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What does "success" look like to Nintendo?

What does "success" look like to Nintendo?

Fri 09 Aug 2013 7:23am GMT / 3:23am EDT / 12:23am PDT
HardwareDevelopment

We talk about the Wii U being a failure - but assessing Nintendo by wider industry standards ignores the company's unique position

Here's a great Nintendo conspiracy theory which I offer for free to any swivel-eyed forum wonk who wants it: the Wii U is selling terribly badly right now, and suffering from a software drought that's impressive even by Nintendo's standards. It also transpires that the console is still being sold at a loss, with the company taking a hit on every unit of hardware sold (even despite the weakened Yen). Now, let's add two and two together to make whatever number we fancy, and decide that Nintendo actually has fully-fledged Zelda and Mario Kart games for the Wii U sitting in a darkened room somewhere in Kyoto, but is waiting for the hardware to be profitable before unleashing them. There you go! One Internet-forum ready conspiracy theory. Use it as you wish, although in a peculiar twist on the notion of Creative Commons, I'd really rather if you didn't attribute it to me.

This is the kind of daft thinking that, while unquestionably in the realms of the silly, almost starts to make sense when we're talking about Nintendo. This is not a company that really fits with the rest of our industry. It plays by very different rules - in fact, it's at its most successful when it completely ignores what everyone else is doing and goes off on a tangent, both creatively and commercially. The firm's lowest ebb, commercially (though by no means creatively) speaking, was arguably the GameCube - I'm ignoring outright failures like the Virtual Boy here, obviously - a console that was quite lovely in many ways, but which simply didn't offer enough to distinguish itself from the competition. It was square and it had a slightly different controller, but functionally there wasn't much to choose between a GameCube and a PS2 (or latterly an Xbox), so it foundered. A generation later, Nintendo ruled the roost with a console that looked and acted nothing like a PS3 or Xbox 360.

"Pundits who engage with Nintendo do so at grave peril - this isn't a company whose motives can be gauged in the same way as other firms in the games business"

This is, in large part, why making predictions about Nintendo is a fool's game. Pundits who engage with Nintendo do so at grave peril - this isn't a company whose motives, thought processes and reactions can be gauged in the same way as other firms in the games business. It's also not a company whose market is terribly well understood by most games business commentators and analysts. In fact, I often wonder if Nintendo's market is terribly well understood by Nintendo itself, at least outside Japan.

I don't mean to make Nintendo sound like some kind of mysterious black box whose workings can only be hinted at, never understood. It is nothing of the sort. It is, however, radically different from any other company in the games industry. Unlike Sony or Microsoft, Nintendo is a pure game company whose platform strategy features no broader objectives or ulterior motives - it simply wants to make money from each game console it launches. Unlike any game publisher (and Nintendo remains pretty much the world's largest game publisher, a factor we should never overlook when thinking about their strategy), Nintendo is a hardware company - its entire philosophy is founded on the notion of creating hardware and software in a somewhat symbiotic, complementary process, on owning and controlling a platform for which it then releases its world-beating game software.

If those differences are obvious, then others, perhaps, are not. For one thing, Nintendo has a long-term outlook that's quite unusual in the games business. It does not answer to shareholders and investors to the same extent that other games companies must, thanks to a combination of large shareholdings by individuals and organisations connected to senior management or to the Yamauchi family, and general passivity on the part of Japanese institutional investors. It is sitting on an enormous pile of cash, easily enough to fund years of loss-making activities, or indeed the launch of an entire new console platform. It could launch new platforms several times over before the accountants started breaking a sweat, in fact, which sets Nintendo apart from much of the rest of the industry - and crucially, makes it into a very different proposition from early 2000s SEGA, for whom the Dreamcast truly was the last roll of the dice.

"Nintendo could launch new platforms several times over before the accountants started breaking a sweat, which sets it apart from much of the rest of the industry"

Like many others, I am a proponent of the argument that as a consequence of those and various other cultural differences, Nintendo doesn't actually act like a game company - it acts like a toy company. It evaluates the performance of its products and the necessity of tweaking its strategy from the standpoint that these products are expensive toys, a seemingly minor difference of perspective that ultimately yields very different decision making. I've also argued before that Nintendo views IP quite differently to other platform holders - where Microsoft, for example, sees Halo as an IP that can be deployed to help launch and sell a platform, Nintendo views Mario, Zelda, Pokemon and their ilk as the company's crown jewels, with platforms being built to support those and other franchises, not vice versa. The notion of rushing out a Mario game to support the launch of a console is largely alien to Nintendo, for whom a failed console launch is better than a failed Mario game, in the long term.

What this all means, and why it's all particularly relevant right now, is that "failure" means something different to Nintendo than it does to the rest of the industry. We're talking in terms of the Wii U being a failure right now - and right now, it is, on anyone's terms. It had a damp launch that even the excellent ZombiU couldn't rescue, has stumbled through the first half of 2013 and has just posted jaw-droppingly poor figures for sell-through in the second calendar quarter of the year. Wii U is a failure right now, by the standards of the games industry and, to some extent, by the standards of Nintendo.

To some extent. That's important, because while the rest of the world may see what happens from now as last-ditch rescue attempts by a company with its back to the wall, I don't think that Nintendo itself harbours too many doubts about its ability to make the Wii U into a viable platform for its games. As my daft conspiracy theory illustrated, so far Nintendo has barely brushed the Wii U with its key franchises. Indeed, the extent of the company's enormous focus on the 3DS this year has arguably left the Wii U genuinely neglected, which is simultaneously a case of dropping the ball (a new console launch needs support) and of quite sensibly making hay while the sun shines (the 3DS is a money-printing machine right now).

If there are people in Nintendo HQ right now thinking, "Wii U can languish for a bit - when we release really big software for it, people will pick one up at that point," then they may be a little bit arrogant but they do have over 20 years of history to look at and conclude that they're absolutely correct. In the end, Wii U at its very worst will probably sell GameCube level numbers, perhaps even Nintendo 64 level numbers, because those numbers represent the people who are happy to go out and buy a Nintendo console in order to play Nintendo's biggest and most beloved games, even if third-party support is utterly lacking and the console isn't getting mass-market traction. They're the core Nintendo fans, and there are a whole lot of them - many of them the kind of people who play on other game systems most of the time, but wouldn't dream of missing out on each generation's Zelda, Mario or on any of the other quirky, beautifully crafted games Nintendo releases.

"Nintendo's launches are toy launches, not the setting out of decade-long grand visions for home entertainment, and a failed toy can always be replaced by a successor next year"

If we're asking, "what does failure look like for Nintendo," we might equally flip the question and ask what success looks like. Few people in the games business would call the N64 or the GameCube a success story, yet from Nintendo's point of view, both consoles made enormous amounts of money and helped to launch or cement the reputation of some of the company's most beloved and enduring games. Would Nintendo like to sell over 100 million units of the Wii U, as it has with the Wii? Of course it would. Will it throw up its hands in abject despair if it only sells 30 million units? Absolutely not. 30 million units with a great tie ratio is still a hugely profitable console - and while the markets may abhor the notion of a company's market share declining in this way, Nintendo is far less in thrall to stock price than most companies in this industry.

Whenever I see someone proclaiming the death knell of a Nintendo console (usually accompanied by a statement on the inevitability of their move to working on iOS games or the likes), I'm always reminded of a comment Satoru Iwata made to me in an interview after the unveiling of the Wii controller at TGS several years ago. I asked him what Nintendo would do if the public didn't take to the Wii, and the whole risky idea flopped. He quite comfortably responded that Nintendo would just go back and try something new. The finances support it, and more importantly, the company philosophy supports it - Nintendo's launches are toy launches, not the setting out of decade-long grand visions for home entertainment, and a failed toy can always be replaced by a successor next year. Yet "failure" and "success", it transpires, are relative metrics. If we're going to be using the word "failure", we need to start asking what "failure" is, what "success" looks like - and assessing companies and products according to what they are and how they act, not according to some imaginary contest that makes for better media narrative than it does corporate strategy.

35 Comments

Nick McCrea
Gentleman

177 217 1.2
Popular Comment
Great article. Really insightful.

Posted:11 months ago

#1

Daniel Hughes
Studying PhD Literary Modernism

436 496 1.1
"The firm's lowest ebb, commercially (though by no means creatively) speaking, was arguably the GameCube - I'm ignoring outright failures like the Virtual Boy here, obviously - a console that was quite lovely in many ways, but which simply didn't offer enough to distinguish itself from the competition"

It is a similar problem, I would argue, that Wii U faces. Wii U has been designed as an alternate machine, yet Nintendo spent the run up to launch attempting to position it as an equivalent machine to PlayStation and Xbox, particularly in terms of the software range, when they should have focused on designing software that was only possible on Wii U, attracting development support that was only available for Wii U, and talking about what makes Wii U different. GameCube and Wii conclusively proved that an equivalent Nintendo console will fail where an alternative Nintendo console will succeed, providing that the software supports and defines the alternative experience enabled by the hardware.

Posted:11 months ago

#2

Patrick Williams
Medicine and Research

93 61 0.7
Even with the Wii U having catastrophic sales in the last quarter, somehow, Nintendo as a whole still turned a profit. Additionally, they're sitting on a massive bank. They aren't going anywhere any time soon.

Posted:11 months ago

#3

Rick Lopez
Illustrator, Graphic Designer

1,269 941 0.7
Loved the article, It was an objective, non biased look at the Nintendo business. I wanted to quote a few lines from the article. But I would end up quoting the article.

But In my personal opinion, Nintendo will survive. There business model is made in a way were they can take a substantial amount of hits and they have enough leg room, to rethink there strategy and try again.

They dont make a profit, add tons more people to the company, grow too big and then crash and burn over one failure. They can withstand a few failures before going down, and by that time they would have found some sort of resolution to there problem.

iOS, touch screen, Casual is the future... yeah dream on. I think there is room for various ways to play games. And making outlandish statements that cater to one platform or the other is stupid. There may be 200 million mobile devices out there now. But Even if you had 30 million console gamers out there, or even 10 million... there is still a business and market to profit from. And there is certainly people who love mario and zelda, enough to warrent a business model around them.

Posted:11 months ago

#4

Patrick Frost
QA Project Monitor

387 180 0.5
From a business point of view Nintendo is still in a good position and from the "outside" perspective I agree with everything Rob says.

However as a consumer, I feel completely shafted. I do love Nintendo's franchises but bit by bit they have tested and gradually worn down customer loyalty to the point where it really does feel like they simply try to convince people that they are doing something new and inventive concerning gameplay and their IPs through entrenched neural linguistic programming. No matter how many times they say that the gamepad is innovative and ground breaking, the answer is that it's NOT until someone makes the games to demonstrate that.

When Nintendo's own attempts at releasing their big IPs seem unable to do that then I do wonder if even they believe that they can be innovative any more? I don't feel like I need to play any of the new Mario games and frankly, I could probably stay happy with the Wii versions of Mario Kart and Smash Bros without needing to drop an unnecessarily high amount of cash on a new console.

"Nintendo" used to mean fresh and vibrant game design + Nintendo charm that appeals to almost everyone.
Now it really feels like "same old stuff on a different console". The Pokemon model for selling the same game to the new generation isn't going to work with their entire library.

Posted:11 months ago

#5

Steve Goldman
Journalist.

81 92 1.1
Nintendo is set to make massive profit this quarter

Posted:11 months ago

#6

Ruud Van De Moosdijk
VP of Development

40 45 1.1
I must admit I was very skeptical when starting to read (and I have worked as a 3rd party developer with Nintendo for 17 years) but this is a really well written article that gave even me some new insights. Good job.

Posted:11 months ago

#7

Shawn Clapper
Programmer

32 57 1.8
Finally an intelligent article about Nintendo here. I've been saying basically this for awhile and I wish more journalists would slow down on the Nintendo hate and take them for what they are. Something separate from Xbox or Playstation that go "all in" every release and put themselves in a position of failure=bust every time.
They spend a lot more on marketing (their entire budget) so public perception and down the line journalist perception is skewed, while Nintendo quietly goes about what it has always been doing and silence is sometimes construed as a reason to "kick them when their down" mentality.

Posted:11 months ago

#8

heirdt von braun
Marketing Specialist

22 8 0.4
I love your article Rob. Yes, Nintendo is a very unique company and has many times leaded this industry. However, I respectfully disagree Wii U will sell as much as Gamecube. I think it is a very respectable and optimistic perspective, but it's not considering the fact Nintendo has never launched a home console under the same circunstances: a combination of formidable competition, no third-party support, lack of interest in the hardware and even missinformed potenial customers.

We all know Nintendo is not easily predictable, history has proven it. However, history on the other hand has also proven Nintendo has been uncapable of satisfying publishers' interests too many times. That is why Sega Genesis was so hard to compete with (save marketing awful decisions), this is one of the main reasons Playstation enjoyed so much support, and also Microsoft in spite of the reasonable doubts also got some degree of support from companies from day one. The truth is Wii was a big success, but mostly for Nintendo. Not many publishers made a ton of money, it was not very profitable for them, and as a result many decided not to support Wii U as it was a very risky business, and I'm pretty sure for the vast majority of publishers PS3/360 consoles still represent a much better oportunity for them. To make things a little bit worse, not many can compete with Nintendo's software, not even giants like Activision. This is why EA was so cautious about Wii U, and for the same reason many others followed suit. The million dollar question is, will Nintendo be able to compete with third-party software this time around?. Wii U software is not specially innovative to the point it has not even proven hardware (Gamepad) itself is useful. The system is plagued with problems that have been overlooked by Nintendo: Gamepad battery life, horrible operative system and even the lack of a hard drive. Also online gaming was not enthusiastically embraced by the company for the fourth time. Which tells me, software is just one big problem, but contrary to the popular belief the console suffers from many others. It's hard to sell a system with so many issues, also when playing online is such a big thing nowadays, much bigger than in Gamecube days. Also PS4/Xbox One innovations are not concentrated solely on hardware, but on next-gen services and I'm pretty sure will be enormously succesful.

Nintendo needs reconciliation with publishers and make a lot of big changes to survive, it's not about money anymore, it's about being competitive, they can't keep doing the same, this is not SNES days, competition is much tougher and the original Wii was the exception not the rule, look at N64, Gamecube and Wii U sales, it's a clear tendency. Being a powerful company financially speaking does not make you invincible, on the contrary it makes you vulnerable because makes you arrogant and gives you false security. I think it is possible for them to create something unique as long as they support third-party interests. It's time for Nintendo to think different, to think about this industry as a team, and not assume the role of the most intelligent guy out there who always tries to impress everyone.

I'm pretty sure in this moment Wii U hardware makes investments even riskier for any of these companies as they have to heavily modify their games to work for the system, also would need to tweek gameplay in order to create enough differentiators as they have serious competition concerns with PS360 as direct ports are not selling. PS4 and Xbox One unfortunetely are pretty much out of range at this time. Even if Nintendo proved their console was revolutionary they still have to convince all those people who switched from the original Wii to PS3/Xbox 360 to return to Nintendo. Many of these people can afford just one console, as next-gen hardware is very expensive, it's very probable they have to decide between buying a PS4/Xbox One or Wii U. It's a difficult proposition in a time when Nintendo is not getting approval from consumers, publishers or even their own fans.

Posted:11 months ago

#9

Daniel Meyer
Editor / Author

4 0 0.0
A very nice article, enjoyable and informative. I for myself grew up with Nintendo and I am also a big fan of their games. As the article states, I am also one of those guys, who play 90% of their time with a 360 or PS3, but just because of the games Nintendo brings to us, it's always worth to buy a Nintendo console (for me at least). Especially the current moths, where we got/get Pikman 3 and The Wonderful 101 (currently playing it) are absolutley great and enjoyable. Also we shouldnt ignore the next 6 months - those are just as promising.

And exactly THIS is what i love about Nintendo. You all have seen the E3 i trust, so what have we seen there with Sony and Microsoft? Except for a handful of Games like those titles from EA Sports or other franchises like Dragon Age and Just Dance, nearly all games were Shooter. It's not like i don't like to play those, or that i aint looking forward to Games like Destiny and Titanfall, but in all honest I am getting pretty tired of them. And thats exactly what you will not find on a Nintendo console. With this i don't mean there ain't any shooters (Zombi U and Bayonetta might kinda fall into this genre e.g.) but the majority are games from all kind of genres which i personally really enjoy to play (even twice or thrice).

Posted:11 months ago

#10

Greg Wilcox
Creator, Destroy All Fanboys!

2,133 1,039 0.5
Great article, Rob, but that opening was somewhat contrived. Nintendo has pretty much admitted they didn't have those key titles ready (and the whole "we didn't think HD development would be so hard" thing is still a mind-spinner to me) and hell, had they, they'd have made a lot more noise about them earlier BECAUSE they're so important. That said, I did get the hilarious image while reading that paragraph of a TV wrestling match with Nintendo getting whipped and about to be pinned before busting out a few desperation moves and taking down its opponent for a win at the last second.

The Wii isn't "dead" as some are claiming.. but it's certainly hurting badly from lack of attention by critics and gamers who still think it's not worth a place in their homes. At this point, they've committed so much to the console that I'd say it needs to have a few flawless victories in the next year (this holiday season included) and maybe a price drop to help get it into a few more homes. I'm still surprised they didn't go the 3DS route with a temporary price drop, but I guess the system needs more games, as that's really what drove the 3DS to where it was at the end of the day...

Posted:11 months ago

#11

Richard Browne
EVP Gaming and Interactive

91 87 1.0
"However, I respectfully disagree Wii U will sell as much as Gamecube."

I totally concur, I think it's wildly optimistic at this point. The huge problem that Nintendo have got themselves into here, and frankly it was remarked upon fairly often during the development of the Wii-U, is that they've built a console that's really expensive to make and where cost efficiencies aren't easily garnered. This is a MASSIVE problem for Nintendo. Whereas they showed with 3DS they could launch the big guns and dramatically drop the price and see stellar returns from the practice that isn't viable for Wii-U. Launching their major franchises isn't enough, they need to shave $100 of both sku's this Christmas and if they're still losing money at this juncture something that's totally alien to Nintendo - losing over $100 per unit is unthinkable even on their warchest. With Wii-U they've managed to go from a massively successful console who's strongest selling point was undoubtedly couch multiplayer and toss that out the window by producing a main controller that costs $100 to make and no more than two can ever be supported by the unit anyway. Instead you have this odd hybrid with one main controller and everyone else using (frankly) uncomfortable Wii-motes as secondary controls - and they've still yet to show me a game where that's an actual positive selling point.

I don't think Nintendo will give up on the Wii-U, they are still in the toy business, not in the MIcrosoft/Sony business, honestly speaking despite the price comparisons PS4 and Wii-U are aimed at totally different audiences. Sony and Microsoft failed massively to bring down the age of the installed base for PS3/360, I can't see parents going out and shelling $400 or $500 on machines that primarily support violent shooting games. So the Wii-U remains viable to the young demographic Nintendo has always had at its core . . .but at $350? I think parents would much rather let the kids borrow their iPads this Christmas.

Posted:11 months ago

#12

Jonah Falcon
Writer

26 16 0.6
You completely ignore what the main problem with the Wii and the Wii U is: no one's buying games. No one. Even first party Nintendo titles can't sell on it.

Third party companies are abandoning the console.

So, the question is: will a new Mario or Zelda game REALLY interest the public? They'd played those games before. Every Zelda game has been the same since Majora's Mask. Every Mario game has been the same since Mario 64 (or at least coming in one of two flavors: 2D or 3D.) And there's no daring at ALL in the software side.

Nintendo may be "daring" on the hardware side, but "it's the software, stupid", and Nintend has been flat out unimaginative on that side. People who bought the Wii were people who don't like videogames. They bought it for the Sports Resort and bowling and nothing else. Nintendo built this generation on Grandma - and bragged about that in E3, no less - are they shocked Grandma won't buy another console?

Warning: nothing is too big to fail. Ever.

Edited 3 times. Last edit by Jonah Falcon on 9th August 2013 6:40pm

Posted:11 months ago

#13

Christian Keichel
Journalist

575 789 1.4
You completely ignore what the main problem with the Wii and the Wii U is: no one's buying games. No one. Even first party Nintendo titles can't sell on it.
As long as we are talking about the Wii and not the Wii U, you are definitely wrong. The total Wii software sales stand at 872.73 million.
The total Wii U sales are now 14.4 million, not especially bad, if you consider, that the install base of the console is 3.6 million.
Every Zelda game has been the same since Majora's Mask. Every Mario game has been the same since Mario 64 (or at least coming in one of two flavors: 2D or 3D.) And there's no daring at ALL in the software side.
Don't seem to me like you played these games, otherwise you would be aware, that Zelda: The Wind Waker, Zelda: Twilight Princess and Zelda: Skyward Sword had vastly different gameplay mechanics and the Super Mario Galaxy series was hailed for reinventing 3D Mario in the same way, Super Mario 3D Land was hailed for reinventing 3D Mario for a handheld.
Nintendo may be "daring" on the hardware side, but "it's the software, stupid", and Nintend has been flat out unimaginative on that side
Wii Sports, Wii Fit, Brain Train, Nintendogs and Wii Music weren't daring?
People who bought the Wii were people who don't like videogames. They bought it for the Sports Resort and bowling and nothing else. Nintendo built this generation on Grandma - and bragged about that in E3, no less - are they shocked Grandma won't buy another console?
Plain and simple wrong, look at this chart from 2008 to get an impression of the Wii user demographics in Japan:
http://www.nintendo.co.jp/event/conference2008fall/presen/e/img/slide/l54.jpg

Besides, it's hard to ignore the ageism, your comment is filled with.

Posted:11 months ago

#14

Paul Jace
Merchandiser

869 1,277 1.5
It is sitting on an enormous pile of cash, easily enough to fund years of loss-making activities, or indeed the launch of an entire new console platform. It could launch new platforms several times over before the accountants started breaking a sweat, in fact, which sets Nintendo apart from much of the rest of the industry
While they do have lots of money, the real reason they could get away with a console failure or two is because they have their handheld business. Had they not had that they would most likely leave the hardware business if they had two console failures in a row. Similarly, this is why Lorne Lannings comment about Microsoft not being around in 100 years was so ridiculous. They have way more money than Nintendo(enough to buy them if they wanted to) and could also deal with several failed products(like Zune) before it ever truly affected them.

As for what success looks like to Nintendo, well it's not the way the Wii U is currently selling. It's the way 3DS is currently selling, both in hardware and software. Thats what success looks like to them and thats what they are planning to have happen with the Wii U this fall. Rather it will happen or not is something we all want to know but until then we are just going to have to wait and see.

Edited 1 times. Last edit by Paul Jace on 10th August 2013 3:00am

Posted:11 months ago

#15

Gareth Eckley
Commercial Analyst

88 67 0.8
The Wii and the Wii U are now dead. In the case of the Wii, this isn't so bad. It sold quite a lot of units before people realised that they'd bought the 2010's equivalent of the "Pet Rock (TM)". But I'd be shocked if the Wii U turned out to be anything but an open sore on the accounts of Nintendo.

Luckily the 3DS is still going strong. Which is reasonable, since it offers something except for a few iterations of the Mario property. Lego (Insert Franchise Name Here) games on the 3DS alone should keep it going for another couple of years, and that's before you stop and consider all the other desirable titles coming out for it.

Unless the Wii U has some kind of incredible killer app, locked by interface or vicious licensing, then it's already dead. No one wants to make games for it. No one wants to stock it. I've yet to meet anyone who will buy it and I have quite a lot of gamer associates.

The only people who still think the Wii U has any chance are willfully blind fans of Nintendo and executives who have already backed it. Unless there is a total paradigm shift in the marketing and games development pipeline for the Wii U within 6 months, it has no hope. I'm not pleased to state this, since I have a lot of respect for Nintendo's past catalogue, consumer orientated approach to hardware and preference for quality over quantity.

As Mr Jace states - in a nutshell, success looks like the 3DS, abject failure looks like the Wii U.

Posted:11 months ago

#16

Julian Cram
Project Manager

49 27 0.6
So, game journalists (and nintendo fanboys) are willing to give Nintendo praise for attempting to do something different, and will go as far to redefine what is successful in terms of that difference, but Microsoft attempts something different and they get blasted and lampooned and essentially forced to stop before they even start??

Lets be completely honest here - we're willing to give Nintendo more rope because they were the first. We don't want to see Mario and Link die.

That's completely fine to feel that way, but let's not kid ourselves - Nintendo have failed here. No amount of redefining success and failure will alter that fact. They'll survive this failure, thanks to their unique approach to the hardware and software cycle as mentioned, along with their greater handheld success, but counting the Wii U as anything but a failure will be detrimental to Nintendo, because they may not learn, and make the same mistakes again, end up with another failure, which they might not be able to recover from, and that will be bad for all of us.

Posted:11 months ago

#17

heirdt von braun
Marketing Specialist

22 8 0.4
Thank you kindly Mr. Browne.

Posted:11 months ago

#18

Roland Austinat
roland austinat media productions|consulting

121 59 0.5
@Christian:

Mate, it seems to me that you come across a bit harsh in your comments recently. I've grown to love this site because it's reporting industry news and it has highly professional people posting in the comments (Peter Moore, Lorne Lanning and many other regulars come to mind, you know who you are). The good thing is that nobody needs to defend or attack a system like in end user forums - thank God this is not fanboys starting flame wars, taking apart a posting line by line. Personally, if a posting is bugging me a bit, it helps me to take a bit of a breather and try to understand why people say the things they say. Or write a reply and then don't hit the "Post Comment" button, I've done that a few times actually.

Back to the topic! Regarding the link you posted, do you happen to have the attach rate for Wii units sold? I suspect that while the console itself sold indeed quite well, the attach rate for Wii compared to 360 and PS3 wasn't as good - and that many buyers never played anything else but Wii Sports or maybe Wii Sports Resort and Wii Fit.

Posted:11 months ago

#19

Christian Keichel
Journalist

575 789 1.4
@ Roland

Sorry, if I sound a bit harsh, that is not intended. If I discuss things, I try to find data to back up my arguments and let this data speak for itself. Maybe this sounds harsh, but believe me, I am not interested in fanboyish flame wars.

To your question about the Wii attach rate, according to Nintendo a total of 827.3 million games were sold worldwide for the Wii, which results in an attach rate of about 8.2. Unfortunately we don't have any information about the worldwide attach rate of the 360 (MS only gives out the attach rate number for the US based on the NPD numbers) and Sony stopped to update their total software numbers after March 31st 2012, where it was 595 million. I think it's a safe bet to say, that the 8.2 is lower then the PS3 (which was about 9 on last year), but it's not unusual low.

Sources:
http://www.scei.co.jp/corporate/data/bizdataps3soft_sale_e.html
http://www.nintendo.co.jp/ir/library/historical_data/pdf/consolidated_sales_e1306.pdf

EDIT:
For comparsion I looked up some other attach rate numbers:
N64 6.8
Gamecube 9.5
NES 8.0
Super NES 7.7
PSX 9.4

Edited 2 times. Last edit by Christian Keichel on 10th August 2013 10:37am

Posted:11 months ago

#20

Bruce Everiss
Marketing Consultant

1,692 594 0.4
Excellent article.
Culturally Microsoft are a software company, Apple a marketing company and Sony is a consumer electronics company.
Nintendo is an entertainment company with a heritage of playing cards and a love hotel.
Nintendo's crown jewels are its entertainment brands, Mario, Zelda etc. The hardware is merely a platform for these brands that maximises control and profit.
Nintendo have a lot of money in the bank. Enough to write WiiU off and start again. (They may have to). Nintendo also have massive profits from the DS which counter the losses they make with the WiiU.
Currently WiiU = Dreamcast. The total installed base in still ahead of the number of smartphones sold every single day, just. It is pretty obvious which device offers the best ROCE to developers.
A price drop, which would increase losses, and a few AAA titles will not rescue WiiU. Too little too late in a market that has changed radically over the last three years. Ever since 2008 the game console industry has been in rapid decline. WiiU is not the product to reverse this.
What WiiU need right now is a redesign and relaunch. Remove the second screen and cut manufacturing costs to the bone. Then go after the family toy market at an impulse buy pricepoint, stacked high in Walmart. With the key AAA titles available. But even this might not be enough.
For Nintendo the third parties don't matter very much. They are just a little extra that it is nice to have. Unlike Microsoft and Sony who are utterly dependent on them. Nintendo is all about those key first party brands.

Posted:11 months ago

#21

Jim Webb
Executive Editor/Community Director

2,232 2,161 1.0
Excellent as always, Rob.

Heirdt, that's an interesting post as you seem to allude to the idea that Nintendo must replicate the actions of the competition to survive which is totally counter to what Rob wrote about.

Julian, MS was blasted not for doing something different but for removing what gamers had loved to start with alongside with that new direction. A company can try something new and that's fine but if they simultaneously remove what made them great in the first place, expect harsh criticism.

Posted:11 months ago

#22

Michael Carter Jr
Studying Business Administration

9 2 0.2
I enjoyed this article, especially in an environment like this where there are always lots of haters. So Thank you Rob. Now for the majority of you in the industry.... Not all gamers are like you. many of us do not have a dedicated internet connection, so 'online' is completely meaningless to us in regards to gaming. And to those who keep claiming that every Mario and Zelda game is the same thing over and over. The same argument can be said about every Racing, Football, and Combat game. To those of us who do not enjoy playing those games, they all look and feel like the exact same thing over and over again.

While I admit I am not overly excited about the WiiU as a console and I don't find any personal use for the new controller, I am a very avid player of my 3DSXL (I play it daily) and I am very much anticipating the new versions of my favorite franchises on the WiiU. (Zelda, Mario, Pikmin, Animal Crossing, Metroid, etc) I like the fact that Nintendo stays dedicated to its own, even if sales are low. I have fallen in love with other games, only to slowly lose interest as their franchise goes on and other companies buy them and change them, or they just simply get changed for unknown reasons). (ie Dragon Age, Mass Effect, Fable).

Bottom line for me is, I have no faith in Sony since they used illegal tactics with their CDs a few years go, and this past year have lost faith in Microsoft as a company, both in personal experience with them, and their initial press release for the xboxone. and even though I do not agree with all of Nintendo's policy's or business practices, I still find them a lot more acceptable and consumer friendly than any other company, and they still make games I enjoy playing.

Posted:11 months ago

#23

Daniel Hughes
Studying PhD Literary Modernism

436 496 1.1
@ Jonah

The only major first party brand to hit Wii U so far has been Mario Brothers, which has sold over 2 million copies to an install base in the region of 3 million. An attach rate of 66% for the only major (in commercial terms) first party title is quite impressive, and proves that Nintendo have needed and need more first party software, particularly their larger selling brands.

I'd also agree with Bruce that third parties aren't important for Nintendo, despite disagreeing with everything else he might have to say!! Though to be fair, I agree Wii U isn't the product to arrest the declines in the console industry post-2008, and it's definitely not a product that will see Wii type growth or sales--even if it does end up being successful in its own right. But back to the third party point, when has third party support made or broke a Nintendo machine? The GameCube had equivalent third party support for roughly eighteen months from launch, yet that didn't help Nintendo. Wii missed virtually every major third party title of the generation, yet sold well because Nintendo produced the software that made the hardware sing.

There's an integral relationship at Nintendo, between software designers and hardware engineers, that needs to bare fruit if the Wii U is to succeed beyond the levels of GameCube. Remove the unique hardware, as some would do by having Nintendo go third party, or as Nintendo did by creating an equivalent rather than alternate console (GameCube), and the software fails to resonate with a wider audience. Fail to provide the software that works in tandem with the alternate features of the machine, as Nintendo have largely done so far with Wii U, and the hardware fails to resonate with a wider audience.

Nintendo will bring experiences to market, and are starting to do so, that can only be played on Wii U--but only in the sense that they are exclusive brands, not exclusive software designs and experiences the way Wii Sports, Brain Training and Nintendogs have been. There's a subtle difference between experiences that can only be played on Wii U, and experiences that can only be made on Wii U, and I believe that will make all the difference between a barely relevant GameCube style market position, or a more impressive, competitive position for Wii U.

Posted:11 months ago

#24

Steve Goldman
Journalist.

81 92 1.1
Will the wii u be number 1? no, but can it make profit and be fun and have great games? yeah

I disagree with Bruce. It doesnt need a price drop, or a redesign or remove the second screen which provides amazing features. It just needs software.

Whether it sells 20 million or 100 million is largely irrelevant at the moment because the 3DS will be the top system of the next 5+ years

Edited 1 times. Last edit by Steve Goldman on 10th August 2013 2:52pm

Posted:11 months ago

#25

Adam Campbell
Associate Producer

1,137 914 0.8
Excellent article.
Culturally Microsoft are a software company, Apple a marketing company and Sony is a consumer electronics company.
I think that's a terrible description of Apple.

Good marketing is something anyone can employ in theory, like Nintendo did with Wii. Doesn't describe to me Apple's hardware and software philosophies or their countless number of engineers working on innovation in those areas.

In cases, they have shown they're capable of exceeding Microsoft and Sony on either the hardware or software front - iPod, iOS, iPhone, iPad and iTunes have caused serious problems for rivals as exceptionally designed and engineered products. Even OSX is gaining new ground with the rep of solid hardware and software in Macbooks.

Apple may have an amazing marketing engine but I don't think they're culturally a marketing company at all. They are able to sit somewhere between Microsoft and Sony, seemingly making fewer strategic mistakes in the last 10 years on top of that.

Edited 2 times. Last edit by Adam Campbell on 10th August 2013 3:02pm

Posted:11 months ago

#26

Yiannis Koumoutzelis
Founder & Creative Director

358 187 0.5
This is exactly the logic that goes through the head of those (mostly me included as well) in a split of a second when they say "do not underestimate Nintendo" or when they oppose the mantra "they are like sega" , "they should publish on 3rd party" and all that jazz.

Of course they are often asked to give "proof" and that people are just fanboys etc. etc.
So for that alone Rob, Thank you! :)

You put everything together so nicely and explained even for those who have barely scratched the surface to understand. Now all i have to do next time anyone asks me is simply copy paste the link of your article! :D

And on an irrelevant note,
@Adam, not it is not. It is exactly that as was quoted.

Posted:11 months ago

#27

Jason Pullara
Podcaster

28 70 2.5
Popular Comment
Oh god, all of the bandwagoning on both sides in the comments here.

I think part of the problem here is that Nintendo just doesn't care about third party developers. The fact is that Nintendo has not based their economic success around having anyone else interested in developing for their platform - this can be seen as both great and disastrous for Nintendo.

It's great because Nintendo can support themselves. They've build a large entertainment empire based on a variety of IPs that sell really well.

It's "disastrous" because outside people think Nintendo is a failure if their console doesn't sell as well as {smartphones|tablets|other consoles}.

The beautiful thing here is that, as a company, Nintendo doesn't need to sell billions of consoles at first. They don't need to outsell their competition because Nintendo cares about making a healthy profit over the lifetime of the console. Nintendo's point of view is simple: we'll support the hell out of our hardware with our own first party titles, and everyone else is welcome to join in, but we really don't care if they do or not.

Is the WiiU going to take the same path as the 3DS? Probably not, but using the 3DS as an example, we can get an idea for the plan of action Nintendo will employ: a full year of first party support for the hardware to prop up sales and edge the numbers into their businesses favor.

Hell, if you look back, guys like Bruce (apologies, Bruce, but you're the stereotypical marketing geek that doesn't have a natural feel for an industry) declared the 3DS dead because it wasn't selling well. Now? The 3DS is selling big time, because it has the software library to back it up. Will the WiiU rebound like the 3DS? Probably not, but it should have a decent rebound in the next year or so - decent enough for Nintendo, mind you.

Someone in this thread said that if the WiiU doesn't have a miraculous turn around in the next 6 months, it's completely dead - to who, you? Again, that's fine for Nintendo: you're not their target audience. As long as Nintendo can continue to sell software for the WiiU at a 2:1 ratio (well, NEAR 2:1), they're making money. Maybe not a shitload of money, but they're making enough money to continue to support the hardware and develop their own titles for it.

Also, @Bruce, have you ever thought, for once, that the ROCE in the smartphone business is so great because development costs are kept artificially low because 90% of the games are absolute shit and cost next to nothing for the consumer? ROCE is a terrible metric to make your argument with when people get tired of fucking garbage like "Candy Crush Saga" and take their expendable $1 to some other trend. Keeping the ROCE artificially high on the WiiU would only serve to destroy Nintendo's core business model.

Is Nintendo DOA? Nope. Are they going to sell their hardware like gangbusters each and every iteration? No; but, just because there's a new subset of players in the market doesn't mean there's no room for the Big N. Smartphones have been and will continue to be an expansion on the gaming industry - not a harbinger of doom, but a soul mate that its been missing for a long time.

Posted:11 months ago

#28

heirdt von braun
Marketing Specialist

22 8 0.4
Hi Jim. Thanks very much for your comments. No, I'm not trying to say Nintendo needs to do exactly what SCEI or MS are doing, all I was trying to pinpoint the main reason of Wii U failure, it's time for Nintendo to team-up with third-parties instead of trying to establish new trends every generation by themselves, as you know Nintendo needs a lot of support for their consoles, in the end no matter how good or intelligent they can be, Nintendo cannot pretend they always know better, cannot run their business without giving companies what they need or want. The industry has changed, but Nintendo hasn't changed that much, there are more competitors, so Nintendo power in this industry has diminished since SNES days, simply because publishers have more options.

Nintendo-Publishers relationship has never worked very well since NES days, this is the main reason competitors always get better support. It's not just because of sales. Wii is the only Nintendo home console (save portables) that has experienced a tremendous success since SNES,

Nintendo can still be unique and innovative as long as they support third-party necessities. They need to ask this industry what they want, and solve difficulties together just like SCEI did.

Edited 1 times. Last edit by heirdt von braun on 10th August 2013 7:02pm

Posted:11 months ago

#29

Bruce Everiss
Marketing Consultant

1,692 594 0.4
@Jason Pullara

Show me where I said the 3DS was dead.
You really don't know me. Your loss.

Posted:11 months ago

#30

Jim Webb
Executive Editor/Community Director

2,232 2,161 1.0
Heirdt, you're welcome. Thanks for the amicable discourse.
I think the issue is that you are measuring Nintendo's success by the same metric we'd measure Sony's or MS's. Nintendo can sell to the Nintendo failthfull and still be called a success because that's really all they are trying to sell to. Anything beyond that are bonus points.


Bruce, you still call the 3DS dead.

Posted:11 months ago

#31

David Serrano
Freelancer

298 270 0.9
Like many others, I am a proponent of the argument that as a consequence of those and various other cultural differences, Nintendo doesn't actually act like a game company - it acts like a toy company. It evaluates the performance of its products and the necessity of tweaking its strategy from the standpoint that these products are expensive toys, a seemingly minor difference of perspective that ultimately yields very different decision making.
Nintendo's decision making clearly represents a cultural difference within the Japanese development community. But outside of Japan, it represents a fundamental philosophical difference with practically all other manufacturers, developers and publishers.

The truth is Nintendo acts like a company which is ahead of a philosophical curve. Meaning, they've decided from a risk and potential ROI point of view it makes more sense to place a higher priority on delivering products which the average person can embrace as play... than on continuing to deliver what the industry, academics and a subsegment of consumers have historically defined as "games." This was highlighted in the "I'm not a gamer" campaign. Nintendo told the mass market in no uncertain terms they considered the most prevalent definition of play, i.e. an activity engaged in for enjoyment and recreation rather than a serious or practical purpose, to be more important than the function, i.e. systems where players engage in an artificial conflicts, defined by rules which result in a quantifiable outcomes.

And if this philosophy and strategy constitutes acting like a toy company, then the PS 4 will most likely have more in common with a toy than with a game console. Go back and watch the PS 4 reveal again and you'll find the entire presentation was focused on a very similar theme... play experiences are more important than games:
With the gamer as the focal point for our efforts, we've created a platform attuned to consumers changing behavior and evolving sense of play.
Our vision for the future is consumer centric, developer inspired and characterized by an unwavering commitment to phenomenal play experiences.
Our immersion into the gaming experience at every touch point resulted in a renewed passion for play.
Today we will give you a glimpse into the future of play.
We believe that PS 4 represents a significant shift away from thinking of PS as merely a box or console to thinking of PS as a leading authority on play.
Today we are revealing the genesis of an expanding idea about the future of play.
The joy of play.
Our goal is to deliver play that is deeply satisfying.
So while Nintendo's application of the philosophy is too frequently way off the mark, they are at least making actual risk based attempts to break the barrier which has always existed between the medium and the wider audience. And if they succeed, they may end up dragging the rest of the industry kicking and screaming into the 21st century. So I say to hell with how a "game" company should act. Be bold and mighty forces will come to your aid.

Edited 2 times. Last edit by David Serrano on 12th August 2013 2:33pm

Posted:11 months ago

#32

Jeff Kleist
Writer, Marketing, Licensing

270 131 0.5
@Heirdt Better watch out, when I said the same things a few weeks ago all I got was trashed. Appreciate your analysis as well though

Edited 1 times. Last edit by Jeff Kleist on 11th August 2013 6:52pm

Posted:11 months ago

#33

Shane Sweeney
Academic

349 250 0.7
Dynasty Warriors director Atsushi Miyauchi when he spoke in Australia talked about the difference between Japanese and Western audiences. He mentioned that lineage was one of the greatest appealing aspects to Japanese audiences, seeing the long history of a title and enjoying the refinements. Miyauchi mentioned that Western audiences seem to need completely new game play and re-imagining of brands constantly to be interesting.

But lineage is of great importance in Japan. Small refinements of the same game play is preferred and labels like Final Fantasy 8, Dynasty Warriors 8, Mario Kart 8 speak to this long lineage. Whereas I can only guess that in the west the eighth Tomb Raider, Uncharted, Mass Effect or Halo would never be branded this way.

Was interesting, not sure how right he is but it definitely describes Nintendo's philosophy on how they approach iterative game design once they uncover an amazing idea. Maybe Nintendo is less a toy company and is rather just consistent with Japanese sensibilities of constant refinement like making a great Sake or Samurai sword.

Anyway, nice article Rob am definitely going to quote you on that Nintendo would rather a failed console then a failed Mario game.

Edited 4 times. Last edit by Shane Sweeney on 12th August 2013 3:35am

Posted:11 months ago

#34

Adam Campbell
Associate Producer

1,137 914 0.8
@Adam, not it is not. It is exactly that as was quoted.
o.O

Posted:11 months ago

#35

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