For all the negativity surrounding the Wii U there is also lot of praise for the console. It just doesn’t make as much noise within the industry as it probably should.
Recently, Codemasters’ Senior Executive Producer Clive Moody stated: "I think it [Wii U] is the future,” when talking to ABC’s News 10 about the prospects of the upcoming next generation of consoles. Will the Wii U be the “future” of home console gaming like Moody thinks it to be? What if it isn’t – what happens then? Well, let’s take a look through the looking glass, shall we?
Negativity
I’ve already mentioned this, but it seems that it is the negative commentary that is the loudest these days. With the Wii U losing third party exclusives and missing out on key third party titles completely (e.g. Tomb Raider, BioShock Infinite, Grand Theft Auto V, etc.), it seems that it is all we hear at times in regards to the struggling console. We’re not debating this here, because most of it is blown out of proportion, but what is understandable throughout all of this is that there are some reasons for concern regarding the console becoming one that’s played primarily for Nintendo’s first party titles.
In our intriguing recent interview with Wedbush Securities analyst, Michael Pachter, one of his statements really stands out in my mind when
thinking on this topic: “I expect to see fewer exclusives next generation.” We
just saw Ubisoft shift the once thought to be timed exclusive Rayman Legends into a simultaneous multiplatform release – delaying the Wii U version of the title
back seven months, when it was only a
mere three weeks from release. But then, Sidhe co-founder Mario Wynands made a shocking statement after he attended the DICE Summit in Las Vegas: “At DICE, nobody has
been talking about the new Wii U projects they have started, only the Wii U
projects that have just been cancelled. Platform is in serious trouble.”
With the Wii U’s worldwide install base currently sitting at
around the low three million units, it is not surprising to see third parties pulling exclusive
support for the console, as they have to make a profit. What is surprising though
is that some developers are apparently cancelling their Wii U projects completely. There is not
any way to spin this news – it simply is not good for the console. It was right
about here when this hypothetical idea started playing around in my head: what
if Nintendo shifted its entire focus on developing its incredible first party
games, instead of developing and marketing consoles that are less-powered than
its competition?
Third Party Nintendo
Before we go any further, let’s quickly step back a few
weeks beforehand: MCV posted an article that reported that Nintendo was merging
its handheld and console markets together into one so that it can, “investigate
future platforms that would satisfy both its DS sand Wii audiences in one” and a
Nintendo business report gave us some insight into its future strategy to take
advantage of merged operating systems and software assets across multiple platforms
(including new platforms).
Changes are definitely happening behind the scenes within Nintendo, and while we won't see the fruits of this new strategy for a while, it's going to be interesting what comes of it. The 3DS is doing very well on the market in Japan, but outside of its home territory neither the 3DS nor the Wii U is taking the world by storm. It also looks as if Nintendo is possibly about to tap into the mobile markets. A Miiverse app on the iOS and Android Marketplaces would allow hundreds of millions of people to tap into its new family friendly social network – possibly pulling them into a console purchase thereafter – but there is slow progress here, with Nintendo developing a web application accessible by phones first.
Changes are definitely happening behind the scenes within Nintendo, and while we won't see the fruits of this new strategy for a while, it's going to be interesting what comes of it. The 3DS is doing very well on the market in Japan, but outside of its home territory neither the 3DS nor the Wii U is taking the world by storm. It also looks as if Nintendo is possibly about to tap into the mobile markets. A Miiverse app on the iOS and Android Marketplaces would allow hundreds of millions of people to tap into its new family friendly social network – possibly pulling them into a console purchase thereafter – but there is slow progress here, with Nintendo developing a web application accessible by phones first.
In a recent discussion with a family member on this topic,
it was surprising how quickly I heard these words: “I would love to play Mario
on my PS3, but I’m not buying a Wii U.” Again, this got me to thinking - what
if Mario was on the upcoming next generation consoles? What if the upcoming
consoles are indeed über powerful and Nintendo spent all of its time and money
creating bleeding edge visuals and stunning gameplay like we’ve never seen before?
If the rumours are true that the upcoming console from Microsoft utilizes a new
and improved version of Kinect – imagine the possibilities of having first
party Nintendo titles that make innovative use of this upcoming technology.
Could we ever actually sneak through a haunted mansion as Luigi, using nothing but our bodies to frantically suck up ghost right from the comfort of our very own living rooms? What about a Nintendo developed version of Kinect Sports in partnership with Microsoft? If Nintendo did not have to worry about costly and inefficient console development, it could instead use its capital to develop unique peripherals to create innovative gameplay mechanics that tap directly into the immense power of these consoles. Its games would sell and would be available to both the Nintendo loyal and the hardcore gamers who don’t typically purchase Nintendo systems. Could this actually be a better alternative for Nintendo?
Could we ever actually sneak through a haunted mansion as Luigi, using nothing but our bodies to frantically suck up ghost right from the comfort of our very own living rooms? What about a Nintendo developed version of Kinect Sports in partnership with Microsoft? If Nintendo did not have to worry about costly and inefficient console development, it could instead use its capital to develop unique peripherals to create innovative gameplay mechanics that tap directly into the immense power of these consoles. Its games would sell and would be available to both the Nintendo loyal and the hardcore gamers who don’t typically purchase Nintendo systems. Could this actually be a better alternative for Nintendo?
Possibilities
What are the chances of Nintendo ever actually becoming
a third party developer? I don’t think there’s an easy answer to this
question. I think it could be a possibility at some point in time, but there
are also variables that could lead to Nintendo’s Wii U becoming a major player
in the next generation of consoles as well. In our recent interview with
Michael Pachter he made another thought-provoking statement that if true, could
bode extremely well for the Wii U: “I think that the upcoming generation [PS4
and Xbox 720] has the potential to be somewhat underwhelming, given that
advances in processing power will be less dramatic than in the past.” If this
is true – is it not possible that gamers decide to stick with their current consoles
that have enormous catalogues of fantastic games? If the cost of these two
consoles is significantly above the retail price of the Wii U, this could in
turn find third party developers finding the Wii U and its numerous control options
extremely appealing once again. Consumers
looking to purchase a new console could also be attracted by the (potentially) lower
entry price, which would also find them having access to Nintendo’s fantastic
first party titles as well. Could this actually be the future of the Wii U?
The Future
The gaming industry is undoubtedly within a paradigm shift. The future of the industry is unclear in what it will look
like in just a few years’ time. All we can do at this point is to wait and see
the happenings as they come and support the companies/products that we want to
see succeed with our pocketbooks. Last year saw a contraction within in the
industry and far too many talented developers have closed its doors. The cost of PC gaming is falling and the cost of console gaming
is continually rising, while mobile gaming on multifunctioning devices continues
to rise in popularity as videogames become more mainstream in digital format. As
the next generation consoles loom just upon us on the horizon, it is also unclear
if consumers will take to those consoles like some analysts project that they might.
What is clear though is that however the industry shifts in
the near future, Nintendo will remain. The chances of Nintendo dropping out of
the hardware market is most likely slim to none, but even if it did it’s
possible that Nintendo as a third party developer could be nothing short of
amazing. In its reorganization it is looking like it’s putting itself into a
position where it can be flexible for not only the current shift within the industry,
but those in the future as well. However the future unfolds, don’t take your
eye off of Nintendo – it just might surprise us all once again.
18 comments:
I don't think Nintendo will ever go third party, personally. It continues to claim that it cares about developing hardware to suit its software, and it's an argument that I can understand - one look at Super Mario 64 with that N64 controller is proof enough for me.
But, what I can see happening is Nintendo struggling to keep up. It lacks the sheer resources of its immediate competition, and that means that in several critical areas it is unlikely to ever offer a value proposition equal to or superior than its peers. Nintendo's online services, for instance, will never catch what Sony Microsoft and Apple offer.
That, to me, makes it a prime acquisition target. Not an acquisition because Nintendo is struggling financially, but because a bigger company with a desire to get into the console market has money to spend. Apple or Samsung, for instance, could snap up Nintendo, bring in the resources and infrastructure to compete with Sony and Microsoft and leave Nintendo to worry about what it actually does well - make good games and hardware - than put energy into stuff it doesn't understand - online infrastructure, Cloud, multimedia services.
Tim Cook over at Apple recently said the company has looked into some really big acquisitions recently. I would bet my house one of them was Nintendo.
I don't think we will see Nintendo going third party any time soon either, but I think it could be possible at some point in the future if Sony and Microsoft can continue to push hardware limits. There are just far too many variables to predict one way or the other.
I can however dream about a super powerful PS4 with a brand new Mario title on it with bleeding edge visuals... Wow! Wouldn't that be cool?
Thing is though, Nintendo has a very well-staffed and well-structured R & D group. Unless Nintendo hit the kind of financial wall that would necessitate the redundancies of that entire business unit, I can't imagine Nintendo wanting to lose that competitive advantage.
And that's why I suspect an acquisition by a big company with minimal gaming presence (Apple or Samsung being the two that immediately spring to mind) is more likely. If either of those two companies were to acquire Nintendo it would, in fact, be more likely for the R & D division than the software development teams.
Either way, that hardware side of Nintendo's business is probably the safest in the whole company.
An acquisition by Apple would likely be amazing.
Oh god not the Rayman exclusive!! without that lucrative franchise under their belt Nintendo is doomed
Not the first time this ideology has been proposed. Who knows the future 15 years down the track. The industry is more volatile and moves faster than ever before.
But first of all, Nintendo are pretty rich. First operating losses in the last year after decades in the electronic gaming industry (not to mention what they did before that for the last 100 years). They would have billions of dollars (trillions yen) in their banks and assets. I'm a Nintendo gamer at heart, and even I know first hand that Nintendo doesn't always set out to utterly appease the consumers. Half the time, they're out to appease their business side of things. Nintendo are just frugal, and one company that is more understanding of the economics today... JUST selling WiiU at a loss because they know they have to. PS3 almost sent playstation division to hell, and Microsoft exec saying the XBOX venture has been a near waste of time from it's inception.
And finally to the games argument. For better or worse, you can probably actually thank Nintendo for any innovation advances. They pushed Analogue controls in N64 days, and essentially propgated 'Move' and 'Kinect'. I agree that Wii was underpowered for it's own good (though half the blame goes to lazy developers, think Rogue Squadron GAMECUBE launch, why couldn't anyone replicate on Wii?), but this generation, we have more than enough performance to make any good game. No game since last generation was bad cause of a lack of performance what so ever. Just devs have no creativity. I use Black Ops 2 as one current example. Production values all the world, but a game I am playing the least. Gameplay, little more intelligent than anything we had 10 years ago! On the flipside, Starcraft, a game that uses minimal hardware, yet one of the most competitive and renowned games in the world wide community...It's literally become a sport unto its own
If Nintendo goes 3rd party, they maybe forced to follow the demands of the hardware manufactureres, and Nintendo's games may suffer as a result. Nintendo loses control of how they make and release their games. We have every company in the world making more mindless blood and guts shooters by the day. Nintendo just does different games. That fill gaming gaps that Sony and Microsoft often don't care to address.
I will have almost every exclusive WiiU game this gen. Which will be far more than enough for me.
Before we write off Nintendo (again), wait till PS4 and 720 release. Think we will all quickly notice how hard they will have pushing their high expense systems at launch.
And a final note.... Nintendo is somewhat strategic in the releases as well. They're probably to some degree deliberately delaying everything closer to PS4/720 launch to swipe their limelight and thawrt their system launches
Hi Holyfire,
So a couple of points based on what you've said here:
"But first of all, Nintendo are pretty rich. First operating losses in the last year after decades in the electronic gaming industry (not to mention what they did before that for the last 100 years)."
Having cash sitting around doesn't necessarily benefit a corporation. It doesn't work in quite the same way as a saving's account: What is more important for a corporation is to keep the share price up. The markets don't tend to react too well to loss-making activities an underinvestment (which large cash reserves suggest). Nintendo can be doing better things with its large cash reserves than hoping for the market to improve around it.
"Half the time, they're out to appease their business side of things."
Well, all the time actually. Nintendo's strategy is to make high-quality products and fun games, but only because those tend to sell better. No corporation does anything without considering the financial impact the decision would have. It would actually be a breach of corporate ethics.
"If Nintendo goes 3rd party, they maybe forced to follow the demands of the hardware manufactureres, and Nintendo's games may suffer as a result."
I'm not quite sure what you mean here. If Nintendo were to go third party, it would not be making games under the direction of the other console manufacturers. Activision doesn't consult with Microsoft and Sony while developing a Call of Duty game.
Nice post, and thanks for taking the time to make it, I just thought I'd clarify some of the economic comments you made :)
Yep all good and all true.
As for cash reserves, it doesn't equate to positive business, but save to say Nintendo can afford a lot. It would take more than 1 (maybe 2 gens) of failing hardware sales to stop their persuits. Even the abysmal selling GAMECUBE was a profitable venture for Nintendo.
And my point on the 3rd party factor was slightly vague, and not concluded either. But I'm presuming, to some degree, that Nintendo would lose some freedom at least in some cases, to produce for other hardware manufacturers (eg Sony or Microsoft). I'm thinking that lesser software producers sometimes have to conform to certain deadlines etc.. I guess this is more the case when exclusivity deals are on the table. Ubisoft is a good example on Nintendo Systems. Red Steel and ZombieU both underdone as launch titles. I would be sure Ubisoft wanted to polish them more, but suppose it was somewhat an influence from Nintendo to have them as launch titles.
Developing games costs a lot of money, (dev times matter financially) and right now Nintendo have the freedom to spend as much time as they want to develop individual titles (,technically). Cause they can live off other 3rd parties licensing their systems etc...(maybe Ubisoft rushed those above mentioned titles cause they couldn't afford the investment, because Ubisoft doesn't have the other income perks Nintendo has as a manufacturer) Perhaps maybe,not sure, Nintendo franchises will become quicker rush jobs such as to ensure a profit off their games to get em out on other systems
Again, very volatile industry. Who knows how it will turn out, and whether it will yield better or worse games. But at least with the Wii system (which I admit was far from perfect on a number of fronts). Pretty much made everyone eat their words. Think Microsoft declared Wii as 'a niche product'
I'm still waiting for the other launches. PS4 I'm interested in particualar.
PS3 has only just hit it's stride into the latter years of it's life. Everyone is buying them now. So how is Sony going to convince all these consumers that just bought the system to lash out on the new one now?
I do appreciate high end games to :) but I have a PC for that . A lot of Sony and M'soft games are often PC ports. Generally I find many Nintendo games slightly unique and not in direct competition with a PC counterpart.
"Tim Cook over at Apple recently said the company has looked into some really big acquisitions recently. I would bet my house one of them was Nintendo."
This has been a popular idea among game enthusiasts in the last few years, but Mr. Cook has stated in no uncertain terms last year that Apple has no intention of entering the console business. Frankly, although I can understand the sexiness of picturing Nintendo's exclusive games on Apple-designed hardware (disregarding Apple-like prices for a second here), I don't see the need on Apple's end.
Firstly, even in a depressed state Nintendo's market cap is floating around $12 billion; i.e. it would not be cheap by a longshot even for a cash-rich behemoth like Apple.
Secondly, why pay essentially $20+ billion dollars to get access to a market that is now driven by loss-leading hardware? That is definitely not in Apple's corporate DNA.
Thirdly...does Apple really need Nintendo? They have trojan-horsed themselves into the conversation whenever a debate about the "future of gaming" arises. They have done it with highly profitable hardware, no in-house game development to speak (there might have been a solitaire app way back when) and quite honestly very little overt effort beyond the occasional guest presenter to show off their newest silicon and perhaps a handful of iPod Touch commercials. Despite this, Gabe Newell himself has said he looks at Apple as the mythical Steambox's primary threat going forward.
If the games industry were a poker table, I think Apple is already just fine with the hand they are holding.
Now Samsung, who knows? Putting aside doubts that a quintessentially Japanese company would sell out to them, there is also the added barrier of Samsung not actually owning any significant platform of their own. I coud see a case being made for Samsung, in an effort to get the fork away from Android and command even more of the value that flows through their mobile devices, looking at exclusive content offerings to attract consumer interest. Problem is, they would have a very very long way to go not to mention that plan sure ain't working for Sony!
Hm. Too early by far to sound the alarm bells of a shift that drastic. If this current product cycle ends up going down in flames, they will (and will possess the resources for) give at least one more "college try" because thats how their whole business is structured.
This puts such questions at least...seven years away? Heck, Ten maybe?
If you focus just more on the impact on content creation of a move to third party, there are two points I have read before that I think are highly relevant. 1) One of Nintendo's greatest competitive advantages is that they are the platform holder. Thus they are first to the development dinner table and are free from the royalty hit to their revenues. 2) The marriage to hardware is a big part of what drives their software development innovation (and vice-versa) and to lose that would mean a very different Nintendo, in terms of creating experiences.
Been said plenty before, but look at once-mighty Sega.
I do think that their hardware is what drives their games, but that's why if they ever did go third party, they would very likely still develop peripherals for their games.
"Been said plenty before, but look at once-mighty Sega."
They're now making amazing games as a third party developer: Bayonetta, Vanquish, Alpha Protocol, Sonic and All-Star Racing, Yakuza 3-5,Valkyria Chronicles, Rez HD, and let's not forget one of the best shooters this generation - Binary Domain.
I've got a massive leak about the Wii U that I'm working on ensuring that I can go ahead and use it and not hurt a relationship. It isn't good for the console at all. :(
When I talk about Apple acquiring Nintendo, it's more from a hypothetical point of view. But it's fun to think about. ;-)
It's also not as implausible as it might sound. For all Apple's rhetoric, it is now in the position where it needs to find new growth in revenue - the rumour that it's developing a wrist watch, for instance, is a consequence of shareholder pressure for the company to diversify its product portfolio.
Nintendo would make for a substantial and instant revenue boost, and if Nintendo were to benefit from Apple's legendary production and distribution line, it's difficult to imagine anything but mega profits from that... new division of Apple.
As for whether Apple needs Nintendo... possibly not. It would be good for Apple to take control over some of the hardware peripherals made for Apple devices. A Nintendo controller for the Apple iPad, officially endorsed by Apple, would do wonders for encouraging more high-end developers to generate gaming content for Apple devices.
I'm not saying any of that will happen - this isn't a prediction (unless it comes true :P) but as acquisitions go, this one strikes me as a harmonious one.
Regarding Samsung - Samsung's problem is that it produces hardware almost exclusively. The real money is in the content. If Samsung were to acquire Nintendo it would be more for the development teams than the hardware division. Frankly, if Samsung wanted to build a games console, that's well within its abilities right now.
Excellent point. :)
Sega survives and still releases some quality games. (back off, Aliens!)
I'll rephrase. How has Sega performed as a business? I feel like their transition to third party developer began in rocky fashion (culminating in their rescue by Sammy) and has remained an "exciting up-down ride" since then. Speaking only of their consumer games division, their losses over the past five years have unfortunately outweighed their sales despite some solid games in that span, including plentay of Sonic titles.
About the sales numbers themselves, there has been a steep drop-off since their transition. This is what I meant originally. They are selling less games and, it can be argued, making less good games. I am getting nitty-picky now, but even awesome titles like Bayonetta, Vanquish, Rez and even the promising new Sonic Racing were not in-house developed. What happened to their hit-makers? (Heck, what happened to Hitmaker?)
Since going third party Sega has been a story of a company struggling to find its way, struggling to adapt and compete that is, and shedding sales and talent along the way. Their brand cache and stable of popular IPs were not able to stave off stagnation and contraction. Now that seems to be endemic of many big game publishers these days, and honestly I am not trying to rag on Sega in particular, but my point is I would hate to see a company like Nintendo follow a similar downward spiral.
O Yeah, as a borderline fan boy of both these large corporate entities, I really do understand the fun in imagining this scenario.
If you put a light gun to my head, I would even say Nintendo doesn't absolutely need to be in the hardware market in the strictest sense of what their company produces, which is fun experiences. If you asked me what Nintendo meant to me it wouldn't be "they make hardware boxes I enjoy buying"!
"For all Apple's rhetoric, it is now in the position where it needs to find new growth in revenue - the rumour that it's developing a wrist watch, for instance, is a consequence of shareholder pressure for the company to diversify its product portfolio."
This is a particularly interesting statement, and one I've seen often. I have also seen statements along the lines of "Apple (under Jobs) doesn't care what shareholders want, they just look at where they can make impactful products that they can sell for healthy margins". Which side is true, who knows? Surely Cook at top has changed the dynamic as well. Wrist watches and wearable computing in general is a promising category IMO, especially if the product can be made to look good too (Google Glasses, just from a fashion standpoint, were kinda ergh). Of course, there are also TVs.
At any rate I actually hope they aren't listening to shareholders too much because who has shiftier priorities than shareholders? :p
Yeah, it's going to be interesting to watch Apple for the next couple of years. The direct impact Jobs had on the company (in terms of product releases and development) is now essentially done. The directions the company takes are now all Cook's.
The iPad Mini was probably Cook's first idea of his own, since Jobs hated the idea of that form factor. It was a proven success. The wrist watch would be a second.
I do think it's inevitable that Apple will make some kind of hardware play into gaming. It remains to be seen what that looks like, and whether Apple develops the technology itself, or buys it though acquisition. Apple and Nintendo are actually a great fit if you boiled it down. I'd love to see a combined company ruin the rest of the games market for everyone else. ;-)
Sorry it's taken me so long to get back to your comment - it's been a busy week and weekend.
I have to agree with you - even if Sega has seen some great release as a third party, it's still struggled. It has been a tough go for Sega and I think it's mostly because the pure arcade gameplay that underlies the majority of its games is very niche these days.
I don't think it would be easy for Nintendo either, but I don't think it would would "struggle" like Sega though - Nintendo's IP are just too desired on a worldwide basis.
I'd like to see Nintendo stay a first party hardware and software developer. It's a company that continues to try to things and one that innovates the industry time and again. A worry that I have for Nintendo is that there might actually be some hardware issues with the Wii U. Yves Guillemont made a comment recently that Nintendo needs to make the necessary "changes to Wii U." Then right after this happening we starting hearing of numerous cancelled projects for the console. These developers aren't complaining of the console's install base either, so there's got to be something more to it.
I think in the case of Ubi's comments, they were voicing concerns about the platform adoption figures to date as opposed to hardware issues (hearing very good things about Need for Speed U, for instance). But O Man, that latest January NPD was shockingly bad.
I read the GDC rumours about cancellations as well...I can't blame a publisher for being skittish about investing there right now. It is a bit of a chicken and egg conundrum though, the system still needs a killer app game and a clear marketing push. If Nintendo is not careful, its competitors will set the Wii U's marketing message for them, and it won't be positive :P
Those numbers were terribly bad indeed. It was sad to see a Nintendo console struggling so badly. I hope things will turn around, but I'm afraid that the current Wii U line-up will do very little to change things against what Sony has just unveiled and what Microsoft has awaiting us just down the road.
I've written many times in published articles about Nintendo's over-reliance on its core brands over the past few years. Not only is it now still doing this, but it's doing it with titles that are so very similar to those we've just gotten over the past year or two. I think Nintendo needs to seriously re-evaluate its first party line-up direction for the Wii U.
With all of the unique control features on the Wii U - how come it isn't "reinventing the wheel," so to speak with its core franchises, like it did with the Wii?
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