Marko Hein: Sure. We are at an interesting time right now in the industry. Over the last twenty years graphics have improved dramatically, but this has negative effects. Development teams are increasing, development times are increasing and development budgets especially are increasing quite significantly.
I've seen a speech recently from Julian Eggebrecht of Factor 5 at the German Games developer Conference, where he showed how the development costs have increased in his company. They started with EURO 10,000-15,000 back in the old Super Nintendo times, hitting the Euro 1 million mark for GameCube. Now when they are pitched for next generation they reach EURO 10 million, and the actual project for PS3 is over EURO 20 million - around EURO 25 million in truth, I guess.
So the problem is, we are facing increasing development budgets, but the price for the end product is not increasing. It's actually declining when you look at it carefully. There are some factors with retail etc, but I think the consumer is unwilling to pay more for a more sophisticated product, which I can understand; what consumer would pay EURO 100 for a video game?
The question is, how do we overcome this problem? The money has to come from somewhere. So the only chance we have is to grow the market; to find more consumers and get them into videogames. What we see in Japan is that the market is stagnant; it doesn't grow very easily. Japan's market is even declining now. Europe is the only market which is quite healthy right now. So what we as Nintendo believe is that we need to look for different user groups to get into videogames.
First of all, the older lapsed users who played videogames in the early '80s and have sneaked away from them. We need to revive them. But even more importantly, the female market because female gamers are a very interesting group. The only game I know which has really broken through the wall is The Sims. They claim to have a 50/50 split [between male and female] and we think they have sold more than 10 million units in Europe.
That means that there are 5 million females who want to play videogames and have no content to play. We are still very much male driven and it's probably a fault from the business side, but also the developer side. Most of the developers are still male. There are a lot of boys there.Is the problem just that it's hard to make a game for someone other than yourself, then?
Yes, but that's how the music industry works, for example. Apart from the independent groups, there's a lot of factory made music and they try to investigate who the target group is, what does the market want, and then try to design music for the mass market. I rarely see this in videogames. It's very much developer driven, it's not marketing driven.
So nobody looks at the market to see which group is currently untouched, which group has a certain potential and then look at how to make a game for this market with research and investigation beforehand. Normally a developer comes to you and says "here's a product, take a look at it". I'm not sure if we can go on like this in the future.So do you think that marketing needs to be involved much earlier on - that marketing needs to be driving what is created?
I think so, absolutely. How it works in the FMCG [Fast Moving Consumer Goods] industry, for example, is that the product manager is involved right from the actual design of the product. So he looks at the competitive market, sees a gap or sees a potential area that the product could be fitted into and then goes to the developer or the designer and talks to them about the product. He guides the design of the product right the way through the lifecycle, until it's out on the market.
I see a big gap between the marketing or the distribution team and the actual developers. In many presentations, they still talk about the "bad" marketing people. They are perceived in a really bad way, which I don't understand because the marketing guys are the ones selling their dream, their product.It must also depend on the company to an extent. Some companies have marketing teams who are perhaps less understanding of the products they're selling than others.
That's true, and I think there's a certain gap of knowledge on all sides. My recommendation to the industry would be to understand your market. Understand who your consumer is, what their preferences are, what the different layers are in terms of the consumer. Have an understanding of the different markets; because sometimes we just think globally, but it's totally different in Japan, America and Europe. Even within Europe, the different markets have very different needs. So first you need a very good understanding of the markets, the consumers, their preferences. Then you should go back and say okay, where can I fit my product into a niche, or jump on hype or whatever, and start designing the product from there.
I had a lot of concepts presented to me during E3 and other events. Normally a developer comes to you and says "here's a concept" and then he shows you a technical demo. The character is swinging about or whatever and I'm thinking "okay, that looks great" and the developer is talking about the beautiful graphics and cel shading or whatever. But I ask, "what is the game?" and they say, that can be figured out later. That's the wrong approach. You have to tell me what game you want to create and for whom. All the technical implementation can be discussed later, not the other way around. So I think sometimes we are approaching it from the wrong end.The marketing lead approach you're talking about - is that something Nintendo are doing now, or is that an aspirational thing?
I think it's an aspirational thing for the entire market. I think Nintendo is currently doing a lot of research in many aspects. To get a better understanding of the markets, of the consumers and this is also fed back to the development teams.So if we take Nintendogs as an example of a game that's obviously targeted a market outside of the traditional hardcore gaming market - is that a title that's been designed in that way?
Yes, but I think also the "brain developing" games are an even better example, because there is a market of older people who are probably interested in playing a game, or using the hardware, but there's virtually no game content for them. Most of the content is very fast, very much teenage driven - but that type of person wants things like quizzes on their machine. So this kind of thing works very well for us and Nintendo Japan really proved that we can open up new markets with such products.How do you market to those people, though? How do you tell them that suddenly there is content on a games console that is relevant to them. Isn't there a worry that they'll just block it out and think 'I don't play games, so I'm not interested'?
I'm not entirely sure about the Japanese marketing procedures and distribution procedures, but as far as I understand, they brought the products into places outside of the normal game shops; into book shops and such like. If we are really following this approach in the long term, we also need to think about our distribution model again. Things like where to place the products, because it's probably not a case of only putting them in Toys 'R Us anymore, but also bookstores and other locations.In terms of the approach that Nintendo is taking, the DS is very much a unique, different type of console and your approach with it seems to be completely different to that of Sony and Microsoft. You've argued that they seem to be going after the same core gamers who were playing last time around. Do you feel that Nintendo is the only company out there that's really growing the market?
I think that Nintendo is brave enough to try and do different things, although we're not always sure it's going to hit mass market. Electroplankton is a very good example. It's kind of a strange product and of course, we're sure that it's not selling millions, but we specifically tried to something different. Of course, we can rely on our million sellers like the Mario games, but on the other hand we constantly want to provide unique games although we know that they won't sell that well.
Nintendo has always been forward thinking. Virtual Boy was a good example of that. Financially, it was a catastrophe, but I think it was really far ahead of its time. I had a slide in my speech [at GDCE] where I showed all the different things that Nintendo has been first to introduce. The Rumble Pack was the first rumble feature on a controller, we invented the analogue stick, the D-Pad, the camera and all these things are what Sony and Microsoft have followed up on later. So I find it a little bit cheeky when they say that the Nintendo DS is a gimmick. I'm pretty sure one of their next consoles will have a touch screen, because this is what makes the gaming experience so different.What do you make of Phil Harrison's comment ahead of the PSP launch in Europe, saying that the competition between DS and PSP is irrelevant?
It's funny because I heard that he was praising Nintendogs [in his GDCE keynote], saying that it was a fantastic product and that a lot of people at Sony were playing it. I have to give credit to Sony because what they've done with EyeToy and with SingStar has also opened up a different experience and new set of consumers. So I think we are going in the right direction; even Sony.
Microsoft I'm not so sure about right now, because they are traditionally very focused on the hardcore gamers. With Sony I can see tendencies that they take this innovative approach very seriously. I think we are just going further in providing completely new gaming experiences which we did with DS and we should definitely do with Revolution.You mentioned about being prepared to release products like Electroplankton, which are innovative and expand the market but might not sell millions. That seems to be something that few publishers are prepared to do; to go out and innovate even though you know it may not be a commercial success. Is that something that we need more of? Do we need to be braver in terms of the products that we're making?
That's a very difficult question, because at the end of the day you have to pay your bills, pay your wages and you have to be financially viable. Many of the small publishers have to have big selling games, otherwise they're in serious financial trouble. Nintendo, Sony and Microsoft are in much better financial positions, giving us the luxury of trying new things even if we're not sure it will sell millions.If someone senior at Nintendo looks at Electroplankton or some of the other innovative titles that perhaps haven't sold very well, are they considered a failure because they didn't sell millions? Or would you say that because it reached people who might not otherwise play games it's a success? How do you evaluate a product like that?
That's actually very difficult. Sometimes you bring a product to market not only for financial reasons, but to open new doors. I'm not sure if this happened with the Virtual Boy, but with the DS it's quite clear. It set certain standards. What we are selling with the DS is that the gaming experience is completely different, and we've got a lot of respect for that, even from the competitors. When Phil Harrison says that Nintendogs is a fantastic product and an enjoyable experience, that confirms we're going in the right direction.
Is it always the best thing we can do at Nintendo? Not always. Sometimes we're wrong. GameBoy Camera was not a huge success, but we're trying new things and testing new areas. Someone needs to go forward, so why not Nintendo? I hope we can be the leader of innovation in the future.A lot of games on the DS are 2D or simple 3D and the development costs are perhaps not as high as something on the PSP or the GameCube. Do you think there's room for more innovation just because of that?
Yes I think so, and I think because the DS is also a great machine for developers. Developers have the same problems; they're seeing higher development costs and so smaller development teams have virtually no chance to get their foot into the industry. So what we're saying with the DS is that there is a console where creativity rules and not just money.
With a smaller budget and some good ideas that make use of the touch screen, or dual screen and voice recognition, you can have a very nice game, even if it's not as graphically gorgeous as something like a PSP game.Is that idea something that we're going to see continued in future Nintendo consoles as well?
My prediction was always that the better games on the Nintendo DS would come in the second half of the life cycle because it's not as straightforward a product as the PSP. The PSP is quite clear in what it can do. It provides good graphics on a very clear screen, in a very traditional way. You play it like you would any other controller and you can virtually port the games from PS2 to PSP. So it's not hard to convince the players what the PSP is about.
It's much more difficult on the Nintendo DS. Firstly for the consumers because they have to get used to the new gaming experience, but secondly for the developers because they have to get used to all the new features. They also have to rethink the way that they are approaching games. Not in the very standard way but using the voice recognition and the touch screen, like Nintendogs.
The more they see from Nintendo and from other publishers, the more ideas they have. Whenever I talk to developers and show them things like Nintendogs they're suddenly filled with great ideas about what else they can do. So I'm confident that we're going to see a lot of really nice games in the next couple of years.
Marko Hein is Nintendo's head of European Developer Business. Interview by Rob Fahey and Paul Loughrey.