For a while now, people had been wondering what the next Wii would be called, with smart money being on the Number 2. However it seems that the new console dubbed the Nintendo NX has a few surprises under the bonnet.
According to Nikkei Nintendo is planning an Android console so that game developers would be able to port their games over with relative ease.
This could also indicate that games developed for the Nintendo NX could extend to other Android-powered devices like smartphones and tablets, play nice with the console.
Games developers have been ignoring the Wii U in droves so this might actually help Nintendo get back into the race.
Android-powered consoles have appeared before but they died horribly in the market place.
There’s something genuinely surreal about sitting down to write an article about region locking in 2015. It feels archaic and almost nostalgic; I might as well be writing something about blowing into cartridge ports to get games to work, or bemoaning the long load times for cassettes. Yet here we are. Years into the era of digital distribution, long after we reached the point where it became technically harder to prevent customers from accessing games from anywhere in the world than it is to permit the same, region locking is back in the news. Thanks, Nintendo.
The focus of this week’s headlines is the Humble Bundle promotion which Nintendo is running for a number of indie titles on 3DS and Wii U. It’s a great deal for some excellent games and is raising money for a solid cause; plus it’s wonderful to see console platform holders engaging with the Humble Bundle approach, which has been so successful at bringing indie games (and other creative works) to wider audiences on the PC. It ought to be a win, win, win for Nintendo, gamers and indie developers alike.
Unfortunately, though, the bundle only works in the Americas; North America and some bits of Central and South America. Customers elsewhere are entirely locked out, a matter which has been a source of deep frustration not only to those customers, but also seemingly to Nintendo’s own staff working on the project. The result is that what ought to have been a straightforward PR win for the company has turned bittersweet; there has been more widespread news coverage of the region locking debacle in the past few days than there has been for the bundle itself.
Although this is a terrible shame for the developers involved – and I sincerely hope that Nintendo can pull its thumb out of its backside and launch an international version of the bundle in short order – no sympathy is due to Nintendo in this situation. It’s a problem entirely of the company’s own making; the firm made a deliberate and conscious decision to embrace region locking even as the internationalisation of digital distribution made that look increasingly ridiculous, and until that stubbornly backwards piece of decision making is reversed, it’s going to continue causing PR problems for the firm, not to mention genuine problems for its most devoted customers.
Remember, after all, that the rest of the gaming world has ditched region locking en masse – Sony gave it up with the PS3, even making it painless to use digital content from different regions by creating multiple accounts on the same console, while Microsoft made region locking optional on Xbox 360 (making a bit of a mess where some publishers enforced it and others didn’t) before ditching it entirely on the Xbox One. At the same time Nintendo, ever the merry contrarians, went the opposite direction, not only maintaining region locking on the Wii and Wii U, but even extending it to the 3DS – in contrast to the company’s prior handheld consoles, which had been region free.
The idiocy of a region locked handheld is staggering; these are systems which are quite simply at their best when you’re traveling, yet lo and behold, Nintendo don’t want you to buy any games if you go on holiday or on a business trip. The excuses trotted out were mealy-mouthed corporate dishonesty from start to finish; it was all about protecting customers, honest, and respecting local customs and laws. Utter tosh. Had those things been a genuine issue, they would have been an issue in the previous decades when Nintendo managed to sell handheld consoles without region locking; they would also have been an issue for Sony and Microsoft when they removed region locking from their systems.
In truth, there’s only one reason for region locking in this day and age – price control – and Nintendo’s calculation must have been that they had more to lose from the possibility, real or imagined, of people buying cheaper 3DS games from countries overseas, than they had to lose from annoying a chunk of their customer base, be they keen gamers who wanted to try out titles unlikely to be released in their regions, expats who want to play games brought from their home countries or parents who find that a game bought in the airport on the way home from holiday results not in a pacified, happy child on the flight but in an angry, upset child with a game that won’t work.
In Nintendo’s defence, Satoru Iwata has recently been musing publicly about dropping region locking from the Nintendo NX, whenever that turns up. That the company is clearly planning to move down that path does rather confirm that it’s been fibbing about its motivations for region locking all along, of course, which might be why Iwata is being cautious in his statements; it’s a shame if such face-saving is the reason for Nintendo failing to keep up with industry moves in this regard, because the company is going to keep being periodically beaten with this stick until the problem is fixed.
Admittedly, there would be problems with removing region locking from its existing consoles – not least that Nintendo’s agreements with publishers probably guarantee the region locking system, so even if it could be patched out of the 3DS and Wii U with a software update, that can’t happen legally due to the contracts it would breach. What Nintendo could and should do, however, is to offer gamers a gesture of good faith on the matter by dropping region locking from all its first-party software from now on – and perhaps emulating Xbox 360 era Microsoft by making it optional for third-party publishers as well. I can envisage no legal barrier to that approach; it would earn the company enormous kudos for responding to its audience and dealing with the problem, and would cost them precisely nothing. There aren’t that many easy PR wins floating around the industry right now; Nintendo should leap on this chance to show itself to be on the customers’ side.
Wheels turn slowly in Kyoto, though, and it’s probably too much to expect the company to react in a startup-like way to the region locking issue. In some ways it’s Nintendo’s strength that it reacts slowly and thoughtfully rather than jumping on every bandwagon, but in recent years, it’s also been a weakness far too many times – and the thoroughly wonderful software that the company has been turning out in the past few years, perhaps the finest line-up it’s produced in decades, has been regularly undermined by bad decisions in marketing and positioning of its platforms, many of which can be traced to a failure to understand where the market is and where it’s moving.
Region locking isn’t the biggest problem. Fixing it would be cheap and easy but would hardly be a panacea for Nintendo’s issues – but it’s a problem that’s symptomatic, emblematic even, of the broader problems Nintendo has with putting its customers first and applying the same care and attention to its corporate aspects which it always applies to its software development. Fix a problem like this in a proactive, rapid way, and we might all start to believe that the company has what it takes to get back on top.
Nintendo has formed a comprehensive new alliance with DeNA that will make every one of the company’s famous IPs available for mobile development.
The bedrock of the deal is a dual stock purchase, with each company buying ¥22 billion ($181 million) of the other’s treasury shares. That’s equivalent to 10 per cent of DeNA’s stock, and 1.24 per cent of Nintendo. The payments will complete on April 2, 2015.
What this will ultimately mean for the consumer is Nintendo IP on mobile, “extending Nintendo’s reach into the vast market of smart device users worldwide.” There will be no ports of existing Nintendo games, according to information released today, but, “all Nintendo IP will be eligible for development and exploration by the alliance.” That includes the “iconic characters” that the company has guarded for so long.
No details on the business model that these games and apps will be released under were offered, though Nintendo may well be reluctant to adopt free-to-play at first. The information provided to the press emphasised the “premium” experiences Nintendo currently offers on platforms like Wii U and 3DS. Admittedly, that could be interpreted in either direction.
However, Nintendo and DeNA are planning an online membership service that will span Nintendo consoles, PC and smart devices. That will launch in the autumn this year.
This marks a significant change in strategy for Nintendo, which has been the subject of reports about plans to take its famous IPs to mobile for at least a year. Indeed, the company has denied the suggestion on several occasions, even as it indicated that it did have plans to make mobile a part of its core strategy in other ways.
Analysts have been offering their reflections on the deal, with the response from most being largely positive.
“Nintendo’s decision to partner with DeNA is a recognition of the importance of the games app audience to the future of its business,” said IHS head of gaming Piers Harding-Rolls. “Not only is there significant revenue to be made directly from smartphone and tablet consumers for Nintendo, app ecosystems are also very important in reaching new customers to make them aware of the Nintendo brand and to drive a new and broader audience to its dedicated console business. Last year IHS data shows that games apps were worth $26 billion in consumer spending globally, with handheld console games worth only 13 per cent of that total at $3.3 billion.
“The Nintendo-DeNA alliance is a good fit and offers up a number of important synergies for two companies that are no longer leaders in their respective segments.
“DeNA remains one of the leading mobile games company’s in Japan and, we believe, shares cultural similarities with Nintendo, especially across its most popular big-brand content. The alliance gives Nintendo access to a large audience in its home market, which remains very important to its overall financial performance. Japanese consumers spend significantly more per capita on mobile games than in any other country and it remains the biggest market for both smartphone and handheld gaming. While the partnership gives Nintendo immediate potential to grow its domestic revenues through this audience, gaining access to DeNA’s mobile expertise is important too to realise this potential.
“This alliance makes commercial sense on many levels – the main challenge will be knitting together the cultures of both companies and aligning the speed of development and iteration that is needed in the mobile space with Nintendo’s more patient and systematic approach to games content production. How the new games are monetised may also provide a challenge considering the general differences in models used in retail for Nintendo and through in-app purchases for DeNA.”
In a livestreamed press conference regarding the DeNA deal, Nintendo’s Satoru Iwata reassured those in attendance that the company was still committed to “dedicated video game systems” as its core business. To do that, he confirmed that the company was working on a new console, codenamed “NX”.
“As proof that Nintendo maintains strong enthusiasm for the dedicated game system business let me confirm that Nintendo is currently developing a dedicated game platform with a brand new concept under the development codename NX,” he said.
“It is too early to elaborate on the details of this project but we hope to share more information with you next year.”
Nintendo is heading back to black, with the company’s financial announcements this week revealing that it’s expecting to post a fairly reasonable profit for the full year. For a company that’s largely been mired in red ink since the end of the glory days of the Wii, that looks like pretty fantastic news; but since I was one of the people who repeatedly pointed out in the past when Nintendo’s quarterly losses were driven by currency fluctuations, not sales failures, it’s only fair that I now point out that quite the reverse is true. The Yen has fallen dramatically against the Dollar and the Euro in recent months, making Nintendo’s overseas assets and sales much more valuable in its end-of-year results – and this time, that’s covering over the fact that the company has missed its hardware sales targets for both the 3DS and the Wii U.
In short, all those “Nintendo back in profit” headlines aren’t really worth anything more than the “Nintendo makes shock loss” headlines were back when the Yen was soaring to all-time highs a few years ago. The company is still facing the same tough times this week that it was last week; the Wii U is still struggling to break 10 million units and the 3DS is seeing a major year-on-year decline in its sales, having faltered significantly after hitting the 50 million installed base mark.
In hardware terms, then, Nintendo deserves all the furrowed brows and concerned looks it’s getting right now. Part of the problem is comparisons with past successes, of course; the Wii shipped over a million units and the DS, an absolute monster of a console, managed over 150 million. In reality, while the Wii U is having a seriously hard time in spite of its almost universally acclaimed 2014 software line-up, the 3DS isn’t doing badly at all; but it can’t escape comparison with its record-breaking older sibling, naturally enough.
Plenty of commentators reckon they know the answer to Nintendo’s woes, and they’ve all got the same answer; the company needs to ditch hardware and start selling its games on other platforms. Pokemon on iOS! Smash Bros on PlayStation! Mario Kart on Xbox! Freed from the limited installed base of Nintendo’s own hardware – and presumably, in the case of handheld titles, freed to experiment with new business models like F2P – the company’s games would reach their full potential, the expensive hardware division could be shut down and everyone at Nintendo could spend the rest of their lives blowing their noses on ¥10,000 notes.
I’m being flippant, yes, but there’s honestly not a lot more depth than that to the remedies so often proposed for Nintendo. I can’t help but find myself deeply unconvinced. For a start, let’s think about “Nintendo’s woes”, and what exactly is meant by the doom and gloom narrative that has surrounded the company in recent years. That the Wii U isn’t selling well is absolutely true; it’s doing better than the Dreamcast did, to pick an ominous example, but unless there’s a major change of pace the console is unlikely ever to exceed the installed base of the GameCube. Indeed, if you treat the Wii as a “black swan” in Nintendo’s home console history, a flare of success that the company never quite figured out how to bottle and repeat, then the Wii U starts to look like a continuation of a slow and steady decline that started with the Nintendo 64 (a little over thirty million consoles sold in total) and continued with the GameCube (a little over twenty million). That the 3DS is struggling to match the pace and momentum of the DS is also absolutely true; it’s captured a big, healthy swathe of the core Nintendo market but hasn’t broken out to the mass market in the way that the DS did with games like Brain Training.
Yet here’s a thing; in spite of the doom and gloom around downward-revised forecasts for hardware, Nintendo was still able to pull out a list of this year’s million-plus selling software that would put any other publisher in the industry to shame. The latest Pokemon games on 3DS have done nearly 10 million units; Super Smash Bros has done 6.2 million on 3DS and 3.4 million on the Wii U. Mario Kart 8 has done almost five million units, on a console that’s yet to sell 10 million. Also selling over a million units in the last nine months of 2014 on 3DS we find Tomodachi Life, Mario Kart 7 (which has topped 11 million units, life to date), Pokemon X and Y (nearly 14 million units to date), New Super Mario Bros 2 (over 9 million), Animal Crossing: New Leaf (nearly 9 million) and Kirby: Triple Deluxe. The Wii U, in addition to Mario Kart 8 and Super Smash Bros, had million-plus sellers in Super Mario 3D World and Nintendo Land.
That’s 12 software titles from a single publisher managing to sell over a million units in the first three quarters of a financial year – a pretty bloody fantastic result that only gets better if you add in the context that Nintendo is also 2014′s highest-rated publisher in terms of critical acclaim. Plus, Nintendo also gets a nice cut of any third-party software sold on its consoles; granted, that probably doesn’t sum up to much on the Wii U, where third-party games generally seem to have bombed, but on the 3DS it means that the company is enjoying a nice chunk of change from the enormous success of Yokai Watch, various versions of which occupied several slots in the Japanese software top ten for 2014, among other successful 3DS third-party games.
Aha, say the advocates of a third-party publisher approach for Nintendo, that’s exactly our point! The company’s software is amazing! It would do so much better if it weren’t restrained by only being released on consoles that aren’t all that popular! Imagine how Nintendo’s home console games would perform on the vastly faster-selling PS4 (and imagine how great they’d look, intones the occasional graphics-obsessive); imagine how something like Tomodachi Life or Super Smash Bros would do if it was opened up to the countless millions of people with iOS or Android phones!
Let’s take those arguments one at a time, because they’re actually very different. Firstly, home consoles – a sector in which there’s no doubt that Nintendo is struggling. The PS4 has got around twice the installed base of the Wii U after only half the time on the market; it’s clear where the momentum and enthusiasm lies. Still, Super Smash Bros and Mario Kart 8 managed to sell several million copies apiece on Wii U; in the case of Mario Kart 8, around half of Wii U owners bought a copy. Bearing in mind that Nintendo makes way more profit per unit from selling software on its own systems than it would from selling it on third-party consoles (where it would, remember, be paying a licensing fee to Sony or Microsoft), here’s the core question; could it sell more copies of Mario Kart 8 on other people’s consoles than it managed on its own?
If you think the answer to that is “yes”, here’s what you’re essentially claiming; that there’s a large pent-up demand among PlayStation owners for Mario Kart games. Is there really? Can you prove that, through means other than dredging up a handful of Reddit posts from anonymous people saying “I’d play Nintendo games if they were 1080p/60fps on my PS4″? To me, that seems like quite a big claim. It’s an especially big claim when you consider the hyper-competitive environment in which Nintendo would be operating on the PS4 (or Xbox One, or both).
Right now, a big Nintendo game launching on a Nintendo console is a major event for owners of that console. I think Nintendo launches would still be a big event on any console, but there’s no doubt that the company would lose focus as a third-party publisher – sure, the new Smash Bros is out, but competing for attention, pocket money and free time against plenty of other software. It’s not that I don’t think Nintendo games could hold their own in a competitive market, I merely don’t wish to underestimate the focus that Nintendo acquires by having a devoted console all of their own underneath the TVs of millions of consumers – even if its not quite the number of millions they’d like.
How about the other side of the argument, then – the mobile games aspect? Nintendo’s position in handheld consoles may not be what it used to be, but the 3DS has roundly trounced the PlayStation Vita in sales terms. Sure, iPhones and high-end Android devices have much bigger installed bases (Apple shifted around 75 million iPhones in the last quarter, while the lifetime sales of the 3DS are only just over 50 million), but that comparison isn’t necessarily a very useful one. All 50 million 3DS owners bought an expensive device solely to play games, and the lifetime spend on game software of each 3DS owner runs into hundreds of dollars. The “average revenue per user” calculation for Pokemon on the 3DS is easy; everyone paid substantial money for the game up front.
By comparison, lots and lots of iOS and Android users never play games at all, and many of those who play games never pay for them. That’s fine; that’s the very basis of the F2P model, and games using that model effectively can still make plenty of money while continuing to entertain a large number (perhaps even a majority) of players who pay nothing. Still, the claim that moving to smartphones is a “no-brainer” for Nintendo is a pretty huge one, taken in this context. The market for premium, expensive software on smartphones is very limited and deeply undermined by F2P; the move to F2P for Nintendo titles would be creatively difficult for many games, and even for ones that are a relatively natural fit (such as Pokemon), it would be an enormous commercial risk. There’s a chance Nintendo could get it right and end up with a Puzzle & Dragons sized hit on its hands (which is what it would take to exceed the half a billion dollars or so the company makes from each iteration of Pokemon on 3DS); there’s also an enormous risk that the company could get it wrong, attracting criticism and controversy around poor decisions or misjudged sales techniques, and badly damage the precious Pokemon brand itself.
In short, while I’m constantly aware that the market seems to be changing faster than Nintendo is prepared to keep up with, I’m not convinced that any of the company’s critics actually have a better plan right now than Satoru Iwata’s “stay the course” approach. If you believe that PlayStation fans will flock to buy Nintendo software on their console, you may think differently; if you think that the risk and reward profile of the global iOS market is a better bet than the 50-odd million people who have locked themselves in to Nintendo’s 3DS platform and shown a willingness to pay high software prices there, then similarly, you’ll probably think differently. Certainly, there’s some merit to the idea that Nintendo ought to be willing to disrupt its own business in order to avoid being disrupted by others – yet there’s a difference between self-disruption and just hurling yourself headlong into disaster in the name of “not standing still”.
There’s a great deal that needs to be fixed at Nintendo; its marketing and branding remains a bit of a disaster, its relationships with third-party studios and publishers are deeply questionable and its entire approach to online services is incoherent at best. Yet this most fundamental question, “should Nintendo stay in the hardware business”, remains a hell of a lot tougher than the company’s critics seem to believe. For now, beleaguered though he may seem, Iwata still seems to be articulating the most convincing vision for the future of the industry’s most iconic company.
Nintendo’s Shigeru Miyamoto doesn’t want to make games for “passive” people; the attitude that games ought to be to be a roller-coaster ride, to entertain without challenge, is, to his mind, “pathetic”. That was the message from the legendary game designer in an E3 interview with Edge magazine, published in this month’s edition; it’s been presented by other news outlets as a sign of a Nintendo U-turn, moving away from the casual market it sought with the Wii and the DS in favour of re-engaging core gamers.
That’s exactly the sort of message that most of the games media wants to hear, of course. The media, after all, speaks exclusively to core gamers; casual players generally don’t bother with specialist media. “Nintendo has seen the error of its ways and realised that the only people worth making games for are you, my dear brethren!” is a crowd-pleaser of a message; but it’s also a pretty big leap to make from the comments Miyamoto actually made.
First, the context. Edge had just challenged Miyamoto over the fact that his prototype games at E3 were all somewhat difficult to play. They used the Wii U GamePad in new ways which it took a while to get accustomed to; the question implied in the text of Edge’s interview isn’t about casual games at all, but about the difficulty level of the prototypes. Miyamoto’s response does make clear a mental distinction between different types of game consumer and a preference for those who enjoy some challenge in their entertainment, but to extrapolate that into a U-turn in Nintendo’s development priorities is an overreach.
In fact, Miyamoto’s comments – equating passivity with “the sort of people who, for example, might want to watch a movie. They might want to go to Disneyland. Their attitude is ‘OK, I am the customer; you are supposed to entertain me’” – are punching in a number of directions at once. Certainly, he’s frustrated by people who play games without ever really engaging with them as a challenge; I doubt he’s a fan of free-to-play systems that allow you to pay money to bypass challenges. Equally, though, those comments are an attack on some approaches to AAA game design; barren technological wonders which serve as little more than on-rails galleries for artwork and pale narrative. Miyamoto isn’t saying “casuals have ruined the market”; far from it. He’s saying that there are consumers who demand spoon-fed entertainment at all points of the spectrum from core to casual, and that he doesn’t want to make games for any of them. (It’s also worth noting that he’s not really blowing his top over this; “pathetic” doesn’t carry the same kind of stinging indictment in Japanese that it does in translation.)
Later in the Edge interview, Miyamoto veers back to similar territory when he talks about the proliferation of mainstream game-capable platforms like iOS and Android devices. While adamant that Nintendo needs to continue to make hardware as well as software, he’s delighted that these new platforms exist, because they provide an “on-ramp” for consumers who haven’t engaged with games before. Nintendo previously saw itself holding a responsibility to try to open up new demographics for the games industry; now it seems that we’ve reached a tipping point, technologically and culturally, where that’s happening by itself.
Edge speculates that this means Miyamoto (and hence Nintendo) believes that the window has shut on making games for entry-level gamers. Titles like Brain Training, which opened up the DS to a huge audience of people who had rarely if ever played games before, may now be pointless; the consumers they ought to target are all playing games on their phones and tablets, so there isn’t an addressable market remaining there for dedicated hardware and more expensive (non-F2P) games. This is fair analysis, and indeed, it probably features in Nintendo’s thinking; let iOS serve as the entry level for new gamers and then hope that those who enjoy the experience will ultimately upgrade to the superior offerings available on a dedicated console.
At the same time, though, Nintendo itself has a conception of “casual” and “core” that probably isn’t shared by the majority of sites reporting Miyamoto’s comments. Miyamoto talks not about themes but about enjoyment of challenge as the distinction between the two groups. To him, a supposedly “adult” game full of blood and ripe language could be utterly casual if it spoon-feeds players with dull, linear gameplay. Meanwhile, a brightly coloured Mushroom Kingdom epic could qualify as “core” if it challenges players in the right way. Consequently, Nintendo’s family-friendly IP and the broad appeal of its themes is entirely compatible with a focus on “core games”, to Miyamoto’s mind. What he’s talking about changing is something at the root of design, not the thematic wallpaper of the company’s games; he wants to challenge people, not to force Nintendo’s artists to remove all the primary colours from their Photoshop palettes.
Viewed in this light, Miyamoto’s comments are an earnest and down-to-earth appraisal of Nintendo’s present situation; still recovering from the heady days of the Wii and figuring out how much of that flash-in-the-pan market is really sustainable, but knuckling down to the challenge of entertaining and delighting (and of course, selling to) those within the audience who really enjoyed games rather than latching onto the platform as a fad. Contrary to the more excitable reportage on his comments, Miyamoto is promising no major changes to Nintendo’s approach; rather, he’s re-committing himself and the company to the same course of action which delivered games like Mario Kart 8, a title firmly within the family-friendly Nintendo tradition and absolutely celebratory of challenge and good design.
“Core gamer” is a phrase that’s picked up a strong whiff of soi-disant elitism and exclusion over the past few years; the phrase “as a core gamer…” in a forum post or comment thread is this odd little corner of society’s equivalent of “I’m not a racist, but…”, indicating a post that’s probably going to brim with self-important awfulness. The bête noire of the core gamer is the “casual”, and just as any move by a game creator or publisher to cater to “casuals” is despised and derided, any prodigal son who declares their abandonment of the casual market and return to the core is greeted with an I-told-you-so roar of delight. This is a thin sliver of the market overall, of course, but a noisy one; as such, it’s worth reiterating that what Miyamoto absolutely did not say is that Nintendo is resetting its course to please these people. Nintendo, for many years to come, will still be a company defined by games that are broadly appealing, generally family-friendly and enormously accessible. Under Miyamoto’s watchful eye, they’ll also be challenging and engaging; but anyone taking his comments on “passivity” as near-confirmation that we’ll see Grand Theft Mario down the line is utterly misreading the situation.
A new survey commissioned by IHS in partnership with Gamer Network has shown that E3 gave a huge boost to the number of people interested in buying a Wii U, with purchasing intent growing by 50 per cent over the course of the event.
Around one thousand core gamers were surveyed on various purchase intentions before and after the LA show, revealing that, whilst Nintendo’s platform started out with the lowest number of people looking at buying it, it saw the biggest benefit from the show’s exposure. 20 per cent of respondents now intend to buy the machine, equal to those who are looking at an Xbox One, which saw a seven per cent increase in popularity.
Sony’s PS4, a clear leader going in to E3, lost ground to its competitors, sinking below 30 per cent of respondents.
In terms of anticipated games, consumers are champing at the bit for 2015′s third-party releases, with Warner’s Arkham Knight leading the charge with an incredible 60 per cent of those surveyed intending to buy the game for at least one platform. Gamers are slightly less excited for 2014′s titles, but Activision’s Destiny is the narrow leader for this year, edging out AC: Unity and GTA V with just under 50 per cent. Both Battlefield Hardline and CoD: Advanced Warfare are lagging behind slightly.
As might be expected, purchasing intent is higher amongst first-party exclusives for current platform owners. On PS4, Uncharted 4 was the most popular game both before and after E3 with 76 per cent of PS4 owners expected to buy it. On Xbox One, it’s Halo which pays the piper, garnering support from 77 per cent of One owners. Over on the Wii U and amazing 89 per cent of owners expect to buy the new Zelda game when it’s released. None of these platform-exclusive heavy hitters will land until 2015 at the earliest, which IHS predicts will increase pre-Christmas reliance on multi-platform games for Microsoft, Sony and, to a lesser extent, Nintendo.
“Although there are other exclusive titles coming in 2014 or already available,” the report reads, “none hold the influence that these leading titles have in terms of selling console hardware, with the exception of Mario Kart 8 for Wii U. As a result, the success of console sales this holiday shopping season will depend more heavily on the total value and content proposition including exclusive content offered by multi-platform games rather than a single, very influential system-selling exclusive. This factor will impact the marketing strategies of the platform holders as we move into 2014′s main shopping season.”
The 3DS stumbled at launch, enduring sluggish sales until Nintendo instituted a drastic price cut on the hardware. While Moffitt noted the impact of the price cut, he said a pair of first-party releases was another key driver in reversing the handheld’s fortunes.
“We had the price cut in August , and then we had Mario Kart 7, Super Mario 3D Land, which really drove sales that first holiday, and on 3DS we haven’t looked back,” Moffitt said. “So we’ve had momentum ever since that first holiday and we’ve got now 260 some games in the library and some of the best, most highest rated, most highest quality content we’ve ever had on that platform. Everything we launched seems to do above forecast and surprises us on the positive side.”
The situation with the Wii U is similar, Moffitt said, adding that the console is about to reach a very similar tipping point.
“As I look at what we have coming this holiday, now with Mario Kart and Super Smash Bros, plus the innovation of Amiibo, I think we are right at that tipping point where we have a lot of great content that is about to be released for that platform that’s going to tempt gamers into buying the system,” Moffitt said. “From the comments I’m reading online, and following gamers’ comments, I think there are a lot of people that are going to have a hard time resisting buying a Wii U once Smash Bros comes out. I think that’s going to be a major hardware driver for us. So that’s the narrative we hope that plays out and that I think we are starting to see play out.”
One avenue that Nintendo won’t be pursuing to spike Wii U sales is an unbundling of the GamePad, Xbox One Kinect-style. Both companies pitched the peripherals as essential components of their visions, but when Xbox One sales lagged, Microsoft found the demands of potential customers more convincing than their original plans. While Moffitt said Nintendo is still working to create gameplay experiences that demonstrate the true benefits of the Wii U GamePad, he said removing it from the hardware bundle is not in consideration.
“We think GamePad is the only innovation that’s come in this new generation of consoles. So we have the only real point of difference. Certainly graphics are faster, graphics are better. This is not a real innovation for gamers. We are fully committed to leveraging the GamePad, to keeping it bundled with the system.”
As for the problem of third-party support for Wii U, Moffitt namechecked the continued efforts of partners like Sega, Warner Bros. Interactive Entertainment, and Activision. While some big companies who have dropped the system, Moffitt understood why that would have happened and acknowledged it was Nintendo’s problem to fix.
“It’s all about driving the install base and so that’s our work to do, right? We need to get to a critical mass where it makes financial sense for them,” he said.
Moffitt added that third-party games don’t all come from the big AAA publishers. He touted the company’s efforts in lowering the barriers to entry for indie developers looking to publish on Nintendo platforms.
“We talked to a lot of them before launching the Wii U and we addressed some of the issues that really were holding some of them back from developing realistic content on our platform,” Moffitt said. “At least for the indie community, we’ve become a lot easier to do business with and we’re seeing a steady flow of content now.”
However, those efforts were largely invisible at E3. Where Microsoft and Sony devoted sections of their booths to indie developers working on Xbox One and PlayStation 4 respectively, there was no such equivalent in Nintendo’s booth.
“With any show, you have choices to make,” Moffitt said. “Every time I go down to our booth floor and see how many people are waiting to play Super Smash Bros, when I look outside at the Best Buys… Last night we had four hours of game play on Super Smash Bros. and we had 1,000 people in line. We had to turn people away. So it’s a tough choice for us as a platform holder. We don’t have enough game stations down there on Smash Bros. We try to feature as much content as we can in the limited space that we have. Right now we just have a lot of demand for Super Smash Bros. We could have used 10 more game stations on that game alone. Choices have to be made.”
Finally, Moffitt weighed in on the VR trend. While Nintendo has a distant history in the field with the Virtual Boy headset, Moffitt suggested Nintendo was taking a wait-and-see approach toward returning to it
“What I’d say is it’s appealing technology,” Moffitt said. “It’s interesting. We’re going to follow it closely to see where it goes. It’s got a lot of advantages. It’s got one disadvantage relative to what we know is often very fun for gamers, which is playing games socially in a living room. This is a very single player solitary gaming experience. Not all of our games are fun to play with multiple people in a living room in front of a game console but it doesn’t lend itself to that kind of an experience as well as what Wii U does now. That would be a disadvantage of going in that direction. Could it be a nice addition to our hardware platform? Sure.”
Philips is looking to get Nintendo’s Wii U games consoles banned in the US.
Philips has patents in its sights and it said that those patents belong to it and are being used without permission.
The firm has filed a complaint for patent infringement with the US District Court for the District of Delaware, and that has been published on Scribd.
The complaint accuses Nintendo of infringing two Philips patents, and Philips said that they are used in the Wii console and its peripherals. It is pushing for a US sales ban.
The patent numbers at issue end in 379 and 231. Philips claims that it alerted Nintendo to its infringing use of 379 as early as 2011. It registered patent 231 last year and the patent covers interactive device pointing, which is rather a key element of the Wii experience.
Philips is asking for a ban on Wii U sales in the US and monetary damages. The impact on Nintendo could be significant if a sales ban in put in place. So far we have not been able to get a response from the company.
The Philips complaint identifies a long list of infringing hardware. “The infringing interactive virtual modeling products of Nintendo include but are not limited to motion-controlled gaming consoles and motion-detecting devices such as the Wii video gaming systems and related software and accessories including, for example, the Wii console, Wii Remote Plus Controller, Wii Remote Controller, Wii Nunchuk Controller, Wii MotionPlus, Wii Balance Board, Wii U console, Wii U GamePad, and Wii Mini,” it says. “The infringement by Nintendo has been deliberate and willful.”
Philips has requested a jury trial.
Nintendo has issued a detailed and far-reaching response to the pervasive concerns about its future as a business.
In a meeting with investors, Nintendo president Satoru Iwata outlined the company’s strategy in both the short-term and as far ahead as 2016. From changing the fortunes of the Wii U to evolving the way we think about game consoles as a concept, Nintendo displayed striking candour in its attempt to allay the criticisms it has received since it drastically reduced its sales forecasts earlier this month.
However, Iwata was clear about one thing from the outset: regardless of what followed, there are certain aspects of Nintendo’s business that will not change, namely the frequently proposed idea that it should take its IP stable to new platforms.
“Dedicated video game platforms which integrate hardware and software will remain our core business,” he said. “Naturally, we are moving ahead with research and development efforts for future hardware as we have done before, and we are not planning to give up our own hardware systems and shift our axis toward other platforms.
“Dedicated video game platforms which integrate hardware and software will remain our core business… We are not planning to give up our own hardware systems and shift our axis toward other platforms”
“From a medium- to long-term standpoint…we don’t believe that following trends will lead to a positive outcome for Nintendo as an entertainment company. Instead, we should continue to make our best efforts to seek a blue ocean with no rivals and create a new market with innovative offerings.”
Here are the key points from Iwata’s presentation
The Wii U is Nintendo’s top priority
It is no secret that Nintendo has struggled to repeat the success of the Wii with the Wii U, but Iwata reassured investors that it has no intention of abandoning its ailing console. The possibility of a further reduction in price was ruled out immediately, with Iwata instead emphasising the company’s ongoing failure to adequately demonstrate the value of the GamePad controller, and to distinguish the console from its hugely popular predecessor.
“By looking at the current sales situation, I am aware that this is due to our lack of effort,” he said. “Our top priority task this year is to offer software titles that are made possible because of the GamePad… We have managed to offer several of such software titles for occasions when many people gather in one place to play, but we have not been able to offer a decisive software title that enriches the user’s gameplay experience when playing alone with the GamePad. This will be one of the top priorities of Mr. Miyamoto’s software development department this year.”
Iwata offered a strong first-step by setting an official May release date for the release of Mario Kart 8, but he also indicated that Nintendo’s development teams would focus on the GamePad’s near-field communication (NFC) function – the same basic technology as that used in lucrative franchises like Skylanders and Disney Infinity. Iwata promised more details of its plans for NFC at E3 in June.
The end of “device-based relationships”
While many have cited the Wii U as evidence of Nintendo’s failure to respond to the changes in the games industry since the launch of the Wii, Iwata stated that the company has already laid the foundations for a fundamental shift in the way it thinks about its products.
Before now, Nintendo had “device-based relationships” with its customers. This was mitigated somewhat by the strength of its software IP, but fundamentally the link with any given consumer followed the lifecycle of each piece of hardware. “We became disconnected with our consumers with the launch of each new device as we could only form device-based relationships,” he said.
However, the Wii U saw the introduction of “Nintendo Network IDs,” an attempt to create “account-based” customer relationships that could continue across different hardware platforms and generations. In the future, Iwata said, “connecting with our consumers through NNIDs will precisely be our new definition of a Nintendo platform.”
With this in mind, Iwata was able to put an end to the speculation around Nintendo’s strategy for smartphones and tablets. He made it quite clear that Nintendo has no plans to release its games on smart devices, but it does intend to use them as a way to communicate and build relationships with new audiences. Iwata offered few details of how the company intends to accomplish that goal, but he indicated that it would include a mobile app that leveraged Nintendo’s existing IP to raise awareness of its hardware and software.
“I have not given any restrictions to the development team, even not ruling out the possibility of making games or using our game characters. However, if you report that we will release Mario on smart devices, it would be a completely misleading statement. It is our intention to release some application on smart devices this year that is capable of attracting consumer attention and communicating the value of our entertainment offerings.”
Flexible pricing for existing and emerging markets
The existence of NNIDs and account-based relationships will also give Nintendo the ability to alter the way its products are sold. Iwata highlighted the company’s role in establishing the model of selling a console for several hundred dollars and individual games for fifty or sixty dollars, but Nintendo now recognises that this model is no longer viable in the long-term.
The first aspect of this that Nintendo intends to challenge is the fixed price-point of software. Iwata suggested a system where the price of a games could be tailored to individual customers based on their NNIDs: someone who purchased five games in a year might pay less and less for each one, for example, or there might be incentives tied to recommending a game to a friend.
“If we can achieve such a sales mechanism, we can expect to increase the number of players per title, and the players will play our games with more friends. This can help maintain the high usage ratio of a platform… Nintendo aims to work on this brand-new sales mechanism in the medium term, but we would like to start experimenting with Wii U at an early stage.”
“While we will continue to devote our energy to dedicated video game platforms, our first step into a new business area is the theme of ‘Health’”
This flexibility will also extend to emerging markets for gaming across the world. Nintendo is a globally recognised brand, but Iwata conceded that the price of its products has put them beyond the reach of people in certain countries. While Iwata didn’t mention any specific regions, he is likely referring to countries like Brazil and India, where the interest in gaming has increased in concert with the disposable income available to the population.
“To leverage Nintendo’s strength as an integrated hardware-software business, we will not rule out the idea of offering our own hardware for new markets. But for dramatic expansion of the consumer base there, we require a product family of hardware and software with an entirely different price structure from that of the developed markets.
“We aim to connect with consumers who do not own Nintendo’s video game systems yet, which will play an important role in cultivating new markets. Once we can establish such a connection with consumers in these nations, we will be able to use smart devices to share our information as well as important content distribution infrastructure. We plan to take significant steps toward such a new market approach in the year 2015.
Going beyond games
There may be no chance of playing Super Mario World on an iPad anytime soon, Iwata did state Nintendo’s interest in making money from its IP outside of first-party video games. Nintendo has always been very cautious of damaging its iconic characters through excessive merchandising and licensing, but one need only look at Rovio’s Angry Birds to see how much profitable such deals can be. Indeed, Iwata attributed the strength of Nintendo’s IP stable to that very reluctance, but, he said, “we are going to change our policy going forward.”
“To be more precise, we will actively expand our character licensing business, including proactively finding appropriate partners. In fact, we have been actively selling character merchandise for about a year in the U.S. Also, we will be flexible about forming licensing relationships in areas we did not license in the past, such as digital fields, provided we are not in direct competition and we can form win-win relationships.
“By moving forward with such activities globally, we aim to increase consumer exposure to Nintendo characters by making them appear in places other than on video game platforms.”
Nintendo’s new business idea: Health
Iwata closed the presentation with Nintendo’s planned entry into an entirely new area of business, one that will provide the “blue ocean” the company so desperately needs.
“While we will continue to devote our energy to dedicated video game platforms, what I see as our first step into a new business area in our endeavour to improve [quality of life] is the theme of “Health.” Of course, defining a new entertainment business that seeks to improve [quality of life] creates various possibilities for the future such as “learning” and “lifestyle,” but it is our intention to take “health” as our first step.”
Again, exact details of what this focus on health will entail were not provided, but Iwata described the concept as “an integrated hardware-software platform business” that will use the company’s experience making products like Wii Fit, Brain Age and the Touch Generations series as a springboard for a more pervasive and persistent initiative.
“We will be able to provide feedback to our consumers on a continual basis, and our approach will be to redefine the notion of health-consciousness, and eventually increase the fit population… I feel that not only can this [quality of life]-improving platform utilise our know-how and experience about video game platforms, but also we can expect it to interact with games and create a synergistic effect.
“While we feel that this is going to take two to three years after its launch, we expect the [quality of life]-improving platform to provide us with new themes which we can then turn into games that operate on our future video game platforms, too. Once we have established such a cycle, we will see continuous positive interactions between the two platforms that enable us to make unique propositions.”
Iwata promised to announce more details this year, and confirmed that the new business will officially launch during the fiscal year ending March 2016.
Nintendo blew it. That much is clear, and even Satoru Iwata doesn’t debate it – Nintendo blew it. The financials could be much worse, but the unit sales? Way, way below targets, and in the case of Wii U, way below sustainability. Nintendo blew it! Shout it from the rooftops, if you can find space on a rooftop next to all the people who are already shouting it, with altogether too much peculiar jubilance in their snide, told-you-so voices.
Nintendo blew it. Blew what, though? That’s a tougher question. The company’s year has been a lot more complex than anyone is giving it credit for. In 2013, Nintendo was proud owner of the best-selling console in every major territory worldwide, and launched an enviable range of first-party software titles that sold over a million copies each – more than any other publisher out there. The company retained its crown as the biggest platform holder and the biggest software publisher in the business.
Yet, Nintendo blew it, because it also had a platform that utterly under-performed even the most conservative of estimates – a console that, on its current trajectory, is set to undershoot the low bar set by the GameCube and become the firm’s worst performing home console ever. Moreover, Nintendo blew it in a subtle but crucially important way – with startling incompetence for a company of its size, the firm predicted sales figures for both the 3DS and the Wii U which were absolutely ludicrous and then failed to revise them as the year carried on, meaning that even the solidly performing 3DS has undershot its targets, while the Wii U looks even worse than it ought to (which is pretty bad to begin with).
“Nintendo’s stock didn’t tumble too badly after it revised its guidance, largely since nobody with a clue actually thought the firm was going to hit its targets anyway”
This latter aspect has made the coverage of Nintendo’s situation even more negative than it would already have been (and there are plenty of people waiting to pile onto the company at the slightest provocation), since it covers up the success of the 3DS and its software line-up – seriously, 3DS has had an amazing year for software and is now set up with a library that effectively secures the console’s future – in a heavy smearing of corporate incompetence. It has also, understandably, deeply annoyed shareholders, because they rely on companies making accurate predictions to figure out whether or not to pick up stock in a firm. That said, Nintendo’s stock didn’t tumble too badly after it revised its guidance, largely since nobody with a clue actually thought the firm was going to hit its targets anyway. Incidentally, the company’s stock price is about 50% higher today than it was 12 months ago, in line with the rise in the Nikkei 225 index – which means that Japanese investors, at least, are rating the company as broadly neutral rather than actually negative.
Still, Nintendo blew it, and that means lots of people are making angry noises. Iwata must go, say some; Nintendo must exit hardware, say others; time for Mario on smartphones, say still others. The owners of all of those voices are going to be disappointed – not least, I believe, because very few of them actually understand Nintendo as a company or the Japanese corporate environment in which it operates. They don’t understand that activist shareholders don’t mean a tuppenny damn to a company whose shares are largely held by a combination of the founding family, the senior staff and (more significantly still) the complex web of interrelated share- and debt-holdings that connects Nintendo with Japanese banks and other corporations, none of whom have the slightest concern in being “activist” except in the most extreme of circumstances. An earnings miss? Pah! Japanese corporations routinely missed annual earnings every year for decades after the Asian Financial Crisis of the early 1990s, but shareholder pressure to change top management never materialised then, and it won’t materialise now. Iwata is secure until he does something sufficiently wrong to have a taint of scandal around it, and that’s deeply unlikely to happen.
Exiting hardware? Absolutely no chance. Nintendo’s primary view of itself is as a toy company and its core business model is selling hardware (generally profitably) and then selling software that runs on that hardware (extremely profitably). The synergy between the company’s hardware side and its software side is legendary, as is the extent to which each Nintendo platform is designed with the requirements of planned first-party software in mind. For that reason alone, it’s likely that the Wii U will eventually have a clutch of startlingly excellent games, matching last year’s critically acclaimed Super Mario 3D World in quality – although whether that will actually do anything to resuscitate sales is another question entirely. The point is that this approach isn’t going to change; the inertia behind Nintendo as a hardware company is immense, and moreover, despite this year’s earnings miss, it’s largely working. Nintendo is, pretty much every year, the largest and most successful game software company in the world. Would it retain that crown on someone else’s hardware? If you rush to answer “yes!” to that question, either your crystal ball gazing skills are excellent or you haven’t thought about it hard enough; I don’t think there is a good answer to that question right now, and I know Nintendo will be eyeing Sega’s post-hardware decline and thinking about its own potential fortunes as one-among-many on a smartphone app store. Right now, Nintendo has around 40 million 3DS owners who are keenly anticipating future first-party releases from the company – keenly enough that they start to agitate and make noise if there’s ever a gap in the release schedule. Would that be true on iOS, or Android, or even on a competitor’s console platform?
“one of the company’s failings, in some regards, is that it still doesn’t really have a global outlook, with Nintendo of America and Nintendo Europe being rather stunted”
How about a limited engagement with smartphones, then, even if they wouldn’t make the leap entirely? That’s plausible. Nintendo’s primary point of reference for its product decisions is Japan – one of the company’s failings, in some regards, is that it still doesn’t really have a global outlook, with Nintendo of America and (even more so) Nintendo Europe being rather stunted local offshoots whose actual contribution to the firm’s planning and success is pretty obviously minimal. In Japan, smartphone games are a huge sector, and interestingly, there’s seemingly more of a market for premium-priced games than there is in the west, where free-to-play is increasingly the only show in town (although premium-priced games are carving out an interesting niche there too). There is, I believe, some potential for Nintendo to start putting Virtual Console titles on smartphones, perhaps initially through a tie-up with one of Japan’s carriers. However, I’d expect this roll-out to be slow and careful, with Nintendo incredibly mindful of the possibility of damaging its core brands by launching Mario or Zelda games tainted by emulation problems or crap touchscreen controls. Still – it could happen, and is by far the most likely of the “demands” being made of the firm to actually be met in some limited form.
If Iwata isn’t going to go (he’s not), Nintendo isn’t going to exit hardware (they’re not) and the company’s future isn’t on smartphones (it’s not, although some cautious toes in that water may be seen in time), then what is Nintendo’s reaction to its present situation going to be?
I’ve stated this before, but it bears repeating – Nintendo has incredibly, insanely deep pockets. The firm has set aside a vast war chest over the course of its successful years, and it can easily ride out even the complete failure of a console platform, supporting that platform sufficiently to satisfy consumers while quietly working on a replacement. That’s what Satoru Iwata told me Nintendo would do if the Wii failed completely – they’d make something else and try that instead – and I see no reason why that logic would have changed. If anything, the firm’s financial position is even stronger now than it was then.
What will Nintendo make? There’s a lot of speculation around that, but most of it is evolutionary. A faster, more powerful DS / 3DS style handheld. A Nintendo tablet, capable of handheld gaming and being hooked up to a TV. A full-spec next-gen console built to rival the PS4. All of these are options for the company – the tablet computer one is even an interesting one, combining as it does the handheld market (which Nintendo always dominates) with the home console market (where it’s hit and miss). However, they all miss the crucial ingredient which Nintendo actually requires to bring itself back to success – surprise.
“Nintendo needs the element of surprise. It surprised the hell out of everyone with the DS, it surprised everyone with the Wii”
Nintendo needs the element of surprise. It surprised the hell out of everyone with the DS, a daft, stupid idea for a handheld console that everyone expected to be trounced by the much more comprehensible PSP. It surprised everyone with the Wii, a weird, tiny, underpowered system with a controller that looked nothing like we expected – so odd that it led me to rather bluntly ask Iwata what he planned to do if everyone hated it and the system flopped, hence his comment above. The DS is the best-selling console in history (or at least, tied for that honour with the PS2); the Wii trounced the Xbox 360 and PS3 in the last generation of hardware. Nintendo does exceptionally well when it surprises people. It creates a clear gap between itself and the competition and makes “the Nintendo Difference” into more than just a silly slogan. Even those who own a more “mainstream” console end up wanting a Nintendo one too, because it’s so interesting and different, while those from outside the core gamer market find themselves intrigued by the very peculiarity and curiosity of the devices and their software.
3DS and Wii U fail the surprise test. They’re practically indistinguishable from their predecessors, both in appearance and in branding. 3DS suffered terribly from being mistaken for a new version of the original DS hardware; the Wii U, I suspect, is doing even worse, with many consumers not realising that it’s a new console entirely and not a new controller for the Wii. There’s been a disastrous failure of communication, branding and marketing, which has compounded the more basic error – assuming that the success of the Wii meant people wanted more of that kind of thing. Nintendo’s strength is providing people will surprises, things that look daft to begin with and then turn out to be precisely what we always wanted and never realised. If it’s to successfully come back from its present mess, it needs to do so by surprising us, not by following along the dull path analysts would now demand of it.
That, I earnestly hope, is what the company is working hard on in Kyoto right now. I don’t want Nintendo to abandon the Wii U, and I don’t think that will happen. The installed base is small, but big enough to be worth caring about, and the console still has the makings of a profitable platform, albeit a niche one. However, alongside continued support for the Wii U (and hopefully, a drastic change in marketing and branding), Nintendo is hopefully also working on something else; something more important and simply more Nintendo; its next big surprise.
Nintendo reportedly is looking to mobile devices to save its struggling business, after it admitted last week that the Wii U isn’t selling.
On Thursday, Nintendo slashed its Wii U sales forecast, acknowledging that despite previously expecting to shift nine million units between April 2013 and March this year, it now expects sales of just 2.8 million. Nintendo’s 3DS console isn’t selling well either, leading the firm to admit that it expects to post a $240m annual loss.
These clearly are signs that Nintendo is losing its appeal in the gaming market, and although there are still many dedicated Wii U gamers out there, the firm is struggling to compete against the Sony Playstation 4 (PS4) and Microsoft Xbox One games consoles.
It seems that Nintendo is starting to realize this too, and it admitted over the weekend that it might look to mobiles and tablets to save the future of the company, following rumors that the firm may be planning its own Android tablet for educational use.
Although the company had previous said that you’re unlikely to ever see Mario Kart running on an iPhone, Nintendo president Satoru Itawa hinted that the firm’s stance on mobile devices has changed, with the company exploring the possibility of bringing its titles to smartphones and tablets.
“We are thinking about a new business structure. Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business,” Itawa said.
“The way people use their time, their lifestyles, who they are have changed. If we stay in one place, we will become outdated.”
However, Itawa admitted, “It’s not as simple as enabling Mario to move on a smartphone,” hinting that the firm will develop dedicated games for mobile devices, rather than porting those it already has.
While Westerners are shunning Nintendo as if it were a rabid dog, the console maker is hoping to make in roads into China.
China just announced that it was allowing consoles made by western companies to exist in the country for the first time in 14 years. The move could pave the way for Nintendo, Sony and Microsoft to enter the world’s third-largest video game market in terms of revenue. But it is Nintendo, which is much cheaper, which could be the winner.
The most popular video games in China are often free to play with gamers only paying for add-ons such as weapons or extra lives.
Price may also be a problem for console makers looking to expand in China. More than 70 percent of Chinese gamers earn less than $660 a month. Nintendo, being cheaper, might do better.
With the Xbox One and PS4 fighting over the core gaming crowd this holiday season, Nintendo is targeting its Wii U marketing elsewhere. In an interview with Seattle NBC affiliate King-5, Nintendo of America president Reggie Fils-Aime said the system is enjoying strong holiday momentum, thanks in part to a renewed and refocused marketing push.
“The marketing has tremendously ramped up,” Fils-Aime said. “And really where it comes down to is being crystal clear in who’s your target. For us, this holiday with the Wii U, the target is parents and their kids. So if you’re watching primetime family entertainment, you’re seeing our marketing. If you’re a parent watching morning or daytime media, you’re seeing our content.”
Fils-Aime declined to give specifics about Nintendo’s marketing spend, but did expound on the company’s overall strategy.
“More than just the dollars, we’re putting our product where the consumer can see it, touch it, and feel it,” Fils-Aime said. “We’re in over 20 malls across the country. We’re creating an opportunity for consumers to see the product, because that, for Nintendo, is where the ‘wow’ happens. It’s not when you talk about specs or technology.”
Fils-Aime also addressed continued calls for Nintendo to begin making games for smartphones and tablets. While he stressed a corporate philosophy that Nintendo games are best played on Nintendo devices, Fils-Aime said the company has been doing “experimentation” on mobile platforms. However, he cautioned that experimentation is “largely going to be much more marketing activity oriented,” and designed to push users to experiences on the 3DS or Wii U rather than serve as stand-alone experiences in themselves.
“What drives us is creating fantastic experiences for consumers that in the end we’re able to monetize as a for-profit company,” Fils-Aime said. “The issue is that if you have games out there on all of these smart devices for very small amounts of money, it’s very difficult to monetize. And if you look at all of these companies who are trying to do it, there aren’t many that are doing it long-term, profitably.”
It is starting to look like the Wii is destined to go the way of the Dodo.
Estimated sales figures seem to indicate that 222,700 Wii U consoles were sold in the United States in November and 4.3 million Wii U consoles worldwide to date. This is not to be sneezed at, but given that Nintendo wanted to sell Nine million Wii Us worldwide during its 2014 fiscal year that is disappointing.
Nintendo flogged 160,000 systems in the first quarter and 300,000 units in the second quarter. Added to this new 222,000, this means Nintendo would need to sell an additional 8.3 million Wii Us before the end of March in order to reach its goal, or between 2.0-2.1 million consoles per month in December, January, February and March.
Analysts have already predicted that Nintendo “will likely miss” its profit goals for Wii U. Nintendo is trying to talk up the figures saying that sales of Wii U hardware increased by more than 340 percent over sales in October. Meanwhile sales of Microsoft’s and Sony’s new consoles are going through the roof.
Wedbush Securities analyst Michael Pachter spoke at the Game Monetization USA Summit in San Francisco, and once again made some bold predictions about the future of the game industry. He pulled no punches as he evaluated the current state of affairs in the business, and he had some hard advice for a number of companies.
Pachter noted that more people are playing games on more devices than ever before, but he doesn’t think the console market will be growing. “I don’t think you’re ever going to see 500 million consoles out there,” Pachter said. For lifetime sales, Pachter expects the Wii U will ultimately sell 30 million “or fewer” units, the PS4 will sell 100 to 120 million units, and the Xbox One will sell 90 to 110 million units.
“The reason Sony beats Microsoft is solely the price,” Pachter noted. “Microsoft loses the next generation unless they cut price. If Microsoft drops its price to $399, I expect the sales to be equal to the PS4.”
The lifetime sales Pachter predicts compare to current sales of the PS3 and the Xbox 360 at about 80 million units apiece, but it’s far below some estimates of hundreds of millions of next-gen consoles. “I don’t know where they get those numbers,” Pachter said. He feels that at several hundred dollars, with games costing $60 or more, consoles are just too pricey to ever sell hundreds of millions of units.
The Wii U’s performance so far Pachter characterized as “underwhelming,” but noted it’s possible “but unlikely” that exciting new titles will reinvigorate growth. He believes that Nintendo is missing a huge opportunity to bring new gamers into their brands: Nintendo should put old GameBoy Advance content on phones and tablets for free, and charge $3 to $5 for more recent titles from the DS. Pachter feels this would generate enormous revenue for Nintendo and bring millions of new fans into their brands, and give them a strong way to sell newer titles on the 3DS and Wii U that use those brands.
“I don’t know why Iwata is still employed,” Pachter said, given that he refuses to take advantage of this opportunity while the handheld market continues to shrink and the Wii U has failed so far to catch on in a big way.
Pachter is more positive on the PlayStation 4 – “Sony thrives, Nintendo doesn’t” – saying it’s impressive as a game playing device. “The graphics are phenomenal, and the huge RAM makes future innovation likely,” Pachter pointed out. He noted that the multimedia features remain unclear, but the CPU power of the PS4 allows the potential for huge improvement in the future. As for the Xbox One, Pachter noted it’s impressive as a multimedia device, and the added features of Kinect and Skype give it additional value. “We’re sticking with our prediction of a built-in TV tuner” for the Xbox One, Pachter said, which would simplify the ability of the Xbox One to control your television viewing.
“The next generation of consoles is probably the last,” Pachter said. “We expect frequent model updates instead of new consoles.” Moreover, there’s going to be renewed interest in the PC, he predicted. “I think the PC is going to make a comeback, the PC will be the hub of all this stuff,” he stated. He feels Smart TVs are a dumb idea, noting that you don’t have a smart monitor connected to your computer. He envisions there will be a number of screens around the home, perhaps controlled by a tablet, being driven by a supercomputer in your pocket that we call a smartphone.