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For Nintendo, slow and steady makes sense

For Nintendo, slow and steady makes sense

Fri 19 Apr 2013 7:00am GMT / 3:00am EDT / 12:00am PDT
Business

Software delays on Wii U may frustrate - but Nintendo knows that its long-term success is built on game quality, not "winning" sales wars

Of the many and varied approaches to PR which have been attempted by game publishers and platform holders in recent years, few have been quite so successful as Nintendo's now semi-regular "Nintendo Direct" broadcasts. Not only has the content being announced generally been of a very high standard - and particularly pleasing to the Nintendo faithful, of course - the presentation style has helped to humanise Nintendo's executives, making likeable personalities out of people in rules traditionally dismissed as "suits" at other companies. Nintendo now enjoys the unique privilege of a devoted following and guaranteed coverage for its broadcasts, along with a halo effect of likeability around the company as a whole - a superb pay-off for a clever but reasonably straightforward approach to PR.

"The presentation style has helped to humanise Nintendo's executives, making likeable personalities out of suits

This week's Nintendo Direct was no exception. It was light-hearted and likeable, but included plenty of impressive, crowd-pleasing news about 3DS software - most notably the announcement of a sequel to 1991's much-loved Zelda game, Link To The Past. Arriving on top of what's already an extremely impressive pile of software in the 3DS pipeline, it's hard to see how 2013 could be anything but a success for Nintendo's handheld; October's Pokemon titles alone should guarantee a Christmas bonanza for the platform, with the rest of the line-up being the icing on the cake.

Even as the 3DS builds and builds towards a market size which many considered impossible only a couple of years ago (my own take was that 3DS would do well but wouldn't rival the ultimate success of its predecessor, the DS; I stand by that, but it looks increasingly possible that I'll be proved happily wrong), rumblings of discontent abound. Nintendo made clear in advance of this week's broadcast that it was going to be about 3DS software, yet the announcement of new titles for 3DS seemed only to deepen dissatisfaction with the slow pace of launches on the Wii U.

This is a merry-go-round with which we're probably all familiar by now - Nintendo launches a new console, there are several months of slow software launches and title slippages, then finally things seem to get into gear and software starts to pour out of the creative floodgates in Kyoto. Apologies are profuse; next time will be better. Next time, of course, is exactly the same. Recently, Satoru Iwata has been criticised - not unfairly - on the grounds of this pattern. "We'll do better next time!" sounds a lot less credible the fourth or fifth time. For new Wii U owners wondering where Pikmin or The Wonderful 101 are, these pledges certainly sound hollow.

While criticism of any company on the grounds of failing to live up to its promises is completely valid - and it is absolutely not the place of consumers to come up with excuses for multi-billion dollar corporate behemoths - I'm not sure that this specific criticism has legs when it comes to Nintendo, at least from a business perspective. It seems to me that it misses the point of what exactly Nintendo is; what exactly the company does, and where its value lies.

"Nintendo would survive the failure of a console platform. It will not survive a sufficiently serious sullying of the Mario brand"

Certainly, if you look at the Wii U right now, it's not doing well. It's probably overpriced, it's certainly lacking in seriously compelling software and it's not building its installed base at the rate it needs to in order to be a sustainable platform for developers. While the 3DS is going great guns (slower in the west than in Japan, but still by no means doing badly), the Wii U is a dark spot for Nintendo - a product which shows all the hallmarks of potential market failure.

That would be bad. Yet there's something that would be worse - much worse, in fact. Imagine a scenario in which Nintendo, shaken by slow sales of the Wii U, reacted by doing what many commentators seem to demand of them - speeding up the release schedule for Wii U software. I have no doubt that, given sufficiently aggressive management and a sufficiently devil-may-care attitude to bugs and balance issues, Nintendo could pump out a number of really big-name titles on the Wii U before the end of the year - possibly even getting all of its biggest franchises represented on the console. This is hardly blue-sky thinking; nearly every developer has experience of seeing a game they worked on being pushed out unfinished to meet a schedule.

The reason Nintendo, thankfully, doesn't do this is because Nintendo's management understands where the value of its company lies. The "Wii U" brand, or even the "Wii" brand, has only been around for half a decade and probably won't be around for much more than another half-decade, at best. This console generation will only last five years, if things go well. The company's character and franchise IP, though, is an extraordinary long-term treasure trove. Mario, Zelda, Pokemon, Metroid and the huge range of smaller but much beloved IPs (witness the delighted reaction to Earthbound, a game most people have probably never heard of, or the critical fawning and solid sales of Fire Emblem) are things of exceptional value - but their value lies not in the character art or the trademarks or any of the tangible assets associated with those IPs. Their value lies in goodwill and adoration from consumers, all of which is predicated on the fundamental assumption that when Nintendo puts one of these names on a game box, the game inside is, almost without exception, going to be excellent.

If we work from that basis, understanding that fundamental principle, then we run into a conclusion which is logical, inevitable and yet completely different from any conclusion that we might ever reach about the Xbox or PlayStation businesses. The conclusion is this - it would be better for Nintendo to let the Wii U founder than for it to rush out or otherwise compromise on the quality of its games. Not just "better" in a creative sense - better in a cold, unfeeling, commercial sense. Games and franchises are the core of Nintendo's business; it will, with some effort, survive the failure of a console platform. It will not survive a sufficiently serious sullying of the Mario brand.

"Sony and Microsoft are effectively consumer electronics firms, while Nintendo is a toy company"

Nintendo understands this. I interviewed Satoru Iwata many years ago, just after he had announced the Wiimote controller at TGS, and asked him what he would do if the company's brave and unusual experiment didn't grab consumers' imaginations. His answer was blunt - Nintendo has a lot of money in the bank (it still does, the scale of its financial assets being something of a bugbear among investors), and if the Wii had failed, it would just come up with a new idea and make a new console. The unspoken but implicit subtext was this; "even if the Wii fails, we'll still have Mario, Zelda, Pokemon and all the other things that make us 'Nintendo'". That remains every bit as true today as it was six years ago.

This aspect of Nintendo's thinking can be difficult for those of us more familiar with the traditional console businesses operated by Sony and Microsoft to wrap our heads around - yet it makes perfect sense if you consider Sony and Microsoft to be effectively consumer electronics firms, while Nintendo is a toy company. A consumer electronics firm, pushing a format that it desperately needs to be adopted by third-party content creators (think of the Blu-Ray vs. HD-DVD battle), simply must "win" the battle with that format. If it starts losing, it will throw every resource at its disposal behind a push for victory; the single most important thing to that company is the platform, so everything else falls below the singular priority of making the platform into a success. A toy company, however, launches a new toy before Christmas - if it's a huge hit with children, it'll make sure to ship more of them next year, perhaps adding bells, whistles and accessories to the mix, but if it's not a hit? The toy company doesn't go bust, or hope that by launching a new helmet for the space marine, the toy will start to jump off shelves; rather, it devotes itself to inventing a new toy for next Christmas, and the cycle continues.

It's an imperfect analogy, of course, and none of this is to say that Nintendo isn't committed to making the Wii U into a success. Accepting defeat and trying something new is on the menu (whereas it's unthinkable for Sony or Microsoft), but it's far from being the preferred option; Wii U won't go down without a fight. However, in light of so many comments essentially asking, "What on earth are Nintendo thinking, not having X, Y and Z title out on the Wii U already?" - well, this is what they're thinking. They're thinking that the games are more important than the console, in the long term. Despite any frustration this may cause, I think gamers ought to be happy that on this rare occasion, the best commercial interests of a company align so perfectly and neatly with the doctrine of spending as much time as necessary to make the best game possible.

17 Comments

JEAN-PHILIPPE ALLANGBA
Studying Marketing Management

7 0 0.0
"Nintendo is a toy company" that sums it all. Nintendo always make a console for their franchises at when new franchise ?

Posted:A year ago

#1

Daniel Hughes
Studying PhD Literary Modernism

436 496 1.1
Popular Comment
"They're thinking that the games are more important than the console, in the long term."

Hit the nail on the head--it's all about the software, as Nintendo have been busy demonstrating with 3DS. My worry is, the longer Nintendo take to get software out with Wii U, the less successful the system will be--I don't think Nintendo have the luxury of two years to get the system properly up and running in the West, which is what it's taken with 3DS. I admire Nintendo's philosophy that games will be done when they are done, and their commitment to quality and bug-free releases which is practically unheard of among major publishers today, but I do think Nintendo desperately need to ensure that when they launch a console, they launch with a consistent stream of software for the first 12 months. They managed this with Wii, fifteen first party titles in the first eighteen months, including Wii Sports/Play/Fit, Mario Kart, Mario Galaxy, Smash Brothers, Zelda, Metroid, and smaller stuff like Fire Emblem, Battalion Wars and Endless Ocean, and the system was sold out for the first two years on sale.

If Nintendo want to ensure that early adopters continue to jump on board in their millions, and ensure that their consoles get off to a strong start, they need to realise these quality releases in a more timely, consistent manner. I understand Nintendo couldn't have expanded rapidly and aggressively and suddenly had a bunch more studios up to their own high standards, but surely, with less certain third party support and a larger possible audience to feed, the priority should be to expand development capabilities? Especially now their digital business is taking off, and in creative terms, allowing Nintendo's experimental side to flourish outside of established IP. They have the money, and they have plenty of second party partnerships. Like I said, I admire their philosophy, but I think it's passed time Nintendo really began to ramp up and increase their development capabilities.

Posted:A year ago

#2

Rick Lopez
Illustrator, Graphic Designer

1,269 942 0.7
At the end of the day, if they give me the games I want, im buying their console. They seem to be on the right track in making me have reason to buy one. When the New Zelda, 3D mario, Bayonetta2, SMT x Fire Emblem, Xenoblade 2 start rolling out the door, then Im pretty certain Ill get a WiiU. Im hoping for a price drop though. If I were Nintendo, I would ditch the gamepad, in favor of 3DS compatability... make a version that has a standard set of buttons, and as a cheaper alternative, combine the features of a pro controller and develope software that can be used with any android or iOS device to compensate for the missing gamepad features. The gamepad is the one thing that actually puts me off about the wiiU. But I will eventually purchase one. At the end of the day, you cant go wrong in purchasing a Nintendo product.

Posted:A year ago

#3

Andy Samson
QA Supervisor

235 179 0.8
I miss the days when two people can play right out of the box. I'd rather they have included an extra controller like a Wiimote or the Pro controller in the deluxe package. Ditching the GamePad now would be more detrimental than beneficial since it's the system's most unique feature. It cannot be effectively and efficiently emulated by other devices, not even by the PSVita.

Posted:A year ago

#4

James Brightman
Editor in Chief

228 272 1.2
Great perspective Rob.

Posted:A year ago

#5

Caleb Hale
Journalist

154 230 1.5
Nintendo makes nearly flawless games, no doubt, but you need the patience of a saint to appreciate that commitment. Patience doesn't really exist, nor is it promoted, in the gaming industry. Nintendo will continue promoting and marketing a game months after it releases, unlike Sony and Microsoft, which let the ad push die within days after a game hits store shelves. Given that and the overall quality of each title, Nintendo games always feel less disposable.

Posted:A year ago

#6

Christopher Bowen
Editor in Chief

420 581 1.4
But this is all wrong! Michael Pachter doesn't like it, so it can't be right!

Posted:A year ago

#7

Nicholas Pantazis
Senior Editor

1,020 1,467 1.4
Genuinely excellent and insightful article Rob. I've tried to make the same argument in the past but not so eloquently. Nintendo makes games first, and the only way they survive is making games first. Better to keep things slow and excellent than compromise themselves as the gold standard of polish and production.

@ Celeb Absolutely, the long-term sales of Nintendo games are in an entirely different league from Sony and Microsoft. The market clearly sees them as less disposable, even if they don't admit it consciously. Nintendo sells more copies of New Super Mario Bros. 2 every week than Microsoft sells of Halo 4, despite NSMB2 being older and on a platform with less than half the install base.

Posted:A year ago

#8
Nintendo always had the right philosophy. I think there application is wrong. It takes Nintendo software to sell their hardware. Nintendo should launch with a major title to get initial hardware sales. The expectation of 3rd party companies should be to keep the momentum.

My Wii U is used mostly for Wii games, internet surfing, and Netflix. I am eagerly waiting Pikmin 3. While I wait I've been playing my PS3 with more frequency. That is not a good sign.

Posted:A year ago

#9

David Serrano
Freelancer

300 272 0.9
@Daniel Hughes

Agreed. I think Nintendo rushed the Wii U to market because the Wii inadvertently exposed a huge vulnerability in Microsoft's and Sony's market and they wanted to take advantage of it before anyone else. But they released the system before the games needed to exploit the vulnerability were developed. Hopefully they'll hang in there until those games are released.

Posted:A year ago

#10
This all makes sense to me. Nintendo make most of their profits from first-party software sales. Hardware can be a contributor, but not in the early years of a consoles life.

Nintendo are better off with a smaller install base, as long as they can maintain strong, worldwide sales of their big titles (and maintain quality to insure future sales).

Personally, I'm finding I have too much to play on the WiiU - primarily because the eShop is more accessible, and has higher quality titles on it (the sort of titles that you can keep replaying over years). Darksiders has sucked months of my gaming time, still got Assassins Creed, ZombiU, Sonic, Mario and other titles to keep me going. I want to buy Lego (and possibly MH3), but no gaming time.

My 360 has been sitting idle for 7 months now - never been turned back on. Might be packing it up soon for good.

And all this ignoring the 3DS releases coming.

Posted:A year ago

#11

Greg Wilcox
Creator, Destroy All Fanboys!

2,177 1,125 0.5
It's that "Evergreen" thing Iwata talked about a few years ago in action, as it's always been since the NES days. Nintendo's core consumers are generally a LOT less fickle and subject to outside market pressures, Patcherisms and other doom-saying about they systems they play on. They know they can count on the company to deliver the goods and while first-party takes longer (it takes a while to whip out a good game, which is why there's no yearly Zelda sequel), the games they get out there tend to be very well received.

The digital strategy is good, but I bet Nintendo is finding it tough to hear complaints from so many users in areas with lousy internet connections who'd LOVE to be playing some of those "exclusive" games. Hopefully, they can help that not so small chunk of the user base out by doing the right thing and releasing disc versions of their Virtual Console titles as collections at a fair price point. If not now, then a few months from now. I'd bet that if they price them right, you'll see some big eyeballs at their HQ when the numbers sow just how many people want those games and don't mind paying what it costs to get them as a physical product...

Posted:A year ago

#12

Keldon Alleyne
Handheld Developer

442 410 0.9
I get the impression they are purposely reducing supply in the expectation of expected future profit margins. Surely it makes more sense for Nintendo to pull in the console purchases when those units bring in more profit.

By delaying key franchises they also reduce demand such that they don't incur any embarrassing shortages and also be obliged to meet a demand they do not yet want.

Posted:A year ago

#13

David Serrano
Freelancer

300 272 0.9
@Greg Wilcox

Nintendo followed a blue ocean strategy for the Wii. http://en.wikipedia.org/wiki/Blue_Ocean_Strategy

But it seems like their Wii U strategy is based on Clayton Christensen's low end disruptive innovation theory: http://en.wikipedia.org/wiki/Disruptive_innovation

Posted:A year ago

#14

Rogier Voet
Editor / Content Manager

71 31 0.4
The problem with Nintendo is their narrow vision of what a platform holder needs to to do to make an platform an success (for all parties)

Nintendo only makes a console so they can sell their games (in a very controlled manor). They have no clue of no intention to have great relationship with third parties (they only want the royalties. A smart platform holder makes sure that the platform is attrive for everyone because there are good quality and quantitie games in every genre. To realize that you need have great relationships with developers and publishers and a much faster and broader team of internal developers.

Nintendo need to create new diverse IP for both
Nintendo has not enough capacity to create games for both 3DS and Wii U.

If you look at the console cycle of their previous consoles (GBA, DS, GameCube and Wii) you'll see the same cycle every time. They have like 8 till 10 great titles max before they run out.

Posted:A year ago

#15
Nintendo has always been "kids friendly" and I assume that majority of Gameboy, GBA, DS, 3DS owners have been and are children. Mobile is changing that fast, as kids want a smartphone instead of an handheld. And their parents are more than happy with this, as they do not need to buy their kids both phone and hand held. And they also factor in that games are free on the smartphone.

Nintendo has excellent franchises, but it has made sub par consoles for three generations now, from Gamecube to Wii U. And with 3DS fighting a losing battle against smartphones, I hope they come up with kick ass console post Wii U.

Posted:A year ago

#16

Keldon Alleyne
Handheld Developer

442 410 0.9
And their parents are more than happy with this, as they do not need to buy their kids both phone and hand held. And they also factor in that games are free on the smartphone.
Nice story, but really? And as a reminder, you cannot get pokemon on your smartphone and I think parents are pretty clued up about that one.

Gamecube sub par? It was more powerful than the PS2. Their disk had lower capacity, but I don't think that makes it a sub par offering surely.



So the question is whether smartphones make the 3DS redundant, and going by the sales the answer is a straight NO. The 3DS is not redundant - it just has far too many sales to suggest that.

Perhaps by the next generation handhelds could be redundant, or at least closed offerings as there will no doubt be a deluge of Android handhelds which double up as mobile phones with headsets.

Posted:A year ago

#17

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