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Nintendo’s New Strategy

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Satoru Iwata, President of Nintendo, gave yet another news conference that demonstrates why Nintendo thinks very hard about its business, technology, and games.

I truly admire what Nintendo is doing and I am only sorry that they have been so difficult to partner with (sigh).

First, their goal is to not lose money on the console hardware i- this breaks with the tradition of a lot of game consoles where substantial losses in hardware are recovered through licensing fees. This reliance on licensing fees pushes costs and risks onto publishers and developers reducing game innovation and flexibility for business models.

Second, by making the Wii cheap, Nintendo makes the threshold for decision to buy easier. Most people will not think nearly as hard about a $250 purchase as they do about a $500 or more purchase — these mental pricing thresholds are very important and Nintendo has a huge advantage compared to both Microsoft and Sony.

Third, Nintendo is joining Turner’s GameTap in re-monetizing its back catalog. These completely developed assets have essentially been worth nothing as they have been considered “obsolete.” By charging between $5-$10 to download them, Nintendo is essentially printing money … for the cost of bandwidth (pretty low for these older games), and no retail channel or others to share revenue with, every game sale goes right to Nintendo’s bottom line.

Forth, the unique design of the Wii has excited developers, but, more intriguingly, it is going to make it a real pain to make a multi-platform game. While it may be possible to port between PS3 and Xbox 360, the Wii platform will essentially stand-alone. This means more exclusive titles and, with good licensing terms, more games. If Nintendo really works to court third-party developers, they will be in a great position to dominate on content.

I think Nintendo understands that its biggest threat is the PC. By building a compelling platform that is very different from a PC, due to the controller, they have created a real market niche. Also, if they can replicate Brain Age and Nintendogs on the Wii, they may reach a much wider audience. Their threat to allow casual, downloadable games, could be icing on the cake — a farm league recruiting system to nurture new developers.

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About Steven Davis

  • mothmonsterman

    But will the current gen of gamers go for it? with games like halo and GTA, most gamers these days jump on a bandwagon “i play what others are playing” they don’t seem to want to play something different. Nintendo is on the right track for finding a new audience but i think they will fail at appealing to the current “hardcore gammers” which are more likely to buy a system that supports third party ports. While “Noobs” like me who have been playing for 20+ years are more than willing to try something less cookie cutter.

  • http://www.playnoevil.com/ Steven Davis

    One can’t be certain of anything… but, by having a platform that is cheaper to develop for, buy, and probably selling less expensive games, the answer may be “Why not?”.

    Given the choice between reaching the “hardcore” gamers and everybody else… everybody else is probably a good choice.

    But, I don’t think Nintendo needs to choose.

    Nintendo also builds good games for serious gamers. Resident Evil 4 won most awards the year it came out (2005) – certainly a hardcore game if there ever was one.

    If developing for Nintendo’s platforms costs a lot less, which it should since graphic development cost increases are not linear, then there is less risk to develop. This means more innovative games for both casual and hardcore gamers.

    With a console, it is easy to do “Try before you buy” and, as has been done with the DS, “Play free, if someone has a copy”, you have a powerful way to expand your market.

    If Nintendo is serious about reaching out to Third Party developers, which it looks like they are, there should be a ton of games for Nintendo’s platforms.

    Remember Microsoft in its success on the PC – it made it easy to be a developer for Windows… providing good, powerful tools at a low cost. They got developers excited.

    A lot of developers are excited about developing for the DS and the Wii. They see new ways to play and new kinds of games to make.

    Heck, even the guys from Sony and Microsoft want a Wii.

  • Dynamo of Eternia

    (QUOTE FROM STEVEN DAVIS: )
    “One can’t be certain of anything… but, by having a platform that is cheaper to develop for, buy, and probably selling less expensive games, the answer may be “Why not?”.

    Given the choice between reaching the “hardcore” gamers and everybody else… everybody else is probably a good choice.

    But, I don’t think Nintendo needs to choose.

    Nintendo also builds good games for serious gamers. Resident Evil 4 won most awards the year it came out (2005) – certainly a hardcore game if there ever was one.”

    This is all true. Plus, I don’t think the Wii is specifically designed to not include hardcore gamers. If anything, the new Wii-mote technology gives gamers a new challenge to try and master.

    The problem with the general stand type gaming controls is that people who have been playing games their whole life have a distince advantage over someone who’s never played a video game before. Even when playing a specific game that they’ve never played before, since they understand the general logic of how the controls work based on previous gaming experience, odds are they can kick the butt of a new comer.

    Now, with the Wii, the controls are new to everyone for the most part. So, it’s not so much that the games and the controls are extremely easy or anything like that. It’s just that it’s something that will be equally challenging (or at least almost equally) for current gamers and new comers alike.

    I believe it will have a more universal appeal overall.

    (QUOTE FROM ARTICLE: )
    “Forth, the unique design of the Wii has excited developers, but, more intriguingly, it is going to make it a real pain to make a multi-platform game. While it may be possible to port between PS3 and Xbox 360, the Wii platform will essentially stand-alone. This means more exclusive titles and, with good licensing terms, more games. If Nintendo really works to court third-party developers, they will be in a great position to dominate on content.”

    Also, another thing to keep in mind is that while the Wii-mote will be the primary way to play the new Wii games, there is also a ‘regular’ style controller that is coming out for it as well. It hasn’t been heavily covered (mainly because most of the attention is on the Wii-mote), but pictures of it are out there.
    Plus, the Wii is designed to work with the Gamecube controllers as well.

    What this means is that many games that will come out for Xbox 360 and PS3 probably can be ported over the the Wii. Granted, they may not look quite as good and the resolution may be lower, but it won’t be such a drastic difference that it becomes a completely different experience or something. So, the Wii has an advantage in the sense that it can still handle similar types of games as the two competing systems. However, the same doesn’t hold true for Wii games going to the other two systems, so things are looking up for Wii in that sense.

    Plus, with the Wii being at a very desirable price, I can’t see it failing. It will be in expensive enough that people who buy one of the two other systems may also get the Wii at some point. And odds are, since the system isn’t overly expensive to make and Nintendo isn’t taking losses like the other two are, it will be easier for Nintendo to start dropping the price on the system much faster (partially depending on its initial success). It wouldn’t surprise me if within the first two year that the system is around, we see it get down to $200 or even $150. So, I’m many people who might be on the fence about buying it at $250 may jump on it at those prices down the road.

    Meanwhile, the competition will have a much tougher time competing in that sense, particularly PS3. Even after a significant price drop, PS3 will still be rather expensive. I will be very surprised if we ever see a PS3 (the more expensive version anyway) for anything lower than $300 before the next generation of systems come out. And even the $300 seems somewhat unrealistic. Odds are it may level off somewhere around $350 to $400.

    So, things are looking up for Nintendo.

  • jayson

    well because of the traditional controller (it kinda looks like a cross between a dualshock and an snes controller) they can make multi platform games so the authors argument on thet is instantly defeated

  • Dynamo of Eternia

    “well because of the traditional controller (it kinda looks like a cross between a dualshock and an snes controller) they can make multi platform games so the authors argument on thet is instantly defeated”

    How do you figure?

    The point is that with the traditional controller, games that are already coming out on Xbox 360 and PS3 can be ported over the the Wii.

    However, games (including 3rd party ones) that are specifically designed to work with the ‘Wii-mote’ and could not logically work with a standard controller will not be able to be ported over to the other two systems. And that’s the point that the author was making – the games specifically made with the Wii’s new technology in mind cannot be ported to the competition, giving the Wii an exclusive edge that the other two systems don’t have.

    However, aside from some graphical advantages, there isn’t much preventing 3rd party games that come out for the other systems to be released on Wii. So, Wii will have an advantage all around in this case.

    I really don’t see what point you were trying to make, jayson.