So, according to some on the internet, Nintendo is in a lot of trouble and there’s a lot of hoopla surrounding what they’ll do next after their most recent earning report was shown to be quite disappointing. This topic and the so-called “Nintendoomed” hype that’s shrouded the company has made the rounds in many places already, but I still had an interest in making a blog about it because I’ve never really had much of a full-blown discussion about them on here before. Sure, I criticize the ‘AAA Empires’ and those bad company decisions, but Nintendo is one of those publishers/console manufacturers outside of that bubble, which makes their current quandaries more interesting.
The best way to examine the problem Nintendo is now in would be by understanding Nintendo's history with the gaming medium. Most of this bare-bones history can be found in one of my previous blogs too:
“What we would call the initial generations of the video game console begun in the 70's eventually grew into one of the most rewarding businesses of that time, accumulating over a three billion dollar market share and a lot of games. No, I mean a LOT of games. Because of the get rich quick notion so many businesspersons saw with this, companies from Quaker to Purina actually invested into shoving their own published titles out in order to rake in easy money. After so many unfinished/finished products looking identical to the series they were stolen from flooded the market, consumers dropped the hobby altogether which resulted in next year’s market share plummeting below ninety-five percent of its previous. A couple of years later, Nintendo basically saved consoles and here we are today.”
By the time 1984 came around, the NA crash of ’83 had come into full effect; consoles were discontinued while gaming devices that looked more and more like PC’s equipped with disk drives and keyboards came into the picture. When the NES came onto this scene during the autumn season in 1985, it was by and large the only device out there to be advertised as a toy that exclusively played videogames. With that mindset, Nintendo set out to entrench a philosophy of the consumer needing their hardware first and foremost in order to get their games and every title on the platform was now required to go through a newly-devised certification process.
Now, the same strategies that made them so successful decades ago seems to be kicking them square in the teeth today. What was initially projected for both of Nintendo’s big products was nine million sales for the Wii-U and eighteen million for the 3DS which has now transitioned to just two-point-eight million and thirteen-point-five million respectively for those devices. Terms like “projections” are typically used when reporting this news and what these vicissitudes translate to in the corporate world isn’t to just say these figures are something the company is ‘hopeful to achieve’ but rather their promises to shareholders. These failed promises have resulted in a 2013 fiscal year where Nintendo was expected to make huge profits but instead have posted a newly-anticipated three hundred and fifty-five million dollar operating loss. After reporting to shareholders, Nintendo’s stock price momentarily plummeted.
As big of news that may have been for shareholders, customers also seemed to be in a bit of a frenzy over this disheartening news. Rumors were bruiting around that Nintendo was going to make a few course corrections once this news broke: supposed leaks of Nintendo looking into making a next-gen console known as “Fusion” or even getting their games into the smartphone market. Head honchos like Iwata received pay cuts to ease the blow. All of this lead up to an investor conference which didn't really do much to change what they’re fundamentally doing already and denying the smartphone rumors. Aside from the expansion of Wii-U features and other stuff, the tidbit displaying the most change in their attitude is looking to eagerly get on board with 3rd-parties and license out some their franchises.
This all funnels back to the fact that Nintendo is indeed stuck between a rock and a hard place right now and they’re fully aware of it; however, even with gleaning all of this new info (as well as some I may have missed) about the company during the past few weeks, I think it stands to reason that maybe some on the internet are overreacting to this fiasco.
An important reason why I think the complaints are a bit much stems from the fact that they’ve been down rocky roads before and that's never really stopped them. And when looking at their history since they were established (1889), I surmise their corporate culture could play a part in that too. Even though capitalism is a universal language, the approach to reaching end goals seems to be disparate between here in the US and over in Japan—at least in some respects. There, the approach seems to favor maintaining an old-guard, dynastic philosophy of keeping that company going through and through (at least in an ideal sense); contrariwise, it’s not hard to spot more myopic, get-rich-quick sorts of methods within American corporate culture that favors lightning fast ways to climb to the top and then just bail for the next business venture. Even with culture out of the equation, just looking at their hardware history displays the character of a company that’s willing to experiment, make close call decisions, and live with their not-so-successful launches much more often than the other two parties in ‘The Big Three.’ The difference being in this situation: dealing with a tremendous commercial flop when their previous console dominated last generation.
As often as people seem to outright ignore the Wii, it was the console that won last generation as far as sales volume is concerned. And unlike its HD competitors, the Wii sold at a profit right out of the gate. Nintendo’s gone on record stating just how many billions of dollars they can throw around on a whim—not…exactly in that tone, but you get the idea. Heck, even the stocks momentarily dipping down like they did in mid-January only meant they were closer to the Gamecube levels of yore; BUT, the difference here is that they still made whatever little profit by comparison back then unlike right now. In the last two years before this news broke, they had reported an operating loss; and now, another year has rolled on by and they’re still seeing red. This is what makes this news have at least some kind of a bite to it.
I suppose I may have some biased reverence for the company altogether since I did grow up with their games and that candy-coated ‘believe to succeed’ faith may not make me the most empirical type to peruse their info and present analytical data, but no one can discount the nest egg they’ve built up. With roughly ten billion dollars in the bank and billions more held in other investments, they seem to have enough to last for decades, IF the storm were to even last that long. While Nintendo as a company seem to have a cozy spot in our industry, the Nintendo that we know today and have known seems ready to morph into something slightly less familiar. True, their past has seen its number of commercial failures, but the industry’s more shaky state today makes this a more volatile time to screw up. When their handheld sales on both the hardware and software side are doing a fine job and they’re still posting these kinds of losses, the Wii-U must be acting like several anchors tied to a moving ship.
One elephant in the room that comes to mind here that I honestly don’t think is that much of a problem would be how they handle their franchises. People seem to always zero in on how they’re resting on their laurels with past successes to pave their future, but they do seem to reap the most success from them. Even looking less at the corporate angle and more as a gamer, those franchises seem to remain unique for me by hitting that middle ground between the whimsical tone and art styles in popular smartphone titles while also having similar gameplay polish and depth of the overabundant AAA market of grey, ‘realistic’ stuff so often. In fact, the whimsical, kid-friendly nature that Nintendo prefers in its franchises seems to be a subject for resentment as well. Harping back to their old marketing strategies, the maintaining of that family-friendly image of selling a toy has lead to some classic examples of them censoring games and frustrating 3rd-parties as a result—and even me in cases when they'll run away from supporting titles like Imagination Is The Only Escape to preserve that persona; in fact, the "kid IP platform" Wii-U was considered was claimed as one of the reasons why EA abandoned them altogether, according to an inside source. Nevertheless, those frustrations haven’t stopped them from dominating in sales for almost half of the entire time consoles have been around. It seems like those kinds of facts are ignored because it estranges a part of an older hardcore fanbase, with their pretensions of maturity—love C.S. Lewis’ quote on this ( http://www.goodreads.com/qu... ), but the truth is those “kiddy” titles are a recipe of success for Nintendo.
For whatever sect of that “anti-kiddy” harcore there might be (who probably love the classic kid-aimed franchises like Mario), there’s practically no particular camp that enjoy more kid-focused hardware and their slow-to-change ideas that present legitimate problems because of it. You’ll always have fans of many of Ninty’s first-party titles, but good luck finding fans of friend codes, annoying parental control prompts, and online purchases tied to the system instead of the online account. It makes the old-hat ideas from the 360’s early days still look innovative. The big problem is that there’s no actual target audience for this sort of device. Nintendo capitalized on the casual market with the Wii but that was based off of getting a whole new type of audience that’s probably flocked to the mobile phone market and have been left confused as to whether or not this new device is just an expensive accessory; and now, the hardcore audience eventually became underfed by its offerings. It actually started off really well with titles like Batman: Arkham City, Call of Duty, Zombi U, and others, but it simply wasn’t enough and eventually those types of titles seemed to dwindle as time went on. Another reason EA has reportedly decided to outright ignore the U was the much-lower quality of the hardware compared to the PS4 and Xbox One wasn't worth the extra effort, which is understandable given that the spectacle they’d like to produce just can’t be done that smoothly on under-powered hardware.
For as desperately as it tried to capture the hardcore there’d always be some limitation or problem: instances of digital game purchases costing more than getting it retail, underwhelming online model like the previously-mentioned game downloads not tied to your account, not being able to use the built-in mic for chat and still no official first-party headset, etc. So the online portion, something desperately needed in order to capture the hardcore shooting crowd, underwhelmed and left the U in a strange middle ground by distancing itself from the Wii audience that got them there while strangely deciding to keep the Wii name when trying to appease the hardcore crowd. The result: the U’s launch being more commercially successful for them in regards to hardware sales than the entire 2013 year. These sorts of mis-communication stems back to Nintendo’s slow-to-change understanding of electronic media today and how it’s delivered in a much more consumer-dictated atmosphere. For good or bad, there’s a greater demand for options now and being a hardware-maker first in mind with a stringent set of rules to play X game only with Y device, regardless of what unique ways those optimized games can be played, is becoming a more outdated concept.
Decades ago, Nintendo’s introduction of a certification process meant that games at least attained a certain level of quality; but now, with easier means of getting their game released via Steam or even on PSN since there’s no longer an indie game approval process, that just means those 3rd parties are looking at different platforms first. In an ever-changing, consumer-dictated gaming world like ours today, giving consumers a strict guideline of having to buy this console for these titles that brought forth success decades ago doesn’t result in that same success today. Back then, pushing their console as being just a toy for videogames was what made them such a success. Now, that same attitude has denigrated their brand to some and fragmented their desired audience. Even with some rather big issues with this product making me hesitant for a purchase, I actually like the Wii-U the most out of all these this-generation consoles as it currently stands. It’s the only one that actually got me excited for “next-gen” upon its announcement and I really like some of the exclusives filling the need of some underserved markets right now. I want to experience some of the games it has to offer that have released recently and some which will be released in the near future. Of course, putting my spending power towards a plethora of last-gen/cross-gen titles I still genuinely want to play has my money and time focused elsewhere which presents me with a problem, but the lack of support in regards to games and commercial success encouraging consumers of the Wii-U’s longevity is Nintendo’s problem, one I hope they’ll rectify soon enough.
Some info acquired from these links:
http://nintendoeverything.c...
http://arcadesushi.com/sony...
http://www.huffingtonpost.c...
http://www.nintendo.co.jp/i...
http://nintendoeverything.c...
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Hope everyone enjoyed the blog. Feel free to leave any comments below.
Thanks for the blog man. Plenty of meaty info. Here's my own take:
I'm a loyal Nintendo fan. That must first be pointed out. While I'm not always there Day One, I eventually buy their systems.
And I loved the Wii. In many respects, my favorite 7th gen console. I liked the direction Nintendo was taking with the Wii, and I was sad to see them back off and "go hardcore" in their attempts to capture the N64/GCN crowd.
I think there is a problem with how Nintendo handles their franchises. They find something that works, and then they turn on their heels and sprint in the other direction.
Skill-based motion controls and a brand-new IP that literally makes your console fly off the shelf (Wii Sports)? Nah, let's make completely skill-less motion controls with established IPs (Wii Music). Heck, let's go a bit further and not revive Wii Sports. Let's launch our new console with...NintendoLand! Or, an even better example, the original DS struggled at first because they relied on ports of N64 games, but it exploded in popularity when they started making NSMB, Brain Age, Nintendogs, etc. So what do they do with the 3DS? Why, make more N64 ports, of course! Starfox and Ocarina will SURELY sell better than the port of Mario 64 did, right?
smh. They have no stamina. They find something that works, and then they drop it in favor of peculiar, niche interests. Just my 2 cents. Great blog.
Excellent blog, I too grew up with Nintendo and my biggest problem is that is very hard for me to be completely loyal to one company and stick with say company. I am somewhat loyal to Valve Steam service but Valve mess up when it came to the Steam Machines. Anyways you are spot on Nintendo refusing to move on and it's antiquated online service. The one thing you miss is the fact the wii u gamepad had the possibility to allow gamers to play their wii u games on the go like Starbucks. It didn't happen because the 3DS was successful had it failed then this ability of playing wii u games on the go would of become a reality.