Thursday, May 31, 2012

Nintendoom - Part 3 - All we want is Mario in every box

In a 2003 piece for CNN Money’s Business 2.0, Geoff Keighley asked “Is Nintendo playing the wrong game?”  Citing falling sales (down 37% from 2002), Keighley wondered out loud how Nintendo had managed this in the midst of an explosion in videogames, with revenues doubling to “27 billion worldwide” and with  half of American households owning a home console.  The answer, he noted, is the competition.  Sony controlled 60% , Microsoft 25% with Nintendo fighting for the scraps.

That same year, analysts called on Nintendo to abandon its console strategy to build a leading position as a software developer.  Noting that it stood to lose very little while gaining access to a usebase manifold larger than the GameCube.  Leading publishers quoted by Keighley, both of which produced games for Nintendo, also questioned Nintendo’s console exclusivity.

Brian Farrell of THQ noted "I'm not sure there's room for a stand-alone game machine,” (referring to the entertainment hubs that were the PS2 and Xbox); Jeff Lapin, the CEO of Take-Two Interactive at the time agreed.  "I think Nintendo is going to have to redefine its hardware if it wants to compete," he says. "The simple fact is that people are looking for extra features."

Citing industry sources, industry publication Computer&Videogames concluded that Nintendo was facing the shock of a hardware-less future. "The way things are shaping up, this is Nintendo's last hardware," said one source quoted by CVG in reference to the GameCube. "Nintendo's all about the games. You have to ask whether or not they actually need an under-the-TV console for the next hardware generation."

Nine years later and the sentiment is much the same.   Writing for Forbes in 2011, Erik Kain laments  “Right now we’re at the edge of the frontier of mobile gaming, but that’s not going to last forever. As more developers churn out more high-quality games, and phone manufacturers like LG and HTC start producing 3D phones, it’s only a matter of time before buying both a Nintendo and a smart phone doesn’t make sense, even for gamers,” adding “iMario would be sweet.”

#3) Why does this view persist?

Commenting on the question that inspired my three part commentary, a member sums up the existing narrative in three points.

1) Nintendo has been around for a while. Eventually all our childhood things get old and die, or so we're told.
2) Nintendo designs games how they want, and refuses to abide by industry trends. Companies adapt or die, or so we're told.
3) Everyone's closing or folding into something. Nintendo is independent and not part of some other huge company, so it follows Nintendo must need help.

There are many more variants presented to the themes outlined above. One could point to Nintendo’s ‘weak’ hardware in the last generation, HD graphics,  it’s on-line features or lack thereof, its recently casual focus  or cite a preference for a ‘one console’ future as other real reasons, but  they tend to be jaded excuses to dislike a company or to justify a purchase.  Discussions on why there is a preference by those who wish for Nintendo games to be published their latest subsidized phone (previously on their favourite non-Nintendo home console) often come back to the idea of the need to grow out of their childhood.

The irony is that the meme persists because so many loved and still love Nintendo games and wish to see it on their latest gadget, without having to incur the costs of owning a Nintendo platform.   Yet Nintendo hardware often defined their software – Think back to Super Mario Galaxy and the use of the Wii remote controller, or how everything, including making music on the ocarina,  just ‘clicked’ in the genre defining Legend of Zelda: The Ocarina of Time on the Nintendo 64.

For those who are more critical of Nintendo, growing up and out of Nintendo also means identifying against Nintendo’s go it alone style, refusal to follow trends, and it’s focus as a games only company or rather its lack of scale compared to its gargantuan competitors.

We close this series with  Keighley’s account of E3 2003 and the non-gaming convergence extravaganza that was about to doom Nintendo.

“If you want to see the future of videogames, there's no place like the annual Electronic Entertainment Expo. Each May the industry's heavyweights roll out their latest marvels, displaying their visions for the next year and beyond... J. Allard, vice president for Xbox, took the wraps off Xbox Music Mixer, a karaoke system for Microsoft's game console. In another corner, Sony entertained the crowd with its new EyeToy, a camera that will add videoconferencing to the PlayStation 2... Sony will take on Nintendo's mighty Game Boy with a new handheld. Finally, with anticipation at a crescendo, Nintendo CEO and president Satoru Iwata faced the crowd to meet his rivals' news with some of his own: Nintendo would soon release a four-way version of the arcade classic Pac-Man. 
You could almost hear the air being sucked out of the room. This was a moment for vision and drama, a chance for Nintendo to dazzle the industry with its genius. Instead, Iwata served up four-way Pac-Man. The idea struck everyone as breathtakingly backward."

Keighley summed up his views of Nintendo’s long-term business prospects with the following:
“Nintendo isn't likely to take any genuine risks that could jeopardize its existing business  ... its main business will likely be videogames--still profitable, but shrinking in relation to competitors. A humbling fate, indeed, for a company that once conquered the world.”
A final twist of irony perhaps, but no one really could have predicted what came after.Memes and narratives aside, the essential lesson here is that it is wrong to say Nintendo is incapable of adapting.  To the contrary, it has proven to be quite agile, turning their own business paradigm of chasing after the quintessential video gamer on its head in the span of one console generation.

Nintendo’s leaders have managed to navigate through a myriad of seemingly insurmountable obstacles by taking risks, and implementing good ideas from competitors, all the while maintaining the distinctly Nintendo whimsy in their design and software philosophies by leveraging hardware and software together.  Nintendo the software company is really Nintendo the entertainment company.  The hardware comes with the software.

Excerpt from  Nintendo's 2003 Annual Report


Part I  - Has Nintendo has Failed?

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