The Nintendo Switch straddles a line between the Mario maker’s portable and home console businesses, but it remains to be seen if Nintendo intends to follow the upgrade cadence of the former or the latter. According to a Bloomberg report, analysts from Citigroup Inc. are expecting Switch hardware refreshes more in line with the DS and 3DS than the Wii and Wii U.
Among the first big changes expected by Citigroup is a smaller version of the Switch to arrive in stores during Nintendo’s next fiscal year, which runs April 2018 through March 2019. While the current Switch is portable, it is decidedly bulkier than Nintendo’s previous handheld systems.
“Although the Nintendo Switch can be used as a handheld device, we think smaller children could struggle to use it comfortably in that format due to its size and weight,” Citigroup analysts said last week. “Accordingly, we think Nintendo will launch a lighter, dedicated handheld version of the Switch, possibly to be called the Switch Mini.”
Losing accessories like the dock for hooking the Switch to a TV could facilitate a cheaper dedicated handheld version of the hardware, but Citigroup did not speculate on a price for any sort of Switch Mini. However, the analysts did say it could sell 6.7 million units by the end of its launch fiscal year. They added that the standard Switch is expected to have an installed base of 25.7 million within the same timeframe.
After a few years of writing articles cautioning people not to write Nintendo off just yet, it feels most peculiar to type these words, but here we go: could we all just calm down a little bit about Nintendo? Yes, the Switch is off to a very solid start; and yes, Zelda: Breath of the Wild is a damned near perfect video game – but the swing of the pendulum away from the doom and gloom of the Wii U’s final months is now threatening to bring us into breathless, giddy over-optimism that the company and its new platform may find it very hard to live up to.
There are plenty of examples out there – perhaps the most egregious is the pronouncement by GameStop’s senior director of merchandising, Eric Bright, that the launch numbers for Switch suggest that its sales could “eclipse the Wii”, but he’s far from alone in this general sentiment. Nintendo itself has lifted its 2017 shipments estimates markedly, which gives something of an official seal of approval to this change in tone, but it’s other commentators who are really talking up Switch to an extent that throws caution to the wind.
A little less than a month ago, before the launch, articles on this site by both myself and Christopher Dring concluded, fairly uncontroversially, that the real test for Switch would not come until the end of the year and that any solid assessment of the console’s performance could not be made until we reach that point. That view would have held true had Switch underperformed at launch; it ought to hold equally true in the wake of the great launch the console has actually enjoyed. Nintendo has come around the first corner in style, but this is a very, very long race.
When you come down to brass tacks, the reality is that we haven’t learned a lot from the launch of Switch. The console sold strongly around the world, but was supply-constrained, so all we can actually take away from its launch sales is that it’s appealed well to the core market of Nintendo fans. Zelda: Breath of the Wild has received rave reviews and has one of the strongest attach rates ever seen for a non-bundled title. What we learn from this is that core Nintendo fans are hugely enthused about new Zelda games (hold the front page) and that Nintendo’s game development talent is firing on all cylinders at the moment. This latter fact is important, but shouldn’t come as a surprise to anyone who’s been following the company in recent years; Nintendo’s software has arguably been going through a golden age that was tragically underserved by the Wii U’s hardware and marketing.
In actual data terms, then, there’s not a lot we can take away from the launch of Switch. It didn’t underperform, which is good news of course, but supply constraints mean we don’t know exactly how much demand existed and what proportion of it was satisfied. It’s important to note that one thing we didn’t see is a repeat of the Wii’s launch pattern; Switch has sold extremely well to core game fans who bought it to play Zelda, and as yet there’s nothing to suggest that it’s succeeded in enticing the kind of casual audiences who drove the Wii’s sales.
Ultimately, all of that information – data on demand, on demographics and so on – is data we won’t see until several months down the line; launches like Mario Kart 8.5 and Splatoon 2 will be big tests for the system, but it’s Christmas and the arrival of Mario Odyssey that’ll allow us to finally start to talk with real confidence about the performance and future prospects for Switch. The setting up of elevated expectations for the console at this early stage only creates potential disappointment down the line; while Nintendo would no doubt love to recreate the success of its most successful home console to date, the reality is that Switch could be a significant commercial success without troubling the track record of the Wii, and establishing a narrative which invites constant comparisons from this early stage is not in anyone’s best interest.
None of this, it should be added, detracts from the achievement the Switch launch represents. While the data the launch has provided us with is simply insufficient to underpin any serious or worthwhile forecasts for the system, the intangible aspects of the launch are unquestionably positive. Word of mouth for Switch is almost universally great, some minor hardware-related teething problems aside; the universal acclaim for Zelda, meanwhile, feels almost unprecedented. Consumer sentiment is hard to quantify, and it’s harder yet to guess at which groups or demographics have been touched by this positivity, but it’s fair to say that Nintendo has already placed itself on the path to recovery from the hugely disappointing and ultimately doomed Wii U.
If you’re keen to keep an eye on the data points that will really be meaningful for Switch in the coming months, though, here’s what to watch out for. Firstly, Nintendo’s ability to stick to its launch schedule and keep a consistent flow of software coming for the new system is vital; if major titles start to slip (Splatoon and Mario Odyssey being the really big ones) then it’s a big concern. Alongside that, the movements of major publishers with regard to Switch support are also worth watching. One interesting sentiment that I’ve seen from a lot of new Switch owners is that they love the form factor of the machine, and conversations over which other games they’d like to play on it have been commonplace; if that idea is making its way into conversations at third-party publishers, then combined with the confidence resulting from a solid launch, it should cause an uptick in third-party support for the system in the coming months.
The other thing to watch, of course, is demand for hardware shipments. Nintendo’s intention in launching the Switch so early in the year was undoubtedly twofold; firstly, to allow it to build a solid software library ahead of its first Christmas (and, again assuming no delays, the system should have its biggest brands – Zelda, Mario, Splatoon and Mario Kart – all on the shelves by that point), and secondly, to allow it to spread out launch demand over a six to nine month period, so supply will be able to keep pace over Christmas. There’s an oft-repeated fallacy that Nintendo deliberately manipulates supply figures to create artificial demand and buzz around its hardware; there’s simply no evidence of that, with the rather less moustache-twirling truth being that the company has often simply not been very good at predicting demand or at being flexible with its manufacturing volumes. With Switch, it’s trying to avoid both the excess demand for the Wii and the excess supply of the Wii U by launching earlier in the year.
That means we’ve got nine months of shipments to watch and evaluate – to see what audiences Nintendo is appealing to, whether demand remains high, and whether the launch of titles like Mario Kart and Splatoon 2 can really drive the console forward. Though there’ll no doubt be crazy speculation around each set of numbers, it’s the overall picture that’s important, and it’s only months of data that’ll really give us a sense of where this console is going. Switch is off to a good start – perhaps even a great start – and like many people, I truly believe that the games industry is better off with a healthy, successful Nintendo competing strongly at its heart. Getting engaged in wildly optimistic speculation off the back of such meagre data, though, is no better than being a Nintendo doom-merchant; it’s merely an error at the other end of the spectrum.
Despite complaints that the Switch had a few problems, Nintendo thinks it will sell between 10-20 million of them in the first year.
Nintendo released the Switch in March 2017 and flogged a million units in the first week.
Nintendo president Kimishima Tatsumi said that by the time Nintendo wants to start selling something else, the Switch’s overall sales will have reached 110 million units.
Much depends on how well Microsoft’s new Xbox game console codenamed Project Scorpio will do when it is released at the E3 2017 event, targeting the year-end holiday season. Sony is expected to release a thinner version of its PlayStation 4 which could also cause people to question the value of the Switch.
Microsoft’s new game console will have Ultra HD and mixed reality (MR) support and PC vendors’ MR head-mounted display (HMD) devices are expected to be able to connect with the Project Scorpio.
Still it does mean that Nintendo seems to think that there are considerable legs to its Switch and there is a level of optimism we have not seen since the early days of the Wii.
Of all the various innovations we’ve seen in this console generation, it may be the business model changes that have the most lasting impact on the games industry. Though originally introduced in the back half of the previous generation, the notion of giving consumers “free” games on a monthly basis for continuing their subscription to console online services has become a standard part of the model in this hardware generation.
The degree to which this is expected, and to which the perceived quality of each month’s offerings is hotly debated, is a clear signal of how the value relationship between consumers and game software is changing. Now, within the next few months, both Microsoft and Sony will evolve that relationship even further, with services which aim to give consumers access to current-gen game software through a very different transaction model.
Microsoft was first out of the blocks with its announcement, revealing at the end of last month that a large library of software for the Xbox One will be made available for a $9.99 recurring monthly subscription. Sony’s version of the concept is similar in business terms, if dramatically different technologically; it’s going to start adding PS4 titles to PS Now, a game-streaming service which currently offers a huge library of PS3 games for a $20 recurring subscription (or $45 for three months, which gets it a little closer to Microsoft’s pricing).
The goal being pursued by both firms is fairly obvious; paying monthly rather than buying titles outright is the model which has become dominant for both music and video, so it stands to reason that games will follow down the same path, at least to some extent. There’s certainly some appeal to the idea of a “Netflix / Spotify For Games”. From a business perspective, getting $120 (or $180) from consumers in flat monthly fees for games is probably actually a revenue boost if the service is primarily picked up by the kind of consumers who don’t buy a lot of new games – either predominantly buying pre-owned, waiting for titles to hit bargain basement prices, or borrowing games from friends, for example.
On the other hand, there’s an abundance of consumers out there who buy far, far more than the two new games a year that you’d get for that $120 fee – so any of those who stop buying new games in favour of a subscription service will represent a major revenue loss to the industry. Many people will be worried about that possibility, no doubt, but the reality is that there’s plenty of precedent to suggest that a subscription service won’t harm sales of new games.
New titles won’t go directly onto a subscription service; there’ll undoubtedly be a lengthy exclusivity period for people who pay for a physical or digital copy of the game, with titles only appearing for subscribers once their revenue potential in direct sales is already all-but exhausted. Subscription revenue therefore becomes a second bite at the cherry – a way of boosting the industry’s often rather ratty-looking “long tail”.
From a consumer perspective, that’s actually not all that different from the way things are now. If you’re not bothered about playing a game in its first few months on the market, then you’re probably going to end up buying a second-hand copy – or getting it from the bargain bin, or borrowing it from a friend, or perhaps even just waiting for it to pop up on PlayStation Plus at some point.
Game software generally loses value dramatically after the first few months on the market; lots of options exist for picking it up cheap, but decades of experience shows that this doesn’t dissuade fans from buying new games they really care about. Games are a “zeitgeisty” medium; people want to be playing the game everyone else is playing right now (as anyone who’s had to put up with their social media feeds being filled to the brim with Zelda chat while every electronics store in the city remains out of stock of Switch can tell you – not that I’m bitter, of course).
For the industry, however, most of these options aren’t very appealing. Second-hand software sales enrich GameStop, and just about nobody else; there’s an argument that second-hand sales boost new software sales by providing trade-in value, but it’s hard to balance the effects of that against the simple revenue loss game creators suffer from the repeated recycling of second-hand stock through stores that often deliberately push consumers towards used games instead of new ones. Borrowing the game from a friend is arguably preferable to the industry; no money is changing hands at all, so at least potential revenue hasn’t been sucked out by a third party.
Given, then, that we’re already talking about consumers who have a range of options for accessing software which provide no revenue to game creators, something like a Netflix-esque subscription service starts to make a lot of sense. How the revenue works in the back-end will, no doubt, be subject to endless negotiation and dispute, but the point is that at least the revenue exists; games on the service will continue to generate cash for their creators as long as they’re being played, and every cent they receive is a cent they’d never have seen in the currently dominant second-hand models. Moreover, the existence of subscription services could be a net boost for the games industry as a whole; the ability to access a large library of software for an affordable monthly subscription fee is something that will appeal to a lot of consumers, potentially bringing them into the console ecosystem.
If the business case for these services is very clear, however, the question of which technical approach will succeed is rather less so. For now, I think that Microsoft’s model – allowing consumers to download and play locally the software on its subscription service – is comfortably superior to the PS Now streaming system.
Game streaming over the Internet remains a technology that’s arguably ahead of its time; there are question marks over the business case (since the provider needs to pay for racks and racks of hardware which every consumer using the service already possesses in their own home, a duplication of functionality that makes little sense, especially since PS Now recently dropped support for “thin client” platforms like Bravia TVs), but more importantly, a huge number of consumers simply won’t be able to make use of the service because their broadband connections are not up to the standard required for high-quality, real-time gameplay. The demands of real-time game streaming are very different from the demands of watching live streams of video, because you can’t buffer a real-time game stream; when it works, it’s impressive, but the reality is that for a great many consumers it either doesn’t work at all or only works at time when the network isn’t congested.
Given the limitations of PS Now (and I think the dropping of support on Bravia TVs, mobile phones and so on is an ominous sign for the future of the service), Microsoft’s native software approach seems far more likely to be a hit with its consumers – indeed, the company may be hoping to recapture some of the magic of the Xbox 360 era, when its enormous advantage over Sony in online services helped it to maintain a lead over the PS3 for several years.
For Sony’s part, the desire to try to boost PS Now may be its undoing, at least in the short term; but an enhanced version of PS Plus (PS Plus… Plus?) with a library subscription built-in seems like a no-brainer in the medium term. It’s a win-win situation for platform holders and game creators alike. The only really big loser in all of this will be heavily pre-owned reliant retailers like GameStop; if game subscription services truly take off this year, they’ll have to scramble to find a new model before it’s too late.
In an effort to bolster Total War developer Creative Assembly, Sega Europe today has announced that it’s acquired Crytek Black Sea and added the 60-person team from Bulgaria to the prominent UK developer. Crytek Black Sea has been renamed Creative Assembly Sofia and will be working on a number of unannounced projects.
Tim Heaton, Studio Director at Creative Assembly, commented: “Now in our 30th year of games development, with an army of multi-million selling titles to our name and a history of world-renowned partnerships, Creative Assembly is proof of the UK games industry’s potential for global success. Due to this success, we are further expanding our UK base and developing additional projects overseas, whilst pursuing top talent from across the globe to join us, all in support of our commitment to creating high quality, authentic gaming experiences. Our continued growth allows us to be dynamic with our future projects, constantly seeking new opportunities and reaching a wider audience with our games.”
Jurgen Post, President and COO of Sega Europe, added: “The acquisition of Crytek Black Sea further enhances Sega Europe’s development capabilities and strengthens our ability to output diverse and engaging content for our IP. Creative Assembly Sofia will be working exclusively on content for Creative Assembly and will prove an invaluable asset given the multitude of unannounced titles currently in the works. This acquisition represents another step in the right direction for the growth of our global business, underlining our commitment to add value to our existing studios and our continued support for the UK games industry.”
Fresh off the Halo Wars 2 project, Creative Assembly has been in a growth mode over the last year, as the studio’s headcount has risen by 37% and is now over 500-people strong. The addition of Creative Assembly Sofia comes after the opening of the studio’s third UK site at the end of 2016, which resulted in an 88% increase in development space to its creative footprint (with over 70,000 square feet of in-house development facilities including a 45-camera motion-capture studio and dedicated audio suites).
Creative Assembly is looking to stay ahead in the UK games market, which generated £2.96bn in 2016, 1.3 times the size of the video market (£2.25bn) and 2.6 times the size of music (£1.1bn).
In an email interview prior to the news, Heaton informed GamesIndustry.biz that Creative Assembly has been looking to expand for a while. “[We] have actually been eyeing potential studios specifically to expand CA’s output for some time. Parties have been discussing this deal over the last few months, since the opportunity arose to purchase Crytek Black Sea, and integrate them into CA’s operation,” he explained.
“While Sega are always looking out for acquisitions that fit with the rest of the business, this addition has been motivated by the growing CA output, and the need to support that growth with talented and experienced teams,” Heaton continued. “CA has never had the aim solely to grow big, but our games have given us the opportunity to work on more projects. As we have taken those opportunities, we have needed to seek out more talent who reflect the calibre of our games.”
While Crytek has run into financial troubles and has unfortunately missed payroll at times, Heaton assured us that the new CA studio would not have to worry about its status any longer.
“We’ve been working closely with the CA Sofia team over the last few months to ensure they are setup for success, and have a comfortable and healthy work environment,” he said. “This has included upgrading their IT infrastructure, setting up clear HR support processes and integrating them with our UK teams; in fact, some of the CA Sofia team are with us in the UK at the moment, as part of their ongoing training and development.”
The games industry’s leading analysts have highlighted just how difficult it is to predict how well Nintendo Switch will perform.
IHS, SuperData, DFC and Niko Partners’ predictions range from 4.4m to 10m shipped by the end of 2017.
DFC thinks Nintendo Switch will sell 8.3m units in its first year, as detailed back in January, to eventually hit an install base of 40m.
IHS estimate a rather weak first year for Switch at just 4,4m, reaching 10m by year two and 30m by the end of the lifecycle – which is a slower start than Wii U but a stronger finish.
SuperData, as revealed yesterday, have concerns over the Switch’s price and software line-up and pencil year one as hitting just 5m units – which is slightly better than Wii U.
Finally, Niko Partners’ Daniel Ahmad thinks the machine could ship 10m this year, although how it does beyond that he’s not sure. That’s stronger than most Nintendo launches, but behind that of Wii and PS4.
Much like previous consoles from the company, Nintendo is targeting an altogether different market to PS4 and Xbox One, and even a slightly different one to its previous machines – which makes estimating its potential difficult.
There are legitimate concerns about the price – if not of the console itself, then the accessories and games. Although it’s possible Nintendo will address this if consumer uptake is sluggish, as it has done in the past with 3DS and GameCube.
There are also concerns about the relatively soft launch line-up and the rather sparse schedule throughout the year – although it’s important to note major first-party IP including Zelda, Mario Kart, Mario and Splatoon are all scheduled to launch his year. It’s also likely Nintendo is holding off many game announcements for E3 in June.
As we’ve observed twice now, it appears Nintendo is taking a softer approach to the launch of Switch than previous machines, although early retail reports is that the product is selling out in many locations.
We won’t get an accurate picture of the Switch’s potential for little while now. In the words of our very own Rob Fahey: “As with any risky new venture, keeping an open mind until the picture is clearer is going to serve any observer of the industry well.”
Nintendo has doing its best to see off stories that its new Switch portable console is blighted with dead pixels.
Those who have got their paws on the Switch have been complaining of distracting dead or stuck pixels, or light or dark patches on the screens of their brand-new consoles.
Nintendo’s answer to this is that such pixels are “normal” and are not defects. In contradiction to this statement, Nintendo claims that only a small number of cases have been reported.
Either way if you have a problem with dead pixels Nintendo will not give you another one.
But “dead” pixels belong to the early days of LCD screen technology but improvements in the underlying technology and manufacturing techniques driven by their use in billions of smartphones has generally been regarded to have significantly reduced the issue.
It seems that Nintendo has not learnt much about customer support a similar issue happened with the Nintendo DS at launch in the US, but the Japanese gaming company eventually relented after complaints from buyers.
Nintendo said at the time: “We suggest that you use your system for a few weeks to determine whether this interferes with your enjoyment of game play. If, after using your system for awhile, you feel that this tiny dot is too distracting, the Nintendo DS does carry a one-year warranty.”
Bizarrely Nintendo also warned users that using the Switch near an aquarium or within a metre of another wireless device, including laptops, wireless headsets, wireless printers, microwaves, cordless phones or even USB-3.0 compatible devices “such as hard drives, thumb drives, LAN adapters, etc”, might cause the Joy-Con controllers to disconnect from the Switch.
It is increasingly looking like Nintendo are trying to shifted a console with an underpowered processor and graphics system with dodgy LCD screens on a slightly more cynical buying public. Time will tell if it will get away with it.
It doesn’t feel right. It all seems so muted. Sure, there are those that can’t decide if Nintendo has made the ultimate games machine or the most pointless, but even so, it doesn’t feel like a new machine from the most iconic name in video games is a little over a week away.
Up until yesterday’s onslaught of unboxing videos, there has been a distinct lack of significant press coverage. Where’s the massive media campaign? Where’s the release countdowns? Where’s the surprise last minute announcements?
You know something is up when Sony’s big new IP launch, Horizon: Zero Dawn (which is also out next week) is comfortably winning the PR battle. Switch was announced six weeks ago and somehow it has already managed to lose its momentum.
And there’s so much we still don’t know about it. Where are all the games that have been promised? What about the Virtual Console? How does the online infrastructure work?
If I was a cynical man, I’d almost suggest that Nintendo is sending its next console out to fail and are preparing a more complete ‘switch’ to smartphones in the near future.
The reality is perhaps something a little more simple – the launch of Nintendo Switch just isn’t that important. Christmas is the true test.
By the end of March, there will be 2m units in the channel worldwide, which is a relatively cautious figure (Nintendo sold 3m Wii Us in that time, albeit over Christmas). There should be more than enough Nintendo fans or Zelda obsessives to pick up most of those – the sort of people who have already dropped £150 on the new Zelda collector’s edition and its assorted Amiibo (which are all gone). Switch has sold out at major US retailers, although there’s still some stock available in the UK.
In fact, you can easily see who Nintendo is targeting with Switch by the level of PR and marketing focus being spent on the new Zelda, as opposed to the actual console.
If you think back to the last time Nintendo released a console at this time in the year, it was the 3DS in 2011. Nintendo got the fundamentals of that launch wrong, both in terms of software line-up, price and PR positioning. In the months that followed the company took drastic action. It dropped the price significantly, ramped up its development resources and launched two big games at Christmas (Super Mario 3D Land and Mario Kart 7). The move meant the 3DS had a strong first Christmas, and the console went from there to 65m units globally in five years.
That first Christmas is crucial and is often more important than the console launch itself.
Nintendo now has the same window of correction. Based on its current schedule, by Christmas there will be four significant first-party Switch games available (Zelda, Mario Kart, Splatoon 2 and Mario Odyssey). It will have a better idea of what parts of the machine are resonating and which aspects are not. It will also know for certain if that price is too prohibitive for anyone that isn’t a hardcore Nintendo fan.
We will have also passed E3. We will know whether GameCube games are coming to Switch and we’ll have a better idea of what the software pipeline looks like.
If you look at the rather understated marketing campaign, the continued announcement of new 3DS titles, the fact that Nintendo revealed the release date so late (including to many of its own employees), and the absence of rather salient information about the machine’s digital functionality, and you get the feeling that the arrival of Switch next week is almost a soft launch.
There’s a risk here. Next week Nintendo has a brand job to do in establishing the Switch, irrespective of how many units it has in the channel. And the problem with soft launches is that consumers and third-parties can quickly perceive a cautious approach as a failed one – it’s something Sony has been wrestling with a little bit with its approach to PlayStation VR.
the close of March, Nintendo should have 2m Switch consoles in people’s homes worldwide. The machine will be doing the rounds with friends and families, word will spread, there are a smattering of big releases during Spring and Summer to keep the conversation going. And then by November, as Sony’s PS4 Pro and Microsoft’s Project Scorpio duke it out over the high end sector, Nintendo have their £250 hybrid complete with a new Mario to tempt you.
It almost sounds deliberate.
Never more than a stopgap that was hugely inadequate to the gap in question, Steam Greenlight is finally set to disappear entirely later this Spring. The service has been around for almost five years, and while it was largely greeted with enthusiasm, the reality has never justified that optimism. The amassing of community votes for game approval turned out to be no barrier to all manner of grafters who launched unfinished, amateurish games (even using stolen assets in some cases) on the service, but enough of a barrier to be frustrating and annoying for many genuine indie developers. As an attempt to figure out how to prevent a storefront from drowning in the torrent of rubbish that has flooded the likes of the App Store and Google Play, it was a worthy experiment, but not one that ought to have persisted for five years, really.
Moreover, Greenlight isn’t disappearing because Valve has solved this problem to its satisfaction. The replacement, Direct, is in some regards a step backwards; it’ll see developers being able to publish directly on the system simply by confirming their identity (company or personal) through submission of business documents and paying a fee for each game they submit. The fee in question hasn’t been decided yet, but Valve says it’s thinking about everything from $100 to $5000.
The impact of Direct is going to depend heavily on what that fee ends up being. It’s worth noting that developers for iOS, for example, already pay around $100 a year to be part of Apple’s developer programme, and trawling through the oceans of unloved and unwanted apps released on the App Store every day shows just how little that $100 price does to dissuade the worst kind of shovelware. At $5000, meanwhile, quite a lot of indie developers will find themselves priced out of Steam, especially those at the more arthouse end of the scene, or new creators getting started out. Ironically, though, the chances are that many of the cynical types behind borderline-scam games with ripped off assets and design will calculate that $5000 is a small price to pay for a shot at sales on Steam, especially if the high fees are thinning out the number of titles launching.
It’s worth noting that, for the majority of Steam’s consumers, the loss of arthouse indie games and fringe titles from new creators won’t be of huge concern. Steam, like all storefronts, sells huge numbers at the top end and that falls off rapidly as you come down the charts; the number of consumers who are actively engaging with smaller niche titles on the service is pretty small. However, that doesn’t mean that locking out those creators wouldn’t be damaging – both creatively and commercially.
Plenty of creators are actually making a living at the low end of the market; they’re not making fortunes or buying gigantic mansions to hang around being miserable in, but they’re making enough money from their games to sustain themselves and keep up their output. Often, they’re working in niches that have small audiences of devoted fans, and locking them out of Steam with high submission costs would both rob them of their income (there are quite a few creators out there for whom $5000 represents a large proportion of their average revenue from a game) and rob audiences of their output, or at least force them to look elsewhere.
Sometimes, a game from a creator like that becomes a break-out hit, the game the whole world is talking about for months on end – sometimes, but not very often. It’s tempting to argue that Steam should be careful about its “low-end” indies (a term I use in the commercial sense, not as any judgement of quality; there’s great, great stuff lurking around the bottom of the charts) because otherwise it risks missing the Next Big Thing, but that’s not really a good reason. Steam is just about too big to ignore, and the Next Big Thing will almost certainly end up on the platform anyway.
Rather, the question is over what Valve wants Steam to be. If it’s a platform for distributing big games to mainstream consumers, okay; it is what it is. If they’re serious about it being a broad church, though, an all-encompassing platform where you can flick seamlessly between AAA titles with budgets in the tens of millions and arthouse, niche games made as a labour of love by part-timers or indie dreamers, then Direct as described still doesn’t solve the essential conflict in that vision.
In replacing publishers with a storefront through which creators can directly launch products to consumers, Valve and other store operators have asserted the value of pure market forces over curation – the fine but flawed notion of greatness rising to the top while bad quality products sink to the bottom simply through the actions of consumers making buying choices. This, of course, doesn’t work in practice, partially because in the real world free markets are enormously constrained and distorted by factors like the paucity of information (a handful of screenshots and a trailer video doth not a perfectly informed and rational purchasing decision make), and more importantly because free markets can’t actually make effective assessments of something as subjective as the quality of a game.
Thus, even as their stores have become more and more inundated with tides of low quality titles – perhaps even to the extent of snuffing out genuinely good quality games – store operators have tried to apply algorithmic wizardry to shore up marketplaces they’ve created. Users can vote, and rate things; elements of old-fashioned curation have even been attempted, with rather limited success. Tweaks have been applied to the submission process at one end and the discovery process at the other. Nothing, as yet, presents a very satisfying solution.
One interesting possibility is that we’re going to see the pendulum start to swing back a little – from the extreme position of believing that Steam and its ilk would make publishers obsolete, to the as yet untested notion that digital storefronts will ultimately do a better job of democratising publishing than they have done of democratising development. We’ve already seen the rise of a handful of “boutique” publishers who specialise in working with indie developers to get their games onto digital platforms with the appropriate degree of PR and marketing support; if platforms like Steam start to put up barriers to entry, we can expect a lot more companies like that to spring up to act as middlemen.
Like the indie developers themselves, some will cater to specific niches, while others will be more mainstream, but ultimately they will all serve a kind of curation role; their value will lie not just in PR, marketing and finance, but also in the ability to say to platforms and consumers that somewhere along the line, a human being has looked at a game in depth and said “yes, this is a good game and we’re willing to take a risk on it.” There’s a value to that simple function that’s been all too readily dismissed in the excitement over Steam, the App Store and so on, and as issues of discovery and quality continue to plague those storefronts, that value is only becoming greater.
Whatever Valve ultimately decides to do with Direct – whether it sets a low price that essentially opens the floodgates, or a high one that leaves some developers unable to afford the cost of entry – it will not provide a panacea to Steam’s issues. It might, however, lay the ground for a fresh restructuring of the industry, one that returns emphasis to the publishing functions that were trampled underfoot in the initial indie gold-rush and, into the bargain, helps to provide consumers with clearer assurances of quality. A new breed of publisher may be the only answer to the problems created by storefronts we were once told were going to make publishers extinct.
Nintendo, is finally getting around to embracing third party development tools including the Unreal Engine.
Nintendo has always had trouble getting third-party developers to make games for its consoles, but the Switch is supposed to show off a new image for the former playing card maker.
Game designer Shigeru Miyamoto has announced that Nintendo engineers have been learning how to use third-party apps and especially the Unreal Engine.
The Switch, like the Wii U, supports the Unreal Engine but has not been particularly enthusiastic about it.
Nintendo’s Shinya Takahashi said Nintendo now wants to develop an environment where “a variety of different third-party developers are able to easily develop compatible software”.
Miyamoto also suggested that Japanese developers no longer are behind their western counterparts when it comes to third-party engines. He added that his engineers’ skill set can “now be compared with those of Western developers”.
While Nintendo will stick to using its own development tools when building games for its new hardware, its engineers are apparently trying to understand one of the most commonly-used game development engines.
Ever since Nintendo’s shares rocketed after the launch of Pokémon Go – and despite the worldwide phenomenon not being a Nintendo product – and the surprise announcement of Super Mario Run, all eyes have been on the platform holder’s mobile strategy need to be free.
Analysts and even the mainstream media have been quick to comment on the potential for traditional games brands in the mobile space, but in all the excitement some people seem to have forgotten several publishers have already made their mark on smart devices with their best-selling IP.
Square Enix, in particular, has a very healthy mobile business thanks to ports of Final Fantasy, Tomb Raider and Dragon Quest games, new IP such as Heavenstrike Rivals, and the acclaimed Go series that has so far offered new takes on the Hitman, Lara Croft and Deus Ex series. The Go games are developed by the mobile team at Square Enix Montreal, led by head of studio Patrick Naud, who tells GamesIndustry.biz that Nintendo’s determined push into mobile further validates what the Japanese publisher has already been doing for more than half a decade now.
Naud goes on to observe that Nintendo’s efforts also illustrate what Square Enix has long since been exploring with its biggest properties: that these brands can help encourage more core players to investigate the gaming possibilities afforded by smart devices.
“Games like Mario will open the road for other big console IPs and get more core players to give mobile a chance,” he says. “Sadly, mobile doesn’t have the best image for some gamers – and I understand why. I’m one of those guys who plays both console and mobile, but you need to find positives that bring you to mobile and ideally open up your mind to playing more mobile games.
“I hope that Mario did this. It’s sad to see so much negative press around it, particularly around the business model because I feel it’s a clever way to have people try the game first.”
“It’s sad to see so much negative press around Super Mario Run, particularly around the business model because I feel it’s a clever way to have people try the game first”
The backlash against Super Mario Run’s £7.99 price point, prompting scores of one-star reviews when the game launched, seemed baffling to many in the industry – myself included. While it’s undeniably more expensive than most premium games on the App Store, Square Enix had charged more than double that for mobile games. A casual glance through the firm’s catalogue shows ports of the early Final Fantasy games to range from £7.99 for FFII to a whopping £20.49 for FFIX. And its mobile business certainly doesn’t seem to have suffered. Why shouldn’t Nintendo charge that amount for its most valuable of IP?
Naud agrees, adding: “And I’d argue they’ve crafted a new epic Nintendo-like experience specifically for mobile. It’s Mario, and yes it’s inspired by the old Mario games, but there are new rules, new ways to play. In terms of level design and the way you play the game, it’s completely different to anything you’ve seen. You’ve got all the brains at Nintendo finding a way to play a Mario game on a phone, and it works, and it’s deep, it has the depth of all the Mario games. So yeah, it’s potentially worth more than what we usually pay.”
Now deep withing the rabbit hole of mobile pricing, the conversation turns to questioning why so many mobile users are less than keen on investing in quality games for their device. As Naud points out, people have been accustomed to paying £40 or more for new console game for decades, and yet they remain reluctant to spend far less on a mobile game? Why?
“When you go on your phone and you buy a game, you go to the app store, not the games store. They’re presented to people as an app. Apps are free”
“One key thing is mindset,” he suggests. “When you go on your phone and you buy a game, you go to the app store, not the games store. People who are willing to pay £15 for a game on Steam are struggling to pay a couple of quid for on mobile, sometimes for the same game. But what’s the difference? It’s because they’re presented to people as an app. Apps are free.
“We still need great games to push other great games. Whenever you have really good mobile titles, people go back to playing on their phones and realise there is some quality content on there. It’s a self-fulfilling prophecy. We’re going to keep making great games, hoping that it encourages other studios to celebrate doing the same. If people start demanding better experiences, or raising their standards of what they expect to play, the market can evolve and we’ll have more premium games.”
That’s no small challenge to overcome. In addition to difficulties convincing players to actually pay for their mobile games, there is then the increasingly common expectation that games will be updated and supported for months, if not years to come – and for free. British indie Ustwo Games faced backlash of its own when it dared to charge £1.49 for the expansion to Monument Valley – a high-quality add-on that essentially doubled the game’s content.
But is kowtowing to this attitude, lowering prices to what mobile users expect rather than what publishers would rather charge actually harmful? The Go games Naud and his team have produced are all critical smash hits, so does selling them for less than a fiver not undervalue the work that goes into them?
“The exercise of distilling a brand down to its core essence and making a minimalist game out of it – that’s our big challenge”
“Yeah,” Naud acknowledges. “We could sell it higher, but if the market’s not ready for it… we need to be clever about it, crafting the proper experience and the proper amount of content for the price.
“There’s room for high-quality mobile games and they don’t need to be free-to-play.”
It’s easy to argue that this is why Square Enix, or indeed any other company, turns to ports of earlier releases or scaled-back takes on gameplay such as the Go series when bringing their big console IPs to mobile. Developing more comprehensive titles in the face of such resistance to invest must seem daunting and highly impractical. Square has, of course, dabbled in this with the release of Deus Ex: The Fall – a four to five-hour title that offers almost an identical experience to Human Revolution – but Naud says it is more to do with discerning between what console players think they want on mobile, and what they would actually enjoy.
“I’d argue that people do want to play console games on the go, but they won’t play the same type of experience,” he says. “People that are playing console games or even PC games are seated in their living room, with their nice couch, 7.1 surround sound, 60-inch TV – they’re going to play in a different way than if they were just going to play a five-minute session. So they might not play exactly the same game. That’s why I love the Switch, because it might be the middle ground that finally solves that.
“I assume most of the console players right now are also playing on mobile, but they’re really not playing the same type of experience because they’re not playing it at the same time. If you were to go from playing a first-person shooter on your TV – with that perfect set-up and your super-reactive controllers – to playing a similar game with a thumbstick on a touch screen… it will never be the same experience. Hence why we’re trying to craft experiences that are very much dedicated for mobile audiences and mobile phones.”
Instead, Naud says the key is to “create an experience specifically crafted for mobile” taking into account how smartphone owners interact with their device, their play habits, their usage and so on. In addition to his earlier example of Super Mario Run – offering the depth of a core Mario platformer with a one-touch control system designed for smart devices – he offers Hitman as further proof of how console IP can be re-appropriated for mobile.
Deus Ex Go is the third example of Square Enix Montreal taking a console franchise and distilling its core elements to a mobile-appropriate experience
So far, Square Enix Montreal has taken two approaches with IO Interactive’s flagship IP. Hitman Go focuses on the slow, strategic aspect of planning your kills and utilising any opportunities that present themselves. Hitman Sniper, meanwhile, takes the sniping element along with the sense of puppeteering, manipulating events from afar to set up better kills.
While the latter was partly borne from the popularity of the Hitman: Sniper Challenge digital title that preceded Absolution, Naud reveals the concept also stemmed from the desire to create a new entry in the series “without the constraints of moving in the world”.
“Half the players on Hitman Go, Lara Croft Go and Deus Ex Go discovered the game through the App Store”
“The biggest challenge when playing on your phone is navigation,” he says. “For Hitman, this was by far the smartest way to do it. And we’re still working on Sniper, we’re still updating the game on a regular basis and it’s been a – maybe not as big a critical success as the Go series, but on the financial side it’s been very successful.”
But it’s the Go series that, for Naud, really demonstrates the benefit of bringing blockbuster console IP to mobile devices: introducing the brands to a new audience.
“Half the players on Hitman Go, Lara Croft Go and Deus Ex Go discovered the game through the App Store,” he said. “Regardless of whether they were already fans or not, that’s how they discovered them. They got to them because they were recommended by Apple, or their friends. We actually have way more mainstream players for the Go games than Hitman players.
“Any time we do a Go game, it needs to be a different take [on the series], it needs to feel like the original, big console IP but with its own personality. All the critical acclaim made it clear that we’ve succeeded for a third consecutive time.
“The art direction of all three games is completely different and yet the gameplay is somewhat similar. You understand the rules, you don’t need big tutorials, it’s not that complex. For us, the exercise of distilling a brand down to its core essence and making a minimalist game out of it – that’s our big challenge.”
To date, Square Enix Montreal has only been granted access to Western and former Eidos franchises: Hitman, Tomb Raider, Deus Ex. With Final Fantasy, Dragon Quest and even Kingdom Hearts already establishing a foothold on mobile, could we see these Eastern IP receive the Go treatment?
“We’ll see,” says Naud. “Even if anything was in development, I couldn’t say anything – you know that. But we’re constantly thinking about what we could do next, what kind of projects we can work on, what we’ve learned from the Go games that can potentially take us in a new direction.”
You know a company has had a rough set of results when its CEO needs to publicly state that they represent the lowest extent of a slump, with a bounce surely to follow; this being essentially the line that Nintendo boss Tatsumi Kimishima attempted to soothe worried investors with this week. It didn’t exactly work; Nintendo shares, which had been trading at their highest levels in five years, dropped back below the 23,000 Yen mark for the first time since last September. The figures reveal sentiment; investors aren’t sold on the Switch, don’t really know what to make of Super Mario Run, and while they’re generally more positive on Nintendo than they were a couple of years ago, they’re feeling jittery and nervous about the firm’s prospects.
As well they should. In fact, 2017 is likely to be a rollercoaster of a year for Nintendo investors, and those nerves are likely going to get more and more jangled as the year rolls on. The reason for that is simple; Nintendo is taking risks, and they’re not the kind of risks that it’s easy to calculate an over-under on. That makes them into the kind of risks that investors love and hate at the same time – but mostly hate. If Nintendo’s risk-taking pays off, it might soar, but there’s also a strong chance it’ll all come crashing down, and the worst part is, nobody can accurately assess what the risk of either of those scenarios, or anything in between, may be.
There are essentially two major risks Nintendo is taking on. The first, of course, is Switch. The company is hoping for Wii-like sales of the device; almost anything would be an improvement over the Wii U, of course, but in reality it probably needs to hit 40 or 50 million to be considered a genuine success, while anything below 20 million would be enough of a disappointment to cast a pall over the company’s entire future in the home console business. Switch is a high-concept device, quite unlike anything else on the market; from the control system it affords to the mixed-mode portable/home console design of the system, it’s a genuinely unusual piece of kit (far more so than the Wii U was) and that alone will undoubtedly inspire a lot of early adopters to pick one up out of sheer curiosity. It could ignite the imagination of a wide swathe of consumers and become a must-have entertainment device, like the Wii before it. It could equally prove attractive only to Nintendo’s fanbase and sink into much-loved but commercially disastrous obscurity like the Wii U.
My personal guess is that it’ll do far better than the Wii U, but come nowhere close to the success of the Wii, but I’m at pains to call that a guess and nothing more. Anyone demanding that their forecast of the device’s performance is of more worth than mere guesswork is, bluntly, a bit of a charlatan. Not only is the market into which Switch is launching extremely poorly understood at the moment (find me a single soul who predicted pre-launch that PS4, at this point in its lifespan, would be outselling the mighty PS2?), with vast new differences emerging between different global markets and demographic groups, the device itself also has no clear analogues to which we might look for guidance. The strength of the Switch is that it’s Nintendo doing something genuinely different and distinctive from its competition – a metric on which the Wii U, ultimately, failed. The weakness of Switch is that that means success or failure, though clearly influenced greatly by traditional factors like software support, is impossible to pin down with a probability calculation.
Having one big, risky venture on the go would be enough to make investors jumpy, but Nintendo has another one running in parallel. The company has been told for years by its investors that it should be involved in the smartphone market, and indeed its recently relatively buoyant share price is largely the result of its initial announcement of a partnership to do just that with DeNA in 2015, and the launch of Pokemon Go last summer. As the company’s titles roll out, though, things are getting a little more grounded and sober, and investors are perhaps recalling that the market they’ve told Nintendo to dive into is one of the riskiest in the business. The first game title created under the Nintendo-DeNA partnership (discounting Miitomo, which wasn’t considered a game, and Pokemon Go, which was simply Nintendo IP licensed out to a different developer, Niantic) was Super Mario Run, which has been largely well-received critically but hasn’t set the world on fire otherwise. Eschewing the F2P business model and the various hooks and enticements it offers for player retention was taken as reassuring by the company’s vocal core fans, but has seen Super Mario Run fade rapidly from consumer consciousness. After a backlash over its $10 price, which laid out just how uphill the struggle for premium-priced mobile games is, Mario Run has managed around a 5% conversion rate and $53 million in revenue so far.
To be clear – that’s not bad, it’s just unremarkable, and not really what investors had hoped for when they pushed Nintendo towards mobile. The company’s next launch, Fire Emblem Heroes, arrived this week and uses the more established business model for mobile titles; a few months down the line we’ll also have an Animal Crossing title on mobile. The thing is that despite the popularity of these franchises and the pedigree of their development teams, their success simply isn’t assured – even the very best mobile developers have had trouble replicating their greatest successes or even being consistently successful with their titles. Many of the world’s biggest mobile game companies are essentially sustained by one huge, evergreen game, and show no evidence of knowing how to bottle that lightning; the reality is that it’s a hugely fickle, difficult market where, even if you produce a brilliant game, external factors (including a pretty big dose of luck) play an inordinately large role in success. Nobody should doubt the quality of the games Nintendo will launch on smartphones, but nobody should consider a gigantic commercial hit to be a sure thing, either.
All that being said, the point here isn’t that Nintendo is going in the wrong direction; it’s that it’s facing a risky, bumpy year ahead, and that’s going to play merry hell with the firm’s relationship with its investors. Since, unfortunately, the media remains convinced that stock markets are magically possessed of grand insights unattainable to mere humans, like a modern-day Oracle of Delphi – where the reality is that stock markets, in their short-term motions at least, are just the sum total of a load of largely not terribly well informed people charging around in blind mob panics – we’re going to see a lot of context-free stories this year about Nintendo’s share price plunging or recovering as the balance of risk seems to sway one way or the other. The reality behind that is that at least in the next few months, the actual nature of that risk profile is going to be utterly obscure to everyone – even to Nintendo itself.
Right now, the wrong direction for Nintendo would be the direction it was headed in two years ago; competing head-to-head with Sony and Microsoft with a home console that was poorly differentiated from the competition; pretending smartphones hadn’t upended its market; making some of the best software in its history for some of the least-played hardware on the market. The right direction is one that changes that path, and change means risk – especially when the only avenues of change available to you involve innovation, untested ideas, and a tough, poorly understood market.
Buried in Nintendo’s statements this week is cause for great optimism; the success of Pokemon Sun/Moon, which are already among the best-selling installments in the series, was built upon the use of Pokemon Go as a marketing and awareness vehicle, allowing Nintendo to reactivate older consumers of the franchise and change the demographic profile of its audience. As a test run for its future strategy of building struts of mutual support between mobile and console titles, it’s been damned near flawless; sure, it got lucky with a timely implementation of AR tech and a lovely marriage of IP to gameplay, but the underlying business strategy has also played out as well as could be hoped. These are the things to watch for in the next year. Ignore the markets; with any company as highly exposed to risk as Nintendo is right now, share price movements will be exaggerated and hypersensitive, even to rumour and falsehood. Watch, instead, for evidence that Nintendo’s actual plans – the things it wants to sell, the consumers it wants to cultivate and the ways it wants to link together its IPs across platforms and approaches – are coming together or falling apart. Only that will tell us whether Nintendo is really going to bounce back, or if Kimishima’s certainty that it’s already hit rock bottom is going to be tested.
Virtual reality will be coming to the Nintendo Switch – just as soon as the company is convinced people can play it for longer periods of time.
The news comes from an interview between Nintendo president Tatsumi Kimishima and Nikkei, as translated by Dr Serkan Toto, CEO of Tokyo-based consultancy Kantan Games. According to Toto’s tweets, Kimishima said Nintendo is studying VR now but will hold off until users can “play for hours on end without problems”.
Nintendo has been extremely cautious about virtual reality, partly due to ongoing reports of nausea and headaches among early adopters. The platform holder’s US president Reggie Fils-Aime also said the technology is “not fun” and “not social”.
However, patents emerged back in December for a virtual reality accessory designed to be used with the Nintendo Switch, suggesting the platform holder is at least preparing to make its new console VR-enabled.
Meanwhile, Kimishima has also detailed prices for Switch’s paid online service, suggesting Nintendo plans to ask for 2,000 to 3,000 yen per year.
3) Nintendo plans to introduce yearly and monthly paid plans for the online service. Again, price range is 2-3,000 yen/year (.70-.50).
— Dr. Serkan Toto (@serkantoto) February 2, 2017
As Toto observes, that translates to between $17.70 and $26.50, or £13.95 and £20.89 for the UK.
Little is know about the paid service yet, save that it will be required for online multiplayer titles and that subscribers will receive a free NES or SNES game every month. Some of the latter will also have online multiplayer added.
While the price point makes Switch’s paid service cheaper than those of PlayStation and Xbox, it will be interesting to see whether consumers deem there to be enough value to signing up. Both PlayStation and Xbox also offer free games every month, often major AAA releases from the past year, and thanks to strong third-party support the number of online multiplayer titles subscribers gain access to is much higher.
The Nintendo Switch launches worldwide on March 3rd, and VG247 reports that Kimishima is confident it will reverse the platform holder’s recent fortunes, with the president claiming Nintendo’s fiscal performance will only improve from here.
He said the Switch’s unique features mean it could sell as well as the Wii – which means Nintendo is targeting sales of around 100m. Regardless of whether or not it reaches that, hopes are high that it beats Wii U’s disappointing lifetime sales of 13.5m.
Former playing card maker Nintendo has managed to make its first profit in four quarters thanks to its mobile gaming division.
For those who came in late, like Nintendo, the game maker did not want to touch mobile gaming with a 10-foot barge pole because it would cannibalise its portable console market. However it looks like it was wrong.
However it warned that there might be trouble ahead as there are lower game downloads for its consoles.
Operating profit reached $284 million in October-December, which is 3.7 percent lower than the same period a year earlier but better than the cocaine nose-jobs of Wall Street expected.
For the year ending March, Nintendo cut its operating profit forecast by a third due to lower game software downloads for its consoles.
Nevertheless, projected income from investments and a weaker yen allowed it to almost double its net profit forecast.
In the nine months through December, the games maker said it earned $93,903,200 from mobile gaming, accessories and related merchandise, including from its first Nintendo-branded mobile game, Super Mario Run. The figure was up from $ 36 million in the same period a year earlier.
Super Mario Run, featuring the princess-rescuing Italian plumber, has reached about 78 million downloads since 15 December, Nintendo said.
But the game has also received a high number of reviews from users complaining mainly about its $9.99 one-time cost, with less than 10 percent of users paying to unlock all features. Most mobile games are free to play and charge small payments for special features.
Nintendo has said it plans to release around 3 mobile games a year, with two titles – Animal Crossing and Fire Emblem – planned for the coming months.
Still, it continues to regard mobile gaming primarily as a means of luring players to its mainstay consoles. Nintendo’s president, Tatsumi Kimishima, said at a news briefing on Tuesday that the games maker plans to move up production plans to meet orders.
Firstly, there is a lot of confusion over what the Nintendo Switch can do. Multiple account support was teased in a photo posted by indie developer Nicalis on Twitter but then this was pulled and people shut up about it.
Now Kotaku have confirmed that the system does support up to eight multiple users but really people should not have to be digging for that information right now.
Nintendo’s colourful Miis will be making a return and Mii characters can be used to represent a user profile, but are not required. They can still be used in games if developers choose to include them.
This is a new detail which for some reason Nintendo forgot to mention at its presentation in Tokyo. Some think this is because they are too closely associated with the Wii era, but others are think Nintendo is daft for forgetting to mention it. After all they are a function which the console will have and a sales point.
But the biggest problem for the console is that for some reason Nintendo forgot to sort out support for video streaming services such as Netflix and Amazon Video.
Streaming video is available on practically anything and would be an important feature of any entertainment centre, so why did Nintendo forget to include it? Apparenly they were spending all their time “making the Nintendo Switch system an amazing dedicated video game platform, so it will not support any video streaming services at launch,” a spokesperson said.
Such apps are “being considered for a future update.” To be fair the Wii U was not a great video streaming set-top box, but then again that console was also disappointing.