Sunday, July 21, 2013

Atlus might not be a good acquisition for Nintendo

With the announcement that Index Corporation would be looking to sell off its assets as it struggles through bankruptcy, the games industry has naturally looked towards the fate of Index's champion developer and publisher Atlus.

There have been a lot of theories thrown around, and one of the most popular ones is "Nintendo should acquire Atlus because games and things." It's a nice idea, but here's why it would be a very bad idea for Nintendo to go acquiring a company like Atlus;

Nintendo needs a mass market hit to move Wii Us. Atlus games are never mass market hits. They're resounding critical successes, and they're profitable because they're produced on tight budgets, but they are not enough to shift consoles, and they're not AAA-grade commercial sales successes.

Nintendo's greatest problem in the market right now is in getting Wii Us into households, and those investments that it does make need to be orientated towards making that happen. For that to happen Nintendo needs to better resource its current teams to deliver HD games at a faster rate - the company has freely admitted that it is struggling to make the transition to SD to HD and keep the output from its studios at the same level. For Nintendo to add another small development team to its stable is to spread its resourcing even thinner, and that won't resolve any of its current challenges.

Further to that, were Nintendo to acquire Atlus, then it would also be acquiring a great deal of redundancy into the organisation. A significant part of Atlus' business is its localisation and distribution arm in the US - a subsidiary that Nintendo may well not need - after all, Nintendo has a global distribution and localisation network of its own. Bringing redundancy into the company might be difficult to justify to the board in the current economic climate.

Atlus develops and publishes some great games, there's no denying that, and many of those recent games have appeared on Nintendo platforms exclusively. For some that's a sign that Nintendo and Atlus are growing closer. More likely it's simply that Atlus was aiming for the widest possible demographic with the 3DS games, and saw the Wii U as an opportunity to relatively cheaply produce next gen games (compared to the PS4 and Xbox One development costs), and the minimal support for the Wii U will help the shelf presence of the game on that platform. To suggest that that in itself is a sign that Nintendo will acquire Atlus is as ridiculous as suggesting that Nintendo is about to acquire Tecmo Koei because the two share management of the Fatal Frame franchise.

It might be that Nintendo acquires Atlus after all that, but as I sit here writing this I don't see any real evidence pointing to that being a wise business decision. Atlus would make a better acquisition for a publisher in Japan that perhaps lacks in a localisation business, or one that lacks for RPGs. It would seem more logical to me for one of the mid-tier developer/ publishers in Japan to be the one to pick up Atlus. 
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