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.
“Most of the developers behind apps that are found to violate our policies have good intentions and agree to make the necessary changes when notified,” said Todd Brix, general manager for the Windows Store, in a blog post yesterday. “Others have been less receptive, causing us to remove more than 1,500 apps as part of this review so far.”
The Windows Store is the official source of Windows 8′s (and 8.1′s) “Modern,” née “Metro” apps, the touch-based programs designed for tablets and touch-enabled notebooks.
Earlier this year, Brix’s team changed Windows Store apps’ certification — the process under which apps are admitted to the market — to require newly-submitted programs be clearly named, properly categorized and appropriately identified with an icon. Those modifications were made, said Brix, to “better ensure that apps are named and described in a way that doesn’t misrepresent their purpose.”
The same requirements have now been extended to apps already in the store.
The timing of Brix’s blog and Microsoft’s efforts to cleanse the Windows Store was no coincidence: More than a week ago, How-To Geek described its probe of the store in a piece titled ”The Windows Store is a Cesspool of Scams — Why Doesn’t Microsoft Care?”
In the story, How-To Geek pointed out worthless apps, some as expensive as $8.99, that did little more than point users to links for downloading Apple’s iTunes (free), Mozilla’s Firefox (also free) and VideoLAN’s VLC Player (yes, free). The publication also found fake — and paid — versions of Adobe’s Flash Player, Google’s Picasa, King’s Candy Crush Saga and Mojang’s Minecraft.
How-To Geek blamed Microsoft for the scam-app pollution. “Here’s one of the most shocking parts of this. People from Microsoft are actually examining each of these scammy apps, checking their content, and approving them,” the site said, pointing out pertinent parts of Microsoft’s certification process.
The apps How-To Geek fingered have been removed from the Windows Store, presumably as part the 1,500 Brix claimed had been bounced out.
How-To Geek’s story was widely cited by other websites, blogs and publications last week, reigniting charges that the Windows Store was packed with junk.
A quick look at MetroStore Scanner, which tracks each day’s new and updated apps, showed that Brix and his team have their work cut out for them. On Tuesday, according to MetroStore Scanner, 12 copies of the free KMPlayer, a media player owned by a Korean TV streaming company, were published to the Windows Store. However, the dozen KMPlayer copies — all using the transparently copycat name of “KM* 5.1 Player” but each with a different icon — were priced at either $0.99 or $1.99.
The real KMPlayer is currently at version 3.9.
MetroStore Scanner’s tally of the number of apps in the Windows Store was approximately 172,000 as of late Wednesday, meaning that the apps removed so far represented less than 1% of the total in the e-mart.
Amazon.com Inc has acquired live-streaming gamingnetwork Twitch Interactive for about $970 million in cash, reflecting Chief Executive Officer Jeff Bezos’ vision to transform Amazon into an Internet destination beyond its roots in retail operations.
The deal, jointly announced by the two companies, is the largest deal in Amazon’s 20-year history and will help the U.S. e-commerce company vie with Apple Inc and Google Inc in the fast-growing world of online gaming, which accounts for more than 75 percent of all mobile app sales.
The acquisition involves some retention agreements that push the deal over $1 billion, a source close to the deal told Reuters.
“Twitch will further push Amazon into the gaming community while also helping it with video and advertising,” Macquarie Research analyst Ben Schachter said in a note.
Twitch’s format, which lets viewers message players and each other during live play, is garnering interest as one of the fastest-growing segments of digital video streaming, which in turn is attracting more and more advertising dollars.
The deal, expected to close in the second half of the year, is an unusual step for Amazon, which tends to build from within or make smaller acquisitions. Tech rival Google was earlier in talks to buy Twitch, which launched slightly more than three years ago, one person briefed on the deal said.
Neither Amazon nor Twitch would discuss how the deal came together or comment on Google’s interest.
In an interview, Twitch Chief Executive Officer Emmett Shear said the startup contacted Amazon because its deep pockets and ad sales expertise would allow the startup to pursue its strategic objectives more quickly.
“The reason why we reached out to Amazon, the reason I thought working for Amazon, having Twitch being a part of Amazon, would be a great idea for us (because) they would give us the resources to pursue these things that we honestly already want to pursue and they’d let us do it faster,” Shear said.
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.”
Mickey Mouse outfit Walt Disney expects global retail sales from its 10-month-old Infinity video game to reach $1 billion.
Disney launched Infinity in August to help turn around its interactive gaming unit, which lost $1.4 billion from fiscal year 2008 to 2013. In an overhaul in March, the division laid off about one-quarter of the workforce, cut the number of games it develops and focused its advertising more on the fast-changing mobile market.
A month ago, Disney reported global retail sales of $550 million for Infinity. Sales of the game helped the interactive unit post a $14 million profit for the quarter that ended in March. Jimmy Pitaro, president of the company’s interactive unit said that Infinity will be a billion-dollar franchise. It is expected to do even better when the game’s next version, “Disney Infinity 2.0: Marvel Super Heroes” is launched. Infinity lets users play with characters from Disney and Pixar films such as Anna and Elsa from “Frozen,” Captain Jack Sparrow from “Pirates of the Caribbean” and Lightning McQueen from “Cars.” The 2.0 version that will be launched in the fall brings in Marvel heroes such as Captain America, Iron Man and Spider-Man.
Still Infinity has not done as well as its rival Activision Blizzard “Skylanders” franchise which has made $2 billion in revenue.
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.
With Amazon’s Fire TV device the first out the door, the second wave of microconsoles has just kicked off. Amazon’s device will be joined in reasonably short order by one from Google, with an app-capable update of the Apple TV device also likely in the works. Who else will join the party is unclear; Sony’s Vita TV, quietly soft-launched in Japan last year, remains a potentially fascinating contender if it had the right messaging and services behind it, but for now it’s out of the race. One thing seems certain, though; at least this time we’re actually going to have a party.
“Second wave”, you see, rather implies the existence of a first wave of microconsoles, but last time out the party was disappointing, to say the least. In fact, if you missed the first wave, don’t feel too bad; you’re in good company. Despite enthusiasm, Kickstarter dollars and lofty predictions, the first wave of microconsole devices tanked. Ouya, Gamestick and their ilk just turned out to be something few people actually wanted or needed. Somewhat dodgy controllers and weak selections of a sub-set of Android’s game library merely compounded the basic problem – they weren’t sufficiently cheap or appealing compared to the consoles reaching their end-of-life and armed with a vast back catalogue of excellent, cheap AAA software.
“The second wave microconsoles will enjoy all the advantages their predecessors did not. They’ll be backed by significant money, marketing and development effort, and will have a major presence at retail”
That was always the reality which deflated the most puffed-up “microconsoles will kill consoles” argument; the last wave of microconsoles sucked compared to consoles, not just for the core AAA gamer but for just about everyone else as well. Their hardware was poor, their controllers uncomfortable, their software libraries anaemic and their much-vaunted cost savings resulting from mobile game pricing rather than console game pricing tended to ignore the actual behaviour of non-core console gamers – who rarely buy day-one software and as a result get remarkably good value for money from their console gaming experiences. Comparing mobile game pricing or F2P models to $60 console games is a pretty dishonest exercise if you know perfectly well that most of the consumers you’re targeting wouldn’t dream of spending $60 on a console game, and never have to.
Why is the second wave of microconsoles going to be different? Three words: Amazon, Google, Apple. Perhaps Sony; perhaps even Samsung or Microsoft, if the wind blows the right direction for those firms (a Samsung microconsole, sold separately and also bundled into the firm’s TVs, as Sony will probably do with Vita TV in future Bravia televisions, would make particular sense). Every major player in the tech industry has a keen interest in controlling the channel through which media is consumed in the living room. Just as Sony and Microsoft originally entered the games business with a “trojan horse” strategy for controlling living rooms, Amazon and Google now recognise games as being a useful way to pursue the same objective. Thus, unlike the plucky but poorly conceived efforts of the small companies who launched the first wave of microconsoles, the second wave is backed by the most powerful tech giants in the world, whose titanic struggle with each other for control of the means of media distribution means their devices will have enormous backing.
To that end, Amazon has created its own game studios, focusing their efforts on the elusive mid-range between casual mobile games and core console games. Other microconsole vendors may take a different approach, creating schemes to appeal to third-party developers rather than building in-house studios (Apple, at least, is almost guaranteed to go down this path; Google could yet surprise us by pursuing in-house development for key exclusive titles). Either way, the investment in software will come. The second wave of microconsoles will not be “boxes that let you play phone games on your TV”; at least not entirely. Rather, they will enjoy dedicated software support from companies who understand that a hit exclusive game would be a powerful way to drive installed base and usage.
Moreover, this wave of microconsoles will enjoy significant retail support. Fire TV’s edge is obvious; Amazon is the world’s largest and most successful online retailer, and it will give Fire TV prime billing on its various sites. The power of being promoted strongly by Amazon is not to be underestimated. Kindle Fire devices may still be eclipsed by the astonishing strength of the iPad in the tablet market, but they’re effectively the only non-iPad devices in the running, in sales terms, largely because Amazon has thrown its weight as a retailer behind them. Apple, meanwhile, is no laggard at retail, operating a network of the world’s most profitable stores to sell its own goods, while Google, although the runt of the litter in this regard, has done a solid job of balancing direct sales of its Nexus handsets with carrier and retail sales, work which it could bring to bear effectively on a microconsole offering.
In short, the second wave microconsoles will enjoy all the advantages their predecessors did not. They’ll be backed by significant money, marketing and development effort, and will have a major presence at retail. Moreover, they’ll be “trojan horse” devices in more ways than one, since their primary purpose will be as media devices, streaming content from Amazon, Google Play, iTunes, Hulu, Netflix and so on, while also serving as solid gaming devices in their own right. Here, then, is the convergence that microconsole advocates (and the rather less credible advocates of Smart TV) have been predicting all along; a tiny box that will stream all your media off the network and also build in enough gaming capability to satisfy the mainstream of consumers. Between the microconsole under the TV and the phone in your pocket, that’s gaming all sewn up, they reckon; just as a smartphone camera is good enough for almost everyone, leaving digital SLRs and their ilk to the devoted hobbyist, the professional and the poseur, a microconsole and a smartphone will be more than enough gaming for almost everyone, leaving dedicated consoles and gaming PCs to a commercially irrelevant hardcore fringe.
There are, I think, two problems with that assessment. The first is the notion that the “hardcore fringe” who will use dedicated gaming hardware is small enough to be commercially irrelevant; I’ve pointed out before that the strong growth of a new casual gaming market does not have to come at the cost of growth in the core market, and may even support it by providing a new stream of interested consumers. This is not a zero-sum game, and will not be a zero-sum game until we reach a point where there are no more non-gaming consumers out there to introduce to our medium. Microconsoles might do very well and still cause not the slightest headache to PlayStation, Xbox or Steam.
The second problem with the assessment is a problem with the microconsoles themselves – a problem which the Fire TV suffers from very seriously, and which will likely be replicated by subsequent devices. The problem is control.
Games are an interactive experience. Having a box which can run graphically intensive games is only one side of the equation – it is, arguably, the less important side of the equation. The other side is the controller, the device through which the player interacts with the game world. The most powerful graphics hardware in the world would be meaningless without some enjoyable, comfortable, well-designed method of interaction for players; and out of the box, Fire TV doesn’t have that.
Sure, you can control games (some of them, anyway) with the default remote control, but that’s going to be a terrible experience. I’m reminded of terribly earnest people ten years ago trying to convince me that you could have fun controlling complex games on pre-smartphone phones, or on TV remote controls linked up to cable boxes; valiant efforts ultimately doomed not only by a non-existent business ecosystem but by a terrible, terrible user experience. Smartphones heralded a gaming revolution not just because of the App Store ecosystem, but because it turned out that a sensitive multi-touch screen isn’t a bad way of controlling quite a lot of games. It still doesn’t work for many types of game; a lot of traditional game genres are designed around control mechanisms that simply can’t be shoehorned onto a smartphone. By and large, though, developers have come to grips with the possibilities and limitations of the touchscreen as a controller, and are making some solid, fun experiences with it.
With Fire TV, and I expect with whatever offering Google and Apple end up making, the controller is an afterthought – both figuratively and literally. You have to buy it separately, which keeps down the cost of the basic box but makes it highly unlikely that the average purchaser will be able to have a good game experience on the device. The controller itself doesn’t look great, which doesn’t help much, but simply being bundled with the box would make a bold statement about Fire TV’s gaming ambitions. As it is, this is not a gaming device. It’s a device that can play games if you buy an add-on; the notion that a box is a “gaming device” just because its internal chips can process game software, even if it doesn’t have the external hardware required to adequately control the experience, is the kind of notion only held by people who don’t play or understand games.
This is the Achilles’ Heel of the second generation of microconsoles. They offer a great deal – the backing of the tech giants, potentially huge investment and enormous retail presence. They could, with the right wind in their sales, help to bring “sofa gaming” to the same immense, casual audience that presently enjoys “pocket gaming”. Yet the giant unsolved question remains; how will these games be controlled? A Fire TV owner, a potential casual gamer, who tries to play a game using his remote control and finds the experience frustrating and unpleasant won’t go off and buy a controller to make things better; he’ll shrug and return to the Hulu app, dismissing the Games panel of the device as being a pointless irrelevance.
The answer doesn’t have to be “bundle a joypad”. Perhaps it’ll be “tether to a smartphone”, a decision which would demand a whole new approach to interaction design (which would be rather exciting, actually). Perhaps a simple Wiimote style wand could double as a remote control and a great motion controller or pointer. Perhaps (though I acknowledge this as deeply unlikely) a motion sensor like a “Kinect Lite” could be the solution. Many compelling approaches exist which deserve to be tried out; but one thing is absolutely certain. While the second generation of microconsoles are going to do very well in sales terms, they will primarily be bought as media streaming boxes – and will never be an important games platform until the question of control gets a good answer.
With Fire TV, Amazon has launched its first box to deliver games to the living room. The $99 Android-based hardware features a quad-core processor, a dedicated GPU and a separate gaming controller for $40. Moreover, Amazon will bring exclusive games to the Fire TV through its first-party team at Amazon Game Studios.
Similar to other microconsoles, the games on the digital store will be either free or quite cheap to purchase, which Amazon hopes will make it attractive to the masses. Amazon has an army of resources and while other microconsoles have failed to become mainstream, it would be foolish to doubt Amazon’s potential. Should dedicated console makers like Sony or Microsoft be concerned? The majority of the analysts GamesIndustry International spoke to didn’t think so.
Wedbush Securities’ Michael Pachter called the announcement a “nonevent,” saying Amazon “will not be a player.” DFC Intelligence’s David Cole agrees.
“Short term they don’t have a reason to be concerned but long term it could be an issue. The main focus of the box is streaming video. The issue is video is 1) a much bigger application than games and 2) much easier to do. It is clear games are at best currently a distant after thought for Amazon in terms of the Amazon box. The type of games they are looking at are more in the realm of tablet/mobile/casual products, which are really no substitute for what the dedicated consoles provide,” he said.
“So I think right now it is a rounding error in the game industry but that could change if Amazon decides it wants to make a big investment in the space. However, the reality is you really have to very directly target gamers and Amazon right now is only half-heartedly doing that.”
Indeed, hardcore gamers won’t be passing up the PlayStation 4 or Xbox One for an Amazon Fire TV anytime soon, said independent analyst Billy Pidgeon: “Hardcore games enthusiasts won’t be satisfied by this or any other inexpensive television-connected device. Still, Microsoft, Sony and Nintendo are increasingly competing for individual and family entertainment time with interactive entertainment, video and audio available in the home on multiple devices, including smartphones and tablets as well as multimedia boxes that connect to television sets.”
Pidgeon conceded that “as more devices can offer games and media, consoles’ appeal for the mass market (an important factor in mid-to-end cycle console adoption) is in steep decline.” He added that if anyone should be worried now, it should be Apple and Google.
“Apple and Google have been the main contenders for online media transactions, but Amazon has the motivation, the focus and the distribution to move Fire TV quickly into lead position. Apple has competition issues with media providers and Google is behind in online retail and user experience. Amazon’s entry into connected TV could energize the competition and speed household penetration,” he said.
Asif Khan, CFO of Virtue LLC, wasn’t wowed by the Fire TV announcement either. Even with exclusive games – and now Amazon has hired some heavy hitters in Clint Hocking and Kim Swift – he’s not convinced that Amazon can disrupt the console market.
“We knew that Amazon was going to enter the games industry, but I am not sure who is going to feel compelled to buy it with a controller that costs 40 percent of the device. The success of the device as a gaming alternative will likely depend on the software that Amazon’s gaming studio can create, but we have seen with Nintendo’s Wii U flop that first-party content is not enough to get consumers to buy a device,” Khan noted.
“There is chance that Fire TV can make some waves if Amazon’s partners continue to bring games to the device, but in my opinion this product will achieve limited success,” he continued. “It feels like all of Apple’s competitors have now shown their cards in anticipation of the upcoming Apple TV refresh. We have seen Xbox One, Chromecast, and now Fire TV. None of these products have wowed consumers and ushered in a new age of how we interact with TVs. This announcement by Amazon today just has me even more interested in what Apple is going to announce this year. Clearly the set top box market has a lot of players and Amazon has a chance to contribute something to that increasingly crowded space. With that being said, I do not think the Fire TV is a game changer for video game consoles. It is a set top box that also plays games, with the potential of asymmetric gameplay.”
If the analysts seem overly negative, perhaps they are forgetting about Amazon’s web services. The back-end technology could make a difference, said IDC research manager Lewis Ward, who believes Amazon is “absolutely” a contender in the console space.
“Anybody in high tech or in content that sees Amazon jump into their bread and butter market and isn’t concerned about what Amazon might be able to do should have their head examined,” he commented. “Let’s put it this way: Fire TV is by far the most viable microconsole platform out there. Couple that with Amazon’s back-end streaming, storage, and game-hosting platforms and developer tools and you’ve got a serious threat to casual home-based console gaming in particular, at least in North America and pockets of Europe in the next few years.”
The Japanese company showed off its SmartEyeglass prototype at the Wearables DevCon conference just outside San Francisco, where it was trying to drum up interest among developers, who will need to build applications for the device.
Like Google Glass, SmartEyeglass displays information instantly in front of a users eyes. Unlike Glass, which has a small prism display, Sony’s prototype looks more like a normal pair of eyeglasses and shows information in green over a pair of see-through lenses.
In a video to show off its capabilities, users walk into an airport and get sent directions to the check-in desk which pop up on their glasses. Other potential uses include displaying the latest score and players’ names while watching a football game, sending and receiving texts and being notified of a missed call.
The glasses have a binocular-type display that makes the text look further away, which makes it more comfortable to read. They also have an embedded camera and a microphone and sensors similar to those in a smartphone, including an accelerometer, gyroscope and compass.
The device is still a prototype and not as advanced as Google Glass. It’s operated via a separate, wired controller with a touchpad that has navigation, power and camera buttons. And the glasses currently work in conjunction with an Android phone. The applications for the glasses run on the phone, and interact with the phone over Bluetooth or Wi-Fi.
Sony said it’s working on a software developer kit for the product, based on the same framework as its SmartWatch 2. But there was no word yet when the SDK or the prototype itself will be available.
Over 90 million people play Candy Crush Saga every day. Say whatever you like about London- based social game developer King, but its headline game is an unquestionable success. Like many games (most games, perhaps) it iterates upon previously existing formulae rather than being a breakthrough, unseen innovation. Like many games, the real DNA of its success can only be analysed honestly if we first admit that one of the dominant genes involved was luck. Still; 90 million players. About 1.3 per cent of the entire population of the planet try to clear candies and jellies at least once a day. Whether you consider that to be a depressing reflection of the state of humanity or not is entirely subjective; whether you consider it to be a remarkable business success is not. King’s got a touch of magic in its sweet jar.
Now King wants to convert that magic into cold, hard cash, so it’s going to float on the New York Stock Exchange. It’s proposing an initial public offering valued at $500 million, but given that its net income last year was $568 million (on revenues of $1.9 billion), everyone involved will clearly be hoping to make a killing off an early spike in share value.
When any company announces an IPO, it’s reasonable to ask why it’s happening. There are two ways for an entrepreneur to “exit”, cashing in his or her chips on the company that’s been built. One is by being acquired by a bigger firm (like the recent purchase of a major stake in Supercell by Puzzle & Dragons publisher GungHo). The other is an IPO. In both cases, there are two clear reasons for cashing in – the first one, which everyone always claims to be pursuing, is to raise more money to facilitate further growth and make your company bigger and better. The second is shadier but not uncommon. You reckon you’ve taken the business as far as you can – organic growth is looking rocky from here, maybe you sense a change in the market or an oncoming headwind, and you want to grab as much cash as you can while the going is good, before your valuation starts to heavily decline.
“Take the money and run” isn’t an uncommon reason for a sale or an IPO, although none of the parties involved would ever be so gauche as to admit to such a thing. Still, the logic underwriting such a thing is cold and undeniable. If you can sense that your company is facing rocky ground and its valuation has likely peaked, you want to make sure you get as much of a return on your holdings as possible before they become devalued. Laws and rules force lots of disclosure of financial data, of course, so you can’t hide a decline that’s already started – but if your instinct says next year won’t be as good as last year, now’s the right time to sell, and “instinct” doesn’t appear on SEC-mandated documents.
Is King taking the money and running? Yes, I think they are. I think this IPO is actually a little late – it’s going to occur just as King is on a downslope – but it’s far better timed than the easiest comparison, Zynga. Zynga launched on the stock exchange far too late, after it had already become obvious that the company was completely hobbled by the rapid transition from Facebook to smartphones in social gaming. Its IPO was a flop from an investor’s perspective, although plenty of people still made a lot of money from it – it certainly made more money than it would have if they’d waited around until the depths of the company’s troubles became apparent. On its current timeline, King will be IPOing while it’s still within touching distance of Candy Crush Saga’s peak.
“Is King taking the money and running? Yes, I think they are”
I foresee two problems, both of which ought to ring huge alarm bells for investors interested in the company. The first is that Candy Crush Saga’s peak is just that – a monolithic, dramatic peak climbing up out of a landscape of foothills and gentle valleys. There are no other peaks in sight. King’s other games do “okay”, but nearly 80% of its revenue comes from Candy Crush Saga, whose 90 million daily users figure is six times greater than the daily users figure for the firm’s second-place game, Pet Rescue Saga. There is nothing on the horizon which might replace Candy Crush Saga; once you start descending from that peak, the danger is that you end up back in the foothills with no more peaks to ascend. There’s simply no evidence, let alone proof, that King is capable of recreating the lightning-strike success of Candy Crush Saga. Bluntly, I don’t think King believes it can manage that either – because if the firm and its investors genuinely believed that they could repeat the success of Candy Crush, they would IPO after doing so, knowing that a company with a proven ability to turn out enormous hits is vastly, vastly more valuable than a company with one lucky strike and a string of also-rans to its name.
The second problem is Zynga itself. The stock market has already had one market-leading social game company perform absolutely dismally after flotation. Investors now know that this sector, while it’s exciting and interesting and extremely profitable, is also insanely volatile, completely hit- driven and largely subject to the rapidly changing whims of technology. On the surface, the F2P model is far more investor-friendly than the old-fashioned boxed game model, since you actually get a steady revenue stream from your products rather than a single burst of revenue after a couple of years of expensive development. In practice, though, you still need to keep turning out hit titles in order to ensure revenue growth (which is all the stock market gives a damn about). Few studios have shown any capacity for doing that – there are laudable exceptions like Supercell and Nimblebit, but most mobile gaming studios are still dining out on single successes. King has Candy Crush Saga; Rovio has Angry Birds; GungHo has Puzzle & Dragons. None of these companies have managed to create another game as popular as the one that made them famous – lacking a track record, each of them can fairly be considered a one-hit wonder until proven otherwise.
What about recent controversies around King? The company’s aggressive approach to trademarks, its reputed cloning of games and so on have done nothing to endear it to the gaming world and cultivated an atmosphere of negativity around the company. I would caution against reading too much into the likely impact of such stories on an IPO, though. Investors, bluntly, don’t really care if a company stands accused of not being terribly innovative, as long as the results are good. They certainly couldn’t care less about trademark spats with independent developers, I fear. Such issues are important and relevant to those directly involved, but of no consequence to the IPO prospects of a company like King.
What they do, however, is set mood music around the firm. Being seen as a bit ruthless is no bad thing, but I suspect that investors burned by Zynga will be quick to note the parallels between the sort of behaviour of which King stands accused, and the sort of behaviour in which Zynga engaged. The two companies are, in my mind, very similar both in culture and in approach. Neither was founded out of any attachment to games as a medium, a culture or an artform; both are simply entrepreneurial vehicles to exploit a potential market, and as such, it’s to be expected that both would struggle to adapt and succeed at points where they encounter obstacles that can only be surmounted by creativity rather than by management bullet points or business model refinement.
That’s not entirely a criticism, by the way; in a capitalist economy, there’s no sin to creating a business just to exploit a gap in the market. If the market in question happens to be a creative medium, one has to expect significant blowback to this approach. Moreover, there’s a limited lifespan to such a strategy – a company in a creative sector which is not founded on creative principles cannot expect to significantly outlive the market conditions it was originally designed to exploit.
In summary, I find it hard to view King’s IPO as anything more than Zynga 2.0. It is better-timed, certainly, but the companies involved are similar enterprises facing similar challenges – and thus far, demonstrating a similar lack of capacity to overcome them. Zynga is much, much further down the slope from its peak than King, so of course there remains a reasonable possibility that King can surprise us all with a second title on the scale of Candy Crush – and by doing so, establish itself as a genuine leading light of this new market. For all the negativity poured upon the company of late, I honestly hope King can make lightning strike twice for itself. I don’t like Candy Crush Saga personally, but that’s a subjective view – objectively, I cannot find a trace of the supposed immorality, grasping and nastiness of which the game regularly stands accused, and can’t help but recall all the awful stuff of which Flappy Bird also stood wrongly accused when it dared to be a break-out mobile gaming success. King faces problems down the line and I question whether it represents a good investment opportunity for anyone – but should it overcome those issues and prove itself capable of the creativity required to replicate its Candy Crush success, it would be churlish to call that anything other than a fresh triumph for UK game development. Fingers crossed that it happens.
Walt Disney Co is making plans to lay off several hundred people in its interactive unit, the division that includes gaming products and the Disney.com website, The Wall Street Journal reported earlier this week.
The job eliminations are expected to begin after Disney releases its quarterly earnings today, the Journal said. Playdom, a social gaming business Disney acquired in 2010, is one division expected to see cutbacks, the newspaper said.
Disney is trying to turn around the interactive unit, which has about 3,000 employees. Its new Infinity video game enjoyed strong initial sales after its release last August, helping the division report a $16 million profit for the quarter that ended in September, an improvement from the $76 million loss a year earlier.
A Disney spokeswoman had no comment.
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.
Nike announced that its Vapor Laser Talon bottom plate weighs just 5.6 oz. and was specifically designed on a 3D printer to provide optimal traction on football turf and to help athletes maintain their “drive stance” longer.
According to Performance Director Lance Walker, an athlete’s “Zero Step” is a pivotal point that can make or break an athlete’s 40-yard dash time. In the moments before that first step hits the turf, his propulsion and acceleration speed are determined. At that point, it’s all about geometry, Nike said.
The plate of the cleat is crafted using Selective Laser Sintering technology(SLS), a 3D printing technique that uses lasers to melt successive layers of powdered polymers.
Unlike fused deposition modeling, where polymers are melted and extruded from a hair-thin hole in a nozzle layer by layer, SLS 3D printers melt layers in a bed of powder. As each layer is melted, an additional layer of powder from a cartridge is added atop the preceding layer. Each layer is fused to the layer beneath it as it melts. As with all 3D printing, computer-aided design (CAD) software directs the robotic laser mechanism as it builds an object.
Nike said the SLS 3D printing, it was able to prototype a fully functional cleat plate and traction system within a fraction of the traditional timeframe — and at a fraction of the weight.
The SLS process allowed for the engineering and creation of shapes not possible in traditional manufacturing, the company said. It also allows for design updates within hours instead of months to truly accelerate the innovation process.
“SLS technology has revolutionized the way we design cleat plates – even beyond football – and gives Nike the ability to create solutions that were not possible within the constraints of traditional manufacturing processes,” Shane Kohatsu, director of Nike Footwear Innovation, said in a statement.
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.