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Summary:

I’m not really sure what has happened since the launch of the NES. Once thought of as the overlord of gaming, Nintendo was on top of the world, and then, all of a sudden, there was nothing. The Nintendo 64 came out and, despite them having […]

I’m not really sure what has happened since the launch of the NES. Once thought of as the overlord of gaming, Nintendo was on top of the world, and then, all of a sudden, there was nothing. The Nintendo 64 came out and, despite them having Mario 64, Ocarina of Time and GoldenEye, Nintendo sank to the bottom. The bottom, sadly, is where Nintendo has stayed… up until now. But even with the success of the Wii, Nintendo faces challenges in the developer arena, and in online, that don’t yet seemed to be addressed. Even with a winner on its hands, could Nintendo be headed for the bottom again?

In the months leading up to the release of the Wii, Nintendo re-invented itself. The old guard at Nintendo had stepped down, and something new was going on. Nintendo was trying something new, something for the non-gamer. When people finally got a chance to play the Wii at the final E3, the positive buzz was immense, but I don’t think anyone had any idea how big it was going to get.

Well, the Wii launched on Nov. 19, and it’s still impossible to find them in stores. Worldwide, Nintendo has sold over 4 million consoles and they’re still going strong. However, there could be trouble on the way. As unlikely as it looks now, Nintendo could blow all of this momentum and end up at the bottom again. With the help of some of our friends (N’Gai Croal from Newsweek and Chris Baker from Wired, along with a few others), we’re going to take a look at how Nintendo could actually manage to end up in third place again.

The Big Software Problem

“Everyone loves the Wii as soon as they pick it up. Non-gamers who played it at holiday parties last month are all saying, ‘Hey, maybe I should get one of those,’” says Jane Pinckard, with the Game Developers Conference and of GameGirlAdvance fame. “But once you’ve mastered the (pretty simple) tennis and bowling games, where else do you go? Warioware: Smooth Moves, maybe, but even that gets repetitive. I think this is especially the case for experienced gamers who have finished Twilight Princess and are looking for the next great game.”

Nintendo, though renowned for making some of the best games in history, hasn’t had much third-party support over the last couple of generations. When everyone else was moving to CDs, Nintendo decided to stay cartridge-based. Then everyone went to DVDs and Nintendo decided to use mini-DVDs. Finally, this generation, Nintendo has caught on and put a DVD drive in the Wii. Will it be too little, too late?

“The N64 and Gamecube were both overshadowed by the success of the Playstation consoles and thus never were attractive targets for third party exclusive games (with a few notable exceptions, of course, like Resident Evil 4, though that was eventually made non-exclusive with the PS2 port),” says Susan Wu, blogger and Associate with Charles River Ventures. “With the Wii selling so many units so fast, and still selling as fast as Nintendo can get them on store shelves, I don’t see that problem continuing. Publishers like EA have announced the development of studios devoted to Wii development (eg. EA Salt Lake). The number of sold-through units won’t be able to be ignored by developers and publishers.

“Between the quick uptake of the console thus far and the continued viral marketing of the console to casual and non-traditional games, I’d expect to see a lot of games for the Wii in the coming years,” she said “In fact, I think that might be Nintendo’s biggest problem and one they should be far more concerned with than a lack of games — what if there are LOTS of Wii games, but developers outside of Nintendo lack the creativity to produce fun game experiences that aren’t just Rayman Raving Rabbids style mini-games?”

Developing Under New Rules

Truly, Nintendo has managed to get around the problem of an installed base, but what about actual development? Part of the problem with innovating is that your developers don’t always know what to do with your new innovation. No matter how easy it may be to program for the Wii, how many companies will actually do something good with it? “Another thing to keep in mind is that while the Wiimote is remarkably simple and intuitive for players, it’s very difficult to design around,” said Chris Baker of Wired. ” I hope Nintendo is helping third party developers figure out how to take advantage of the tech.”

That’s where Nintendo has to step in and take an active role. As fantastic as all of the Nintendo first-party games are, they can’t just let third-parties go nuts with the controller or we’ll end up with more rubbish than content. Hey, that was a pretty good segue to our next point:

Ports In the Storm

Who wants to see a ton of movie-licensed games and afterthought ports on the Wii? I know I don’t! When you don’t release many AAA titles, you end up with a drought that makes people consider purchasing games that aren’t exactly going to help your image.

“Nintendo can fail if it becomes known as a home for middling ports of PS2 games. I expect that we’ll see lots of ports and kiddie shovelware over the next year that’re almost identical across the PS2, PSP and Wii,” said Baker. “This will probably be a constant over the life of the console, even when a bigger install base and lower development costs compared to PS3/Xbox360 make the Wii even more attractive to third party developers. Clunky lo-res ports can easily overshadow innovative games, especially if Nintendo slows the pace of releases of first party titles to a dribble…which they seem to be doing.”

This leads us back to Nintedo’s support for developers.

The Third-Party Blues

One severe sore point for Nintendo has been third-party support. It’s not that developers don’t want to develop for Nintendo consoles, it’s that Nintendo really never seemed to care if they did or not. I would usually have plenty to say on this subject, but N’Gai Croal of Newsweek put it so eloquently that I’d rather just quote him:

I may be getting soft in my old age, but Nintendo has done so much right with this launch that I have a hard time seeing how even they can screw this up. The irony is that even as Nintendo has done what its critics have long urged them to do — stop being arrogant and finally become a better partner to third-party developers and publishers — Nintendo hardware owners are by and large ignoring third-party games in favor of Nintendo-developed and published software.

When you look at the global success of the DS, with the exeception of Tamagotchi and Final Fantasy III, the games that have made the DS a runaway hit have all come from Nintendo. In each of my numerous meetings with Reggie Fils-Aime since he started at the company, I’ve asked him what Nintendo plans to do to boost third-party support. With the DS and Wii launches and beyond, he and Satoru Iwata have pretty much done it. A lot of the early third-party DS software was mediocre, but there were some good games, especially those developed by Vicarious Visions (Tony Hawk’s American Skateland), Atlus (Trauma Center) and Capcom (Phoenix Wright: Ace Attorney). Yet none have been breakout hits. The Wii had better third-party support at launch than the PS3. But the lion’s share of the sales went to Zelda.

Nothing in this scenario poses a problem for Nintendo. They will continue to be hugely profitable as a result of their hardware and first-party software sales. The people who need to be concerned are third-party publishers. Xbox 360 sales are still slower than expected, and Microsoft cut its projected shipments through June 2007 from 13-15 million to 12 million. That’s not the behavior of a company planning to dominate its sector. Then you have Sony, which is already seeing some slight slowdown in demand relative to supply in North America and Japan. And PS3 is very pricey in Europe, so it will be very interesting to see what impact that has on PS3 sales in a territory where Sony obliterated both Microsoft and Nintendo last generation.

The Network

Even though Satoru Iwata, current President and CEO of Nintendo, may have once said “Customers do not want online games,” he definitely changed his tune for the Wii. Online gaming has become huge in the console world, mostly thanks to XBox Live, and if you don’t offer online services now, you’re seriously hurting your possible revenue. Nintendo came on board with the Wii, but they’re definitely showing some inexperience.

“I think a more exploitable weakness of Nintendo’s is in the area of network support. The entire user experience for Wii’s networking capabilities is really poor right now. The whole friends-code system is ridiculous when compared to what Xbox Live and even Sony’s PS3 network support,” said Wu. “The news and weather channels are neat gimmicks, but they really need to get some games out there that use the multiplayer networking features.”

What’s With All This Negativity?

“It’s still difficult to get a Wii; by the time they are widely available, we’ll have a whole new crop of gamers playing with their Miis, and by late 2007, a batch of new games, too,” said Jane Pinckard. “I think Nintendo’s got it covered.” The general consensus here is that Jane’s probably right.

The way I’ve been talking you’d think that Nintendo isn’t in the best position they’ve been in for years, but that’s not the case. The release of the Wii and the extreme success of the DS has put Nintendo in a position to where they could once again regain market dominance. Now that we’ve talked about what could go wrong, let’s think about what they could do to continue.

N’Gai has a few thoughts to help Nintendo maintain:

The first thing they should do is in two to three years introduce a $249-$300 Wii 2 that is capable of HD graphics, that supports the winner of the Blu-Ray/HD-DVD battle, and, most importantly, is completely backwards compatible with the Wii remote and the nunchuk. This would give them an HD console at a price that should still be competitive with PS3 and 360, but still takes full advantage of what makes the Wii so much fun.

The second thing is that Nintendo should figure out how to bootstrap third parties to greater success. This could consist of some deep and ongoing research into their audience, and making that research freely available to partners; revamping their third-party relations group to provide even more insightful and meaningful feedback; creating a “Miyamoto’s Choice” seal for select third-party games that Nintendo firmly believes that all Wii and DS owners should experience; hard drive support for downloadable demos; and more. Nintendo knows how to make hits itself. If it can figure out how to help third parties have bigger hits, Nintendo itself will become even more profitable — and have a shot at returning to the number one spot.

  1. [...] folks at GigaGamez recently interviewed me for an article about Nintendo and the future of the Wii that they called, “Nintendo’s back…but can they hang [...]

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  2. Nintendo’s Back… But Can They Hang On?

    From a GigaGamez article, excerpt and link below:
    “Between the quick uptake of the console thus far and the continued viral marketing of the console to casual and non-traditional games, I’d expect to see a lot of games for the Wii in the coming yea…

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  3. [...] GigaGamez » Archive Nintendo’s Back… But Can They Hang On? « A great read on the Wii’s future (tags: wii) [...]

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  4. Will someone finally shut N’Gai Croal up? Yep, someone tell poor Capcom and Konami how to make big hits. I’m sure they’ll appreciate the schooling.

    And i’m sure tons of people want to buy another version of the same console 3 years down the line for those absolutely brilliant reasons that aren’t actually worth it and don’t actually contribute much to the system. Good fuckin’ thinking, N’Gai. $300 you say? Totally sounds worth it for an HD port and disc tech nobody needs. Why stick with your decision to not whore out for pointless hardware when you can deliberately sabotage your own console’s lifespan 3 years into it? Good thing you get paid to figure this shit out.

    So, let me sum up the problems here, according to that panel:

    A) Oh my god, why aren’t all games like, superbig like Zelda? If you can’t force all games into being comparable to a franchise well-loved and entangled in the deepest roots of gaming, FUCK IT ALL THE SKY IS FALLING

    B) The Wiimote is simple and intuitive. These are concepts which are TOTALLY lost on most developers, so this might cause problems.

    This is basically a vague, unwitting condemnation of the industry. Nintendo’s biggest problem, according to all this, is the utter incompetence of everyone else, solvable only by holding everbody’s hand through the magical land of Nintendo.

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  5. “This is basically a vague, unwitting condemnation of the industry. Nintendo’s biggest problem, according to all this, is the utter incompetence of everyone else, solvable only by holding everbody’s hand through the magical land of Nintendo.”

    I quoted this because of its precise, honest truth. Thank you, Jon. I couldn’t have said it better.

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  6. [...] The Nintendo Wii is super popular right now, but how quickly could that change? Jason sits down with several industry professionals to discuss what could happen. [...]

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