So over the last few weeks, but realistically over the last decade (or two), people have been making a lot of comments in the vein of "why doesn't Nintendo do This and That so they can properly compete?" Genuine confusion begets scores of frustrated gamers who are privy to seemingly obvious solutions for Nintendo's problems, and yet Nintendo shows no signs of nor interest in implementing them. So what's the deal? Are they as out of touch as they seem? Just a stoic and immovable relic that refuses to adapt to the modern world? I hardly think they're running a flawless business by any definition, but I think there is a lot to discuss about how they actually choose to run their company, and why. So let's discuss it!
Originally Posted by Iwata
We just don't care too much about what other companies are doing or are trying to do. Our primary focus is to think about and actually carry out something which other company's hardware can never realize. We are trying to provide consumers gaming experiences that can only be available on Nintendo platforms.
Originally Posted by Iwata
I think the essence of the entertainment business is that you cannot expect big results if you do the same things as your competitors or follow what they have already done.
Virtually everything that Nintendo does, and everything people give them shit for, can be boiled down to these quotes. I recently said that Nintendo "doesn't try to compete" with Sony or Microsoft, but that's not really accurate. They are certainly aware of what they do, at at least a high level, but their method of competition is to ignore them. History has proven that the market cannot reasonably support three platforms. The Wii's "blue ocean" approach was based in this very concept, that matching their competitors blow for blow provided far less opportunity than changing the game and targeting a different type of consumer entirely. And so, the Wii thrived. Motion control and casual games are old-hat now, though, and the blue ocean is red. So the Wii U is an attempt to adapt yet again, approaching the market with ideas like asymmetric gameplay, off-screen play, and Miiverse.
Nintendo will traditionally identify a need, and then come up with an approach to meet that need from scratch. Sometimes this yields some very interesting ideas, like Miiverse and StreetPass. Sometimes it yields some shitty ones, like friend codes and system-tied game purchases. It's rare that they'll just take an industry-proven approach and slap it into their offerings as-is. We get a lot of "Nintendo-esque" experiences this way, where everything is just a little game-ey in cute and fun ways. But at the same time, many of them are lacking in feature-completeness or user expectation. That's the Nintendo way, though. Experiences that may not be what we expect them to be, but that exist to serve needs we didn't know we had.
This isn't just some golden ticket to success, as the Wii U has made perfectly clear. If you bank on a new idea that doesn't end up being embraced by the marketplace, or if you can't properly convey the value or differentiation of your product even if it's there, you're going to flounder. Nintendo has certainly made some missteps here, but their hand is still steady. The plan is to just get some friggin games out already, and attempt to better convey that value.
This is where a lot of arguments crop up, with suggestions that are patently un-Nintendo. "Sell a version without the GamePad." "Give up, relaunch with a more powerful machine." "Go multiplatform and/or make mobile games." Let's look at each of those in turn.
No GamePad: Nintendo's business philosophy is built on differentiation. Without the GamePad, the Wii U loses almost the only thing that defines it as a platform. Without it, it's a mid-generation console that can't quite match its competitors in any technical way. Surely there are other things that differentiate Nintendo's hardware by virtue of it being Nintendo's hardware, which I'll touch on in a bit, but the GamePad IS the Wii U. It's true that they haven't properly communicated to the masses what the value of the GamePad is, via either marketing or actual games, but that's their challenge now. I think it's a bit premature to paint this issue as insurmountable.
Relaunch with more power: I'll go ahead and skip over the "relaunch" part, since it should be clear to anyone how much the Nintendo brand and consumer trust would be damaged by abandoning a platform this early on. But as for the Wii U's power:
Originally Posted by Miyamoto
From my perspective, with regard to the more powerful hardware systems, to me what still remains incredibly important is the developers maintaining a focus on creating unique games because if all that everyone does is uses the enhanced power to create more and more games that look and feel the same, then all that it becomes is a competition about the power of the hardware rather than the uniqueness of the experience. That, to me, is where developers should be devoting their effort.
Now obviously there are gameplay uses for more power, and Miyamoto's quote here vastly simplifies the whole issue, but it speaks to Nintendo's focus, and part of why they make the decisions they do. System price is a huge factor here as well, and a big part of Nintendo's differentiation strategy is based in using money to focus on other aspects of the hardware. Higher specs would imply either a higher price, or the removal of the GamePad, which contributes significantly to the system cost already. And each of those are huge factors in how the Wii U differentiates.
It's true that the system's power may be negatively affecting the amount of third-party support it receives, but third-party support is another topic entirely, that I'll get to later.
Third party and/or mobile: Nintendo's greatest commodity, and perhaps their greatest differentiator, is their stable of franchises. All manner of hardware innovations can be copied, but you can't get Nintendo franchises anywhere else. If Nintendo wants to survive as a hardware business (let's just accept that this is a good idea for now, as the damage to their freedom, structure, and staff if they went software-only should be clear), they need their franchises there, and only there. This argument isn't even really for GAF, we're all pretty much on the same page here. Even hardware that people find virtually no value in (like many think of the Wii U) remains tempting due to being the only home for these franchises.
The franchise argument that is for GAF is that Nintendo pushes these franchises as hard as they do, going so far as to wrap them around new game structures in lieu of new IPs, is that they are their number one differentiator. Imagine a Nintendo without these franchises. Even if they continued to make amazing games, would they see even a fracture of their current success? Surely they can be overused or get stale, this is a problem that arises when the value of your business is so tied to these identifiable characters. I won't argue that there isn't room for new IP nor that the existing ones aren't maybe being overused, but we can probably see WHY they push them as hard as they do, yeah?
Nintendo doesn't approach third parties the same way as Sony or Microsoft. While their competitors basically build their machines for third parties, sometimes in great ways (more RAM more RAM more RAM), sometimes in awful ways (everything about Xbox One), Nintendo builds their machine almost entirely for themselves, and to facilitate the kind of games they want to make.
Originally Posted by Iwata
We will release a succession of Nintendo titles from the latter half of this year to enable the Wii U platform to regain sales momentum. This momentum will create business opportunities for software developers, so I think that the support from them will change in due course.
If software developers decide not to support a platform when, in fact, it has momentum and other software developers have experienced good results, people will definitely question their decision.
It's easy to say that Nintendo just "doesn't care" about third parties, but it's certainly not the case. Huge Japanese series like Monster Hunter and Dragon Quest are largely Nintendo-exclusive at this point, and Nintendo publishes a vast array of titles that are developed in collaboration with third parties, be it smaller ones (Genius Sonority, Good Feel, Grezzo) or larger ones (SEGA, Platinum Games). It's definitely a unique approach, though. If Nintendo has a specific project in mind they'll do a collaboration, but their more general stance is "sell it and they will come." If they can move enough hardware, the system should attract game-makers. It's why Monster Hunter and Dragon Quest are there, and it's why the poorly-selling Wii U is getting such poor support.
The Wii U's hardware strength is surely a huge factor in its lacking third-party presence, though. With Frostbite 3 simply not being compatible with the hardware, a vast array of EA games will just never show up. There are plenty of examples of high-spec engines not properly scaling to Nintendo's hardware. But to a point, Nintendo just.. isn't particularly interested in this issue. If they had made a higher-spec machine, they would have had to sacrifice either on price or differentiation (the GamePad), which puts them squarely in direct-competition mode, which is a battle they simply cannot win. This software differentiation, though, is why so many people say things like "I'm going PS4U this generation." The Wii U is almost a given, a companion console, since its offerings are so distinct.
Even if the hardware power was there, though, third-parties have a long list of reasons to not develop for Nintendo machines. Surely many of these are defeated when a platform has an enormous userbase (like the Wii did), but when the system is struggling, they become much more compelling. The Wii and the Wii U each have the same issue, "we have to make the game different there." It seems like a no-brainer to port the various current-gen games that are still releasing to the Wii U, but the fact is that proper support of the Wii U GamePad, and thus the ability to actually offer a version of a game that slots into Nintendo's primary differentiator and reason to sell, requires additional work. Not just programmers, but game designers, information designers, artists, etc. Some studios have the bandwidth to manage it, others don't. But another common third-party complaint, "third-party games don't sell on Nintendo hardware," is true enough that the effort isn't usually made to even look into it.
I guess what I'm suggesting here is just that we shouldn't really expect much to change here, unless the Wii U starts to sell so much that certain third-parties can't affort to ignore it. But Nintendo's probably okay with it, as their modus operandi simply doesn't involve actively courting third-party multiplatform games, due to their emphasis on differentiating with their exclusive software (be it first-party or third-party collaborations). It's probably time that we all come to terms with this, rather than feeling disappointed every time it happens.
Finances and focus
Originally Posted by Miyamoto
Because of the waves in the entertainment industry and the way the cycles move, personally I feel that aiming for a specific numerical goal is almost silly, and instead our focus should be on doing our best to create something that's new and unique.
So all of this talk of "Oh is Nintendo going to hit its numbers? Is Mr. Iwata responsible?" and all these discussions I think are just silly ones to have because Mr. Iwata is managing our company and I don't think there's anyone better to manage it than him.
Originally Posted by Iwata
We're competing with each other in terms of who's creating the most fun games. Unfortunately, however, as I saw the reports dispatched from E3 this year, they're pretty much occupied by talk about which machine is more friendly to used games, or which machine is $100 cheaper than the other. I’m sorry that we're missing the most important discussion – about video games.
Nintendo likes to act like a privately-held company, despite certainly not being one. Shareholders are probably pretty frustrated by it, but it's yet another part of their DNA. Their focus is on making games they think people will like, and they get frustrated when people place the focus on other things.
Originally Posted by Iwata
It is up to consumers to ultimately make judgments about our entertainment business. Therefore, before we launch new products, it is difficult to accurately predict which ones will do well or how long it will take until they spread explosively. We work hard to lower the impact that this unpredictability has on our business by launching various titles throughout the year. Nonetheless, it is still possible that we will experience times when, for example, the demand for a hardware system is significantly lower than the number of units manufactured, or we have to make a substantial investment in marketing. In such an unstable business environment, I think that we are only able to take risks because we have a strong cash position.
I think the essence of the entertainment business is that you cannot expect big results if you do the same things as your competitors or follow what they have already done. Therefore, I think that the significance of holding a strong cash position is to enable us to take risks and achieve good results.
Nintendo maintains their cash so they can operate the way that they do--trying new things, differentiating in a risky fashion. Certainly I'm not going to defend the Wii U's current performance, there were enough missteps there to be worth chastising. But when I see so many people call for Iwata's head, I have to wonder what they think a different CEO would be able to change. Iwata is to me probably the most rational and well-spoken industry figure I'm aware of, and the problems facing Nintendo I think are endemic to Nintendo as a company, due to the way they've functioned for ages, and not so much tied to one man. When we have a system launch with very little software and stay that way for months it's obviously a huge problem, but Nintendo has basically been working on GameCube-level hardware for over a dozen years, and training their teams to be able to function and quickly produce on significantly different and more powerful hardware, literally their first-ever foray into the HD era, is a transition that is going to be a mess no matter who's in charge. Probably more difficult now, after their long years of optimizing for and getting used to lower-powered hardware, than it would have been had they made the attempt back in 2006.
But to return to the point, they have a very tight public focus, and it's always on games. With their system launches, their demos, they always say the same thing: "you have to play it to understand." They've been saying this for years. They don't like armchair analysts, they don't like conclusions based only on media impression (and have actively taken control of their public image via Nintendo Direct and Iwata Asks), and want gamers to come to their own conclusions. They destroyed their official forums, and created Miiverse, a place that exists exclusively to talk about games that people are playing. Their executives have a public presence like no others in the industry, appearing in Luigi hats, posing around franchise paraphernalia, and acting like total goofballs in Nintendo Directs. Nintendo is the chocolate factory, and they're all Willy Wonka.
It's idyllic and silly to think people will only talk about Nintendo's games and never their financials, but the goal here is just to try and understand Nintendo, and why they do the things they do. I see so many posts and threads where people say "what is WRONG with Nintendo" and suggest this or that "obvious" thing that they should be doing, and express frustration and bafflement at their every move. I really don't think it's that mysterious, though. I'm absolutely not suggesting that Nintendo shouldn't be critiqued, or held responsible for many of their actually-boneheaded moves, but I think they need to be approached from the correct context. They are not trying to be Sony or Microsoft, and every thread that talks about how another third party game isn't getting a Wii U port shouldn't be met with the kind of shock and "way to fucking go Nintendo" sentiment that it gets. I don't think ANYONE should be shocked by these things. Their message has been remarkably consistent for years, via all of their PR mouthpieces, and while it's perfectly fine to not like it, it's disingenuous to be surprised by it after all this time. And that's all I'm trying to do here: paint a picture of Nintendo as they are, so if you're gonna be disappointed, it's about and for the right things. The "why" to go with Nintendo's "what" is never the mystery that it seems.