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Nintendo's next generation strategy - why the "Super generation" begins now

Chittagong

Gold Member
I have written previously some prediction pieces about Nintendo's strategy (prior to Wii and for next gen Wii), as well as Sony's (before PS3). Some of the predictions have been better than others, obviously.

As we are now entering Nintendo's next upgrade cycle (first handheld, followed by home console), I thought it'd be interesting to write a follow-up piece, because until today nobody had almost any idea on Nintendo's strategy for the upcoming generations - they have not publicly spoken about their strategy this time, unlike with the Wii and DS, probably in fear of competition. This should be interesting to the three people who enjoy reading these types of things.

I believe that many people will interpret the "3D screen innovation" as similar revolutionary new feature as motion controls. My interpretation is different. The games unveiled don't look designed with 3D in mind and it will only provide initial "wow" and a sales point, but is hard to market. Looking at the game lineup, it looks obvious that Nintendo was planning a "Super generation" all along, then saw a prototype parallax barrier display and decided to throw it in for a brilliant marketing story. This might have happened in the timeframe of a year, while games have been underway for longer. All of the marketing is very hardcore oriented, compared to the Wii launch, for example.

So, to take a look at how the world looks after today's unveiling we better start on looking where Nintendo is coming from.


NINTENDO'S PREVIOUS GENERATION STRATEGY
- Basic assumption was that gaming had gotten too complex and technology too expensive
- Core gamer market was becoming saturated
- Nintendo wanted to move into a "blue ocean", an uncontested space
- Nintendo wanted to create consoles that "mom's could enjoy"
- This lead to the creation of the DS touch screen interface, Wii controller, GameCube chipset reuse (size, power consumption, price) and many other things
- Moving differently compared competition proved a breakthrough strategy


SELECT QUOTES

Satoru Iwata said:
Discussing what kind of hardware can do more than the Ds was the starting point

Satoru Iwata said:
“[It will have] highly detailed graphics, and it will be necessary to have a sensor with the ability to read the movements of people playing.”

Shigeru Miyamoto said:
It was similar than to when we made the GBA originally. Everyone was surprised when they saw Yoshi appear on the GBA screen. When Mario appeared for the first time on the 3DS screen it was the same type of surprise. This has a lot to do with the fact that hardware manufacturers technology is advanced


STRATEGIC INSIGHTS FOR THE NEXT GENERATION

Blue ocean is becoming red ocean
- As always happens, competition moved into the previously contested "casual space"
- With massive investment and copycat marketing, making noise about casual is becoming futile
- Competitive offerings are competent, but late in the contest
- Nintendo still practically owns the casual market and this is unlikely to change

Red ocean of core gamers is becoming the new blue ocean
- Ironically, as everybody moves to cater the casual market, core gamers are seeing less exiting announcements

Core games are the defendable niche against Apple
- Apple can create easily an ecosystem for casual games
- This means touch + motion controls are becoming even more contested
- On portables, having proper game controls becomes a differentiator Apple can't match

Prolonged cycles of Sony and MS create opportunity for offcycle leapfrog
- As Microsoft and Sony launch Kinect and Move and Go, their next generation is even further away, leaving core gamers without new, exciting technology
- Nintendo can exceed Xbox 360/PS3 and PSP graphics with a mass market pricepoint
- This means that effectively Nintendo can offer an affordable console with the most cutting edge technology for the next 2-3 years
- While technically such technology is hardly cutting edge, it's better than anything in the market

Disruptive UI/control innovations come only once in 10 years
- Developing a truly paradigm shifting UI happens only once in 10 years due to the time it takes to experiment, concept, iterate, test and develop games
- See: soft key UI, touch UI in phones
- Market needs time to diffuse the innovations before new ones

Hibernating franchises are Nintendo's cash in the bank, in addition to cash
- Over the Wii and DS generation, Nintendo has released major franchise games extremely sparingly compared to N64 and GC generation
- Nintendo has been practically sitting on tons of franchises - Star Fox, F-Zero, Pikmin, Mario Party
- These franchises give Nintendo the opportunity to capture the core gamer market again


THE SUPER GENERATION

A "super generation" is essentially a "refinement generation", where the basic experience stays nearly identical but graphics and game catalog expands significantly. E.g. NES -> Super NES, PS -> PS2, N64 -> GameCube


MY INTERPRETATION OF NINTENDO'S STRATEGY FOR 3DS AND WII2

1. Focus on capturing underserved "core gamer" demographic

2. Release next console and handheld offcycle, earlier than competition, in order to ride mature technology that is still most impressive on market (e.g 3D display is now mature, tested on GC era, processor is mature but powerful)

3. Let current control innovations diffuse to the market, use DS/Wii controls iterated and perfected

4. Focus on visual "wow" and "online wow" lost in the current generation to surpass PlayStation and Xbox brands for the next 2-3 years

5. Bank on reviving loved franchises that will resonate with core gamers

6. Core gamer pricepoints can be slightly higher than casual pricepoints, but not Sony high

GENERATION CYCLES

Home Console

NES - Super NES - N64 - GameCube - Wii - Wii2 - Wii3
1985 - 1991 - 1996 - 2001 - 2006 - 2012 - 2018
Revolution - Evolution - Revolution - Evolution - Revolution
Control Pad - Graphics - 3D + Analog - Graphics - Motion control - Graphics - ???

Portable

GAME BOY - GBC - GBA - DS - 3DS - 4DS
1989 - 1998 - 2001 - 2004 - 2010 - 2016
Revolution - Evolution - Evolution - Revolution - Evolution - Revolution
Swappable games - Colour - Graphics - Touch/dual screen - graphics + 3D - ???

ROADMAP SPECULATION

Wii2

- Evolution console (Super generation)
- Tons of core gamer franchises in HD
- As detailed earlier
- 2012

Wii3
- Revolutionary console (Revolution generation)
- ???
- 2018

3DS]
- Evolutionary handheld (Super generation)
- Tons of core gamer franchises in 3D
- 2010/2011

4DS
- Revolutionary handheld (Revolution generation)
- ???
- 2016


EDIT 24 June 2010 - Iwata's latest comments about 3DS basically confirm this core gamer focus theory

http://www.gamespot.com/news/6266844.html said:
In the Nikkei interview, Iwata went on to suggest that the current DS and its software only caters to those who do not play games, something that he hoped to rectify with the 3DS in terms of advances in graphics and gameplay. Recognizing this shift in focus from first-party to third-party development, Iwata told Nikkei that Nintendo went to great lengths to incorporate software developers' requests when making the 3DS, and called on these developers to make games for the new system.

"These partnerships are good for both Nintendo and the software developers," Iwata said.
 

nyprimus2

Member
Star Fox, F-Zero, Pikmin, and Mario Party aren't going to single handedly capture the core gamer market.

Star Fox, F-Zero, Pikmin, Mario Party + Zelda, Mario, etc. + shooting games and sports games all in HD will capture the core gamer market.
 

jufonuk

not tag worthy
Jason's Ultimatum said:
What happens if blue and red mix together?

purple ocean for the win, we get casual core games? hardcore party games??

Zombiezzzzzzzzzzzzzzzz
 

fernoca

Member
Interesting read, though you missed (or maybe I did) the definition of "super generation" you mentioned it twice, but never explained it..
 
Jason's Ultimatum said:
What happens if blue and red mix together?

charizard-impossible.gif
 

Chittagong

Gold Member
fernoca said:
Interesting read, though you missed (or maybe I did) the definition of "super generation" you mentioned it twice, but never explained it..

good point, will add it in. basically just means a "refinement generation", where the basic experience stays similar but graphics and game catalog expands significantly. E.g. PS -> PS2
 

Kad5

Member
I enjoyed reading this.

I think there is a good chance that what you are saying is true. I had a similar thought and drew the same conclusions as well.
 

Tiktaalik

Member
We do seem to be in a middle area. Technological advancements that could be used in a new system, such as persistent online through 3G or GPS are still too expensive to fit with Nintendo's business model.

All that's left is for Nintendo to do is to refine their current product and wait. Bringing out lesser used franchises is definitely a good way to keep things fresh. It's important to note that it was Icarus which was shown at the press conference, not the much larger, established franchises of Mario Kart or Animal Crossing, even though those two are receiving new titles.
 

2Dcube

Member
I remember Nintendo saying several times they want to use these casual games to draw people into gaming, and eventually also get them to play the more "hardcore" titles. Just like Mario Kart Wii and New Super Mario Bros Wii are "bridging titles" as Reggie said in the press conf.

So you may say they showed mainly "hardcore titles", but in fact they're also partly aimed at the newcomers / casuals whatever you want to call them.

So in conclusion, I disagree that the core gamer audience is the new blue ocean. The core gamer audience is simply ready to expand.
 

seady

Member
Interesting thoughts, but didn't really put the competition into consideration. They can be quite unpredictable too (though Microsoft and Sony have been walking into Nintendo's trap.)
 

Ether_Snake

安安安安安安安安安安安安安安安
- Nintendo has been practically sitting on tons of franchises - Star Fox, F-Zero, Pikmin, Mario Party
- These franchises give Nintendo the opportunity to capture the core gamer market again

With F-Zero, Star Fox, and Pikmin? Seriously? If anything what Nintendo needs is more casual brands to match their casual marketshare. Things like Mickey Mouse is a good start, they need to keep going in that direction (Harry Potter, etc., should have been a given for the Wii). They need to do more with Disney (and hence Pixar, indirectly), Lucas Arts, etc., among others.

Nintendo will continue in the exact same line they did with the Wii, they really have no viable alternative, unless they did something magical that brought all third parties to develop games for their new console, which is extremely unlikely.The casual market will remain their big focus. Social networking is another thing that needs to be mentioned. The hard core market is becoming niche for a good reason. Compare it to how many people out there are playing games on Facebook yet never owned a DS and it becomes clear Nintendo has a lot of people left to sell their consoles to, so there's a much bigger market still for them to aim for. Hard core gamers are DEFINITELY not part of that.

seady said:
Interesting thoughts, but didn't really put the competition into consideration. They can be quite unpredictable too (thoughs, but didn't really put the competition into consideration. They can be quite unpredictable too (though Microsoft and Sony have been walking into Nintendo's trap.)

:lol :lol :lol People actually believe Nintendo tried to trap MS and Sony? Are you that much afraid of Kinect and Move that you have to tell yourself Nintendo is luring MS and Sony into a trap?

Nintendo will probably face extremely stiff competition from both MS and Sony (well really, more from MS than Sony) in the future, and definitly also from Apple (and in that case to a much more serious extent than ever).

Remember, nothing guarantees that Nintendo will do well in the future just because they did now, especially considering that the video game market is now MUCH more coveted by companies that used to ignore it. The conditions that allowed Nintendo to do what they did with the Wii and DS this generation won't necessarily be there to favor them next time. It's about to become a completely different industry really, with online, 3D, mobile phones, etc., all getting closer to one another. MS has a good headstart with anything online or PC related, Sony has a slight headstart with anything 3D-TV related (ok, a very small one), and Apple has a massive headstart with mobile phones. They are all better positioned than they were at the beginning of this generation to do better in the next one, except Sony which is probably never going to fully recover from the mistakes it did this gen.
 

a.wd

Member
So essentially nintendo is a dealer, get them hooked on some nice casual weed(wii) , give them a taste of something stronger (Zelda, Mario, Resi 4?) then break out the hard stuff and have them devoted to you for life (3DS wii2?)

Rat Bastards
 

Pimpbaa

Member
So nintendo creates a casual market with the wii and causes it's competitors to follow that route and while the competitors are focused on the casual market, they are gonna go back and steal the hardcore gamers? Sneaky bastards!
 

Dragmire

Member
"Core" gamers, in my opinion, are mainly driven by technology. Specifically graphics-rendering technology. They want traditional games and demand high-tech graphics (not necessarily good graphics, but high-tech) and they want increasing complexity, variations on old gameplay, or fine-tuning. This obsession has deluded hardware makers and developers, who've lost touch with the concept of providing new kinds of games for more people to play.

Nintendo has never been overly focused on graphics-driven tech and I don't think they ever will be, so those gamers will probably forever elude them. Nintendo has been driven by gameplay of all styles and even complexities, but the graphics never go too far beyond what they need to be. It makes sense. The N64 was their most advanced graphic hardware, but it also served to allow expansive 3D gameplay, which was something new. I don't think they'll go that route again, because it won't open any new avenues for them.
 

dsister44

Member
Ether_Snake said:
With F-Zero, Star Fox, and Pikmin? Seriously? If anything what Nintendo needs is more casual brands to match their casual marketshare. Things like Mickey Mouse is a good start, they need to keep going in that direction (Harry Potter, etc., should have been a given for the Wii). They need to do more with Disney (and hence Pixar, indirectly), Lucas Arts, etc., among others.

Nintendo will continue in the exact same line they did with the Wii, they really have no viable alternative, unless they did something magical that brought all third parties to develop games for their new console, which is extremely unlikely.The casual market will remain their big focus. Social networking is another thing that needs to be mentioned. The hard core market is becoming niche for a good reason. Compare it to how many people out there are playing games on Facebook yet never owned a DS and it becomes clear Nintendo has a lot of people left to sell their consoles to, so there's a much bigger market still for them to aim for. Hard core gamers are DEFINITELY not part of that.



:lol :lol :lol People actually believe Nintendo tried to trap MS and Sony? Are you that much afraid of Kinect and Move that you have to tell yourself Nintendo is luring MS and Sony into a trap?

Nintendo will probably face extremely stiff competition from both MS and Sony (well really, more from MS than Sony) in the future, and definitly also from Apple (and in that case to a much more serious extent than ever).

Remember, nothing guarantees that Nintendo will do well in the future just because they did now, especially considering that the video game market is now MUCH more coveted by companies that used to ignore it. The conditions that allowed Nintendo to do what they did with the Wii and DS this generation won't necessarily be there to favor them next time. It's about to become a completely different industry really, with online, 3D, mobile phones, etc., all getting closer to one another. MS has a good headstart with anything online or PC related, Sony has a slight headstart with anything 3D-TV related (ok, a very small one), and Apple has a massive headstart with mobile phones. They are all better positioned than they were at the beginning of this generation to do better in the next one, except Sony which is probably never going to fully recover from the mistakes it did this gen.


That is what they will do. Having seen the success of DS and Wii, Third parties know which horse to bet on (at least they think they do). 3DS third party support is frankly outstanding. If Nintendo does what they did with 3DS with wii's successor, it's going to get far more third party support than wii did
 
Nice writeup. I think you're right for the most part, Im not sure about the whole "Core market becomes new blue ocean" thing, only because I doubt Sony/MS (or Nintendo) will neglect the core market that much for that to happen. The market is expanding, not shifting.

Regardless, its become very evident that the videogame industry does experience a "paradigm shift" every 10 years in terms of control input, and I agree that the following generation is then a refinement of that control input with expansions in terms of graphics and game design. It is control input and game design that drive the industry, not graphics. In the 90s, gaming saw a revolution when the design entered 3D spaces, which was dependent on more powerful technology/graphics. However, the latest revolution, motion controls, did not require this. So Nintendo was able to make a new input standard without a big graphical update.

And thats how they reclaimed the market. Really, Nintendo has touted the importance of innovation for years, but it was the touch screen in the DS and the motion controls on the Wii that caused them to regain market share. If they hadn't been bold and innovative and gone forward with these new control mediums, then they wouldn't be dominating the handheld and console sectors right now. But they are. Nintendo didn't just develop the latest paradigm shift, they standardized them with how much they sold. There is now absolutely zero doubt that Nintendo's Revolution was successful, with Sony and Microsoft now putting so much focus on motion control and "family games". And with those two playing catch up with what are basically very similar products, Nintendo should control the market for the forseeable future (the next 3 years at least).

I'm willing to bet Nintendo will launch its next console around 2012 and before the others, like you said. MS and Sony are putting so much effort and money into Natal and Move that if anything, this generation for them is at its halfway point, not nearing completion. If Wii2 gains a lot of steam right off the bat, Nintendo could dominate the market for much, much longer. The only disadvantage they have is that since Sony/MS are both playing the same game, there's two consoles at that track and only one on Nintendo's alternate track. Along with the reputation for third party sales on Nintendo platforms, I feel like third parties may still gravitate towards the other consoles. That may change though, since 3DS already has amazing third party support, and Wii2 could follow. And when developers start realizing that control input is the driving force, not graphics, the whole industry model for western development might shift.

Sony, in my opinion, has the ability to become the definitive "number two" of this generation. Move may be a Wiiremote knockoff, but its a pretty good one at that. Its as good, if not better than Wii Motion plus, and I think gamers will embrace it more than connect, especially the HD shooters using the device. It also seems to have more game design potential than a button-less camera. Not only that, but Sony has a much bigger first party catalog to draw from than Microsoft, in 2011 and beyond they seem to have quite a catalog coming up. Not to mention Blu-Ray, which is getting more popular as HD consoles become cheaper.

Microsoft on the other hand, has had 2 big things in their favor this gen. The smartest thing they did was to launch first, in 2005. The second thing, which was lucky, was that it took Sony forever to get the PS3 off the ground. They were a bit too bold with their pricepoint, and thus had a very slow start. With MS having a bigger installbase early on, they were seen as the go-to console for third party games, and still are in many ways. Call of Duty has seen huge success at launch (when it outsold all of MS' first party titles), and ever since. Modern Warfare was huge. MW2 was even bigger. Now the Call of Duty franchise is bigger than Halo and Gears, MS' big guns. And therein lies the problem- on the first party front, the only thing really driving sales is Gears and Halo- the guns. Fable, Forza, and Crackdown are playing supporting roles, but really they have two big franchises, and third party stuff. And with the Gears trilogy wrapping up and Bungie moving on, what will MS do after mid-2011? No wonder they made a deal w/Activision pertaining to the CoD franchise. Microsoft has lost many of its first party partners (Bungie, Bioware, Bizzarre). Epic is still a partner for now, and theyve got Rare and Lionhead but thats not much. Developers like Mistwalker and Team Ninja have moved on to work on other consoles. I guess they could make new partners (like the Crytek Warrior game) but so much of their future success seems to rest on Kinect. And im not convinced it will be that successful.

Honestly, the biggest thing Sony or MS could really do to take back market share from Nintendo would be to come up with and push the next paradigm control shift, the next Revolution. MS put all their money on online, which is changing the market and gaming, but not expanding it like motion controls are. Sony pushed HOME (social networking) but that hasnt had the impact they hoped. Little Big Planet's user content and Forza 4's driving controls seem like the most promising things they have on the horizon. But really, I think they'll have to wait until next or nextnext gen. Good software, price drops, and good marketing will help Sony/MS, but we're living in Nintendo's world for the forseeable future.
 
Very interesting write up, I think it was definitely evident in today's Nintendo conference. I thought the really key moment was when we saw all the AAA third-party support for 3DS launch, high-end core games probably coming within the first year. For me personally, I'm glad to see Nintendo at least give more attention to the core at E3 while Microsoft goes barking desperately up the casual tree.

I wouldn't be surprised if at E3 2011 they do the same thing with a Wii successor, announce a successor for 2012 with a shitload of third-party core support.
 

Boney

Banned
Really great read. The only thing I'm not quite sure about is the offcycle launch since it could work really well like it did for the 360 or go south like the Dreamcast.
 

entremet

Member
With everyone being so giddy about the 3DS, compared to the original DS reveal, Nintendo just guaranteed continual dominance in the handheld space.
 

Ether_Snake

安安安安安安安安安安安安安安安
Fact is what the OP describes is basically the 3DS scenario.
 
What you are saying kinda makes sense, but it cames off as if its being written by a nintendo fan fantasizing about his favorite company.
 

Hcoregamer00

The 'H' stands for hentai.
a.wd said:
So essentially nintendo is a dealer, get them hooked on some nice casual weed(wii) , give them a taste of something stronger (Zelda, Mario, Resi 4?) then break out the hard stuff and have them devoted to you for life (3DS wii2?)

Rat Bastards

:lol :lol :lol

If a super generation is defined as the transition from one of the greatest gaming consoles ever (Nintendo DS), to the new king of videogames (Nintendo 3DS), I say BRING IT ON!!!

:D
 
ShadowPampers said:
What you are saying kinda makes sense, but it cames off as if its being written by a nintendo fan fantasizing about his favorite company.
Nah, let's not confuse him with the Gray Ghost or anything...
 

USC-fan

Banned
The thing you are missing is the core gamer grew up and dont care about nintendo franchises games.

I mean beside the nintendo fanboy....
 

Instro

Member
Good read man, it makes sense. I dont think its necessarily about stealing the core market from others but also trying to get casuals to delve into more core titles. They talked about the whole "bridge" title, it seems like a direct attempt to cultivate a bigger core market with the large amount of casual players they have, while also grabbing core crowd from elsewhere
 

NolbertoS

Member
Interesting OP and good read....I still think Apple will join the fray, once one of the Big Three Drops out of the race...how will your marketing concepts defer for Nintendo than??
 
Ether_Snake said:
People actually believe Nintendo tried to trap MS and Sony?

Well they did, just not the one the OP describes. At the beginning of this generation, Sony and MS were ready to use their warchests to launch a hardware war to end all hardware wars. Nintendo could not afford to burn that kind of money forever. So instead of competing with MS/Sony on graphics and dudebro games, they found greener pastures in the expanded audience. This in turn, predictably, caused Sony and MS to follow. Now Sony and MS are competing with Nintendo in a market that Nintendo pioneered (more or less). How is that not a trap?
 

Xavien

Member
Personally i think Nintendo is attempting to upstream casual gamers into more "core" orientated gamers. Essentially create a whole generation of gamers who love and adore nintendo's franchises.

Giving the current "core" gamers a lot of nice games is but a side-effect of what they're trying to do. Remember they're trying to expand the gaming audience and they're trying to make this expansion as Nintendo-orientated as possible to lock out their competitors.
 

thefil

Member
While I like your reasoning, and it may be valid if we were only looking at the vendors, I don't think you can say that the hardcore market is wanting for titles. In fact, 2010 is the first year where the first quarter is as saturated with hardcore titles as the 4th quarter will be, and even the summer has seen releases of interest to the hardcore. All of this is as a result of third parties.

While Sony and Microsoft console owners may not necessarily get many hardcore titles from their first party studies in later 2010/mid 2011, the third parties are still supporting this kind of content on their platforms near-exclusively. Basically, there's no blue ocean to move in to.

Not that I think Nintendo will be in any trouble in the coming years, I just think as a strategy what you suggest is unlikely.
 
Man, that was a really good read, and having grown up through all these stages it really makes a lot of sense. I'll be interested to see if your predictions come true!

Pinko Marx said:
Its only a matter...
171381662csi-miami-horatio-caine-sunglasses.jpg

of time.

YEAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAH!
 
USC-fan said:
The thing you are missing is the core gamer grew up and dont care about nintendo franchises games.

I mean beside the nintendo fanboy....


Right, core gamers stopped caring about Mario and Zelda games :lol :lol
 

legend166

Member
Decent theory, but I think it misses an important point: Nintendo the developer has never been able to capture the 'dudebro crowd'. Franchises like F-Zero, Starfox, Pikmin, etc, are loved by the actual hardcore, enthusiast crowd, but the guy who buys CoD, GTA and Madden couldn't care less.

Nintendo will have to rely on heavily on third parties to capture that crowd.
 
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