantly) there is the sense that Nintendo could well be repeating the mistake it made with 3DS. However, this time I suspect there is more leeway for the platform holder to cut costs if it has to.
Over the weekend we spent some time trying to actually figure out what titles you will be able to buy on day one if you take the plunge and buy a Wii U. Despite a lot of confusion due to announcements and such, it has been harder than you might think to figure out which titles are going to be available for purchase on day one when the console releases in North America and Europe.
From what we have been able to figure out from what Nintendo has announced and what third party developers are telling us, it would appear that only seven titles will arrive on launch, and the number is actually only six if you count the Nintendo Land Mine Game collection that will be coming with the Premium model as one of the releases.
We expect to see FIFA 13, Rayman Legends, Mass Effect 3, Super Mario Bros U, ZombiU, Trine 2: Director’s Cut, Toki Tori 2, and Nano Assault Neo as the day one titles in North America and Europe.
The one mystery might actually be Call of Duty: Black Ops 2, as it has been called a “Launch Day Title”, but neither Activision nor Nintendo have provided a release date. We do know that the game is set to arrive ahead of the Wii U launch on the Xbox 360, PlayStation 3, and PC; so we think that it is possible we will see this as well as a day one title release or very close to launch day.
Nintendo claims that another couple of dozen titles will be arriving before the end of the March Launch window for the Wii U. These will include: 007 Legends, Aliens: Colonial Marines, Assassin’s Creed 3, Batman: Arkham City Armoured Edition, Ben 10 Omniverse, Cabela’s Dangerous Hunts 2012, Darksiders 2, Disney Epic Mickey 2: The Power of Two, Family Party: 30 Great Games Obstacle Arcade, Funky Barn Game & Mario, Game Party Champions, Just Dance 4, Lego City: Undercover, Madden NFL 13, Marvel Avengers: Battle for Earth, Monster Hunter 3 Ultimate, NBA 2K13, Ninja Gaiden 3: Razor’s Edge, Rabbids Land, Rise of the Guardians: The Video Game, Runner 2: Future Legend of Rhythm Alien, Scribblenauts Unlimited, SiNG Party, Sonic & All-Stars Racing Transformed, Sports Connection, Tank! Tank! Tank!, Tekken Tag Tournament 2 Wii U Edition, Transformers Prime, Warriors Orochi 3 Hyper, Your Shape: Fitness Evolved 2013. Of the majority of these titles the actual release date isn’t clear, but sources tell us to look for 3rd Party Publishers to start firming that up in the next week or so.
The studio, which will be run under the Microsoft Studio’s banner, will report into Phil Harrison, corporate VP of Microsoft’s Interactive Entertainment Business in the EMEA region, and will have a focus on developing for Windows 8 tablets. Apparently because, well, someone has to.
“I’m hugely excited by this new venture,” said Schuneman. “Adding a fourth UK based studio to the incredible roster of talent already in place across Rare, Soho Productions and Lionhead not only increases our in-region studio presence, but will allow Microsoft Studios to explore the many creative and business opportunities that developing new games and entertainment experiences on Windows 8 tablet devices and platforms will afford.”
Schuneman will not be the only person working there of course, and Microsoft said that it is running a recruitment drive for other staffers. Anyone that is hired will work on “entertainment as a service” releases, which should fun, and focus on the aforementioned Windows 8 on tablets.
Work at the studio is expected to start in November.