Why I don’t want Nintendo to become another Sega after its first annual loss
Engadget reports on Nintendo’s rather poor quarter:
The company posted profits of ¥40.9 billion (about $631.6 million) for the October – December period, representing a 61 percent quarterly drop. That’s especially disappointing, considering that this period has traditionally been strong for Nintendo, which had previously forecast an operating profit of ¥1 billion (around $12.9 million). Those forecasts have since changed, however, with the manufacturer now predicting a ¥45 billion ($580 million) operating loss for the full year, ending March 31st. Nintendo blames the poor showing to sagging 3DS sales, which have forced it to slash prices.
Despite my gaming now almost entirely being on iOS, and my belief that iOS has heavily impacted on Nintendo (through people gaming on smartphones and iPods, and through parents buying children iOS devices over Nintendo handhelds with expensive, easy-to-lose cartridges), I was fairly positive about the company a year ago:
It remains to be seen if the 3DS sales slump is a temporary glitch, and even if the console isn’t a massive hit, that certainly doesn’t mean Nintendo is in any way doomed. Like Apple, it’s managed to be profitable at almost every point during its history, even when one of its consoles only had a minority share of the market. But Nintendo could for the first time find itself ousted as the default company synonymous with handheld gaming—and that would be a pretty major shake-up for the entire industry.
I still think Nintendo is probably the company most people think of as synonymous with handheld gaming; the thing is, that’s clearly no longer enough for it to remain profitable. And since that was Nintendo’s trump card—an Apple-like profitability regardless of its market position, that is a major concern for the company.
When the 3DS appeared, I didn’t think it was enough. It felt like a relic, with a gimmick—an echo of a bygone age, where dedicated handheld gaming devices still mattered. It continued Nintendo’s line of thinking that had worked so well since the original Game Boy: technologically middling but accessible and portable hardware; reliance on high-quality first-party IP that’s drip-fed over many months to an eager audience; software sold on expensive cartridges; an honest focus on the purity of gaming; a level of accessibility that the likes of Sony can only dream of.
These ideals were once precisely what the industry needed, but now Nintendo has to face the harsh reality that it’s veering dangerously close to becoming another Sega. If it cannot halt the decline with the Wii U, whatever it brings out next in the handheld space (and I’ll be surprised if the DS brand isn’t retired, enabling the Game Boy to—potentially—triumphantly return) will have to be nothing short of amazing—a device that will wrench people away from smartphones and iPods, back to Nintendo. But if Nintendo continues to stubbornly follow the same path, will that be enough? It wasn’t for the 3DS. So will the company bite the bullet and go with the flow, with a system that works with cheaper downloads rather than expensive cartridges, and that at the very least recognises some manner of an app ecosystem (with stronger options regarding web browsing, social networking, reading, movies, music, and so on)?
I hope so. Despite what raging Nintendo fan-boys think whenever I criticise the company (my record to date: a drop of 50 Twitter followers from one short string of comments some months back), I do not want Nintendo to fail. Although over-reliant on refreshing certain aspects of its catalogue a little too often, it’s also been a company of innovation. The original DS was a brave move, as was the Wii. Both made gaming more accessible and open, wrenching it from the claw-like grips of so-called ‘hardcore’ gamers. For a long time, I considered Nintendo the Apple of gaming—a company that cared about the details and about the right things (fun, excitement, enjoyment). Nintendo’s problem these days is that Apple is now the Apple of gaming—and the Japanese veteran needs to fight back, perhaps borrowing some of the tricks used by the plucky American upstart.
It would be sad to see Nintendo become “another Sega” in terms of abandoning its own hardware and starting to sell games for other platforms, except… that’s exactly what I want.
I had been loyal to Nintendo for years. The great trio of Mario, Zelda and Metroid are still by far my favorite three franchises in video game history.
But Nintendo has lost its way in the new era of Apple. After growing up on Atari 2600 and NES, I got back into gaming in 2002, and have owned a GameCube, a Wii, 2 models of GBA and 3 models of DS, but I have no interest in buying a 3DS, and I haven’t even bothered to learn what Wii U is. I just don’t care.
But I still love the games. I just no longer love them enough to bother with Nintendo’s hardware in order to get them.
So, honestly, I DO want Nintendo to fail, but only to the extent that I will be able to play Mario, Zelda and Metroid games on my iPhone.
In some ways, this is similar to what is happening to Apple, with negative analysts seeing bad in every statement… Nintendo announces it’s now going to sell ONLY 14 million units of the 3DS in its first year, and that’s a disappointment that’s going to wipe millions off the company’s value? That means it’s already going to sell more than the DS in its first year.
True, as a gamer I feel that Nintendo have not quite got things right with the 3DS and I am reluctant to buy one until either
a) I’ve had a good chance to get my hands on one and see how I cope with the 3D effect
b) there is no sudden announcement of a revised model
But I still want one, and I still can’t wait to see what Nintendo has in store for gamers with the Wii U and 3DS. It continues to produce the best hardware designed to solely play games.
@room34: Thing is, Nintendo has in recent years shown enough innovation with the DS and Wii for me to want it to have another crack at one line each in handheld and TV consoles. What I’ve seen of the Wii U, though, makes me wonder if the company’s lost its way a bit too (half-arsed third-rate iPad-style controller looks naff compared to Kinect), and I’m sure we’ll know for sure when setting eyes and hands on the 3DS’s successor. My guess: within the next two years, Nintendo will either pull a rabbit out of the hat, or we’ll be seeing Super Mario Bros for a fiver on the App Store.
@Merman: There’s a big difference when comparing the statements with Apple’s. In Nintendo’s case, it’s released a console that’s had to have massive discounting *and* it’s made an annual loss. For a company that’s previously been massively profitable, this is a really big deal. If it’s a one-off blip, fair enough, but my belief is that Nintendo is stubbornly refusing to let go of aspects of its past and embrace the now.
I think this is also the case with Nintendo gamers in general. I remember the GBA and DS era, with Sony fans slamming Nintendo fans for the company’s supposedly ‘casual’ stance. Nintendo gamers wore that badge with pride, arguing that the platform had depth and accessibility, and that it was open to all. iOS appears to have grabbed the accessibility crown today (along with a massive chunk of the kiddie market), and so these days Nintendo fans are also likely to play the ‘hardcore’ card, which is hugely depressing.
As for the 3DS, I see literally nothing about it that would make me part with my cash, and that’s the first time this has been the case with a Nintendo handheld since, well, pretty much ever.
I’m curious your thoughts on the Nintendo Network recently ‘announced’ (http://kotaku.com/5879796/nintendo-network-announced-digital-distribution-of-games-envisioned).
I’m hesitant, because so far Nintendo doesn’t seem to ‘get’ the Internet, but groping in the dark is better than Friend Codes.
@Joe: I think it’ll have to be a case of wait and see. If the system’s as simple as Apple’s and also has an iCloud-style ability to download things whenever you like, fine; but I wonder if Nintendo has the infrastructure for such a venture. It certainly doesn’t have Apple’s cash pile for setting up gargantuan data centres.
[…] A great piece by Craig Grannell at Revert To Saved about the current state of Nintendo: For a long time, I considered Nintendo the Apple of gaming—a company that cared about the details and about the right things (fun, excitement, enjoyment). Nintendo’s problem these days is that Apple is now the Apple of gaming—and the Japanese veteran needs to fight back, perhaps borrowing some of the tricks used by the plucky American upstart. […]
I spoke to this issue a while back in an “open letter” of sorts to Nintendo (not that they will read it). http://iamsteve.tumblr.com/post/14014166253/dearnintendo
I would like to see them abandon their proprietary mobile hardware and embrace iOS. They will make more money with less overhead. They are the Disney of video games and they can use their intellectual property to sell tons of games, as long as they are good.
@S. Best: I don’t think Nintendo would necessarily make more money if it widened its OS target. Bar this past year, its hardware has always been profitable on a per-unit basis, meaning software sales only added to that. And the exclusive nature of the software drove the hardware sales; it was the opposite of a vicious circle. My thinking is Nintendo needs to match Apple where it matters (online, wider scope for devices), but also maintain true to its nature. Whether it can do this remains to be seen. Without doubt if the successor to the 3DS continues to ignore apps (at least reading, movies, social networking, web browsing) and downloads, in favour of plastic cartridges, it’ll be the company’s last handheld.
@ Craig –
I agree with you. I don’t think they should jump ship right away, but testing the waters certainly won’t hurt and can only add to their bottom line. I was very disappointed with the 3DS, but have high hopes for the Wii U. Nintendo should not release it until it is good and ready though. It all depends on the quality of that tablet. I’ll also be curious to see if I lose any of my Virtual Console games when (if) migrating from my Wii to the Wii U. That and Netflix are my sole reasons for having a Wii. While my kids love the Nintendo created games for the Wii, there really are no good third party titles that they like, aside from the Lego games which are available on every platform. They like World of Goo, but only play the Wii for Sports Resort and DK Country these days. My oldest wants an XBox but I am holding out to see what Microsoft offers next before I make any purchases.