Chittagong
Gold Member
The chatter about Nintendo's next generation console and handheld is starting to get louder as Wii has been 3 years in the market and HD penetration is increasing.
5 years ago, before the Wiimote was unveiled or anything about the console was really known, I wrote a piece on my thinking about Nintendo's approach for the upcoming generation. This is a similar piece, for the next generation.
Now, 5 years later, the game has changed. Let's take at the assumptions for the new round.
BASIC ASSUMPTIONS
- Nintendo is the undisputed market leader with Wii
- Sony and Microsoft will never catch up in this generation
- Sony and Microsoft are both introducing motion controllers, which will commit them to their current consoles for the next 2-3 years. This means their new consoles can be expected in 2012-2013
- Xbox 360 generation technology has come down in cost so that a $249 console can be profitable
- Nintendo wants to be profitable on hardware
Nintendo has been extraordinarily quiet about their next plans, seeing how the competition jumped on their motion controller idea. So this time we have less "Iwata hints" about their direction.
NINTENDO QUOTES
Nintendo's latest earnings Q/A (thanks swerve) gives some hints of the future, however:
This would be my take on what's going on:
SCENARIO ANALYSIS
My thinking is that Nintendo always plays these situations with scenarios. Picking the one most likely to give them sustained profit.
A. What would happen if Nintendo would launch before PS4/720?
+ Can offer graphics that consumers consider impressive at a low pricepoint
+ Driven by maturity of 5 year old Xbox 360 level architecture
+ Capturing current brand equity while its hot
=> Low Risk / Predictable Outcome.
B. What would happen if Nintendo would launch at the same time as PS4/720??
- Need to either 1) Match PS4/720 spec OR 2) come up with an innovation of Wiimote grade
- Wiimote is a once a decade innovation like iPhone (see iPhone UI -> iPad UI)
- Matching PS4/720 spec at launch is going to be prohibitively expensive to Nintendo
=> Very high risk / High cost / Unpredictable outcome
C. What would happen if Nintendo would launch after PS4/720??
- Same downsides as in scenario B, plus
- Must be even more innovative than in Scenario B as the "late comer"
- Massive brand erosion to Wii as PS4/720 will match Wii controller and improve on Wii graphics 100x
- Leads to disappointed users and drop in brand equity
=> High Risk / Moderate Cost / Unpredictable outcome
STRATEGY CORNERSTONES
Nintendo is facing an inconvenient "binary break"
Wii technology doesn't scale any further - it was a one-off "get out of jail card"
Wii put Nintendo a generation behind in technology, and somehow it needs to catch up
Catching up at the beginning of the generation is very expensive - mid generation it's cheap
Wii is leading on mindshare, controls and mass adoption
Nintendo does not need to introduce new controller schemes
Nintendo does not need to change the terms of the game, the game is favourable
Nintendo can afford to compete in the terms of the market
Wii is losing in 3rd party support
PS3 and Xbox 360 games can't be ported to Wii due to it's outdated architecture
Publishers find creating a specific Wii version too cumbersome and unprofitable
Market has largely rejected "watered down" versions of games on Wii (e.g. Dead Space)
Commonalities bring economies of scale to 3rd party development
Nintendo needs to support common development pipeline to get no-brainer ports
Xbox 360 and PS3 getting motion controllers opens up a chance for common cross platform motion titles[/B]
Especially PS3 Gem and Wiimote are similar in terms of interface
Classic Controller can support all PS3 and Xbox 360 games
Making a Wii comparable with the power of Xbox 360 is the best of all worlds
Wii continues its stronghold on the casual market
With all the big 3rd big party games on board, it becomes the "no brainer platform"
Starting from scratch, Nintendo can make the device much more cost efficient than Microsoft - just like GameCube was comparable to Xbox but considerably more cost efficient
This is the perfect time to attack
Microsoft and Sony are distracted with their motion controller initiatives, however futile they may be
Before the beginning of their next generation, Nintendo can make a huge dent to their current market on their technology
Once Sony and Microsoft come out with new consoles, they will be - again - too powerful and expensive to mass market, so Nintendo can afford to catch up later
Consumers adoption of HD is hitting 50%
PRODUCT OUTCOME
Here is how I would play my hand in this situation:
Introduce soon a console that is on breathing distance of Xbox 360, but much cheaper to do - think difference of GameCube and original Xbox
New console it backwards compatible with all Wii titles. New games not downwards compatible, just like GBA games don't work on GBC
User base transition handled like GBC > GBA or GBA > DS
Branded as the evolution of Wii - iPod style naming
Introduce at Wii launch price point and design, to replace Wii in the channel as fast as possible
This way current massive Wii sales are channeled directly to the new console, making it leader day one
Consumers will embrace this, significantly improved new value proposition
So, there you have it. How I think Nintendo can play it's hand and catch up with the technology curve.
OPEN QUESTIONS
The only questions I have is
- What architecture Nintendo could use to achieve backwards compatibility with Wii
- What Nintendo does in terms of optical media
- What this would mean to Metroid: Other M and new Zelda
- Why is it so extraordinarily quiet - we haven't heard a single thing - which we usually do
5 years ago, before the Wiimote was unveiled or anything about the console was really known, I wrote a piece on my thinking about Nintendo's approach for the upcoming generation. This is a similar piece, for the next generation.
Now, 5 years later, the game has changed. Let's take at the assumptions for the new round.
BASIC ASSUMPTIONS
- Nintendo is the undisputed market leader with Wii
- Sony and Microsoft will never catch up in this generation
- Sony and Microsoft are both introducing motion controllers, which will commit them to their current consoles for the next 2-3 years. This means their new consoles can be expected in 2012-2013
- Xbox 360 generation technology has come down in cost so that a $249 console can be profitable
- Nintendo wants to be profitable on hardware
Nintendo has been extraordinarily quiet about their next plans, seeing how the competition jumped on their motion controller idea. So this time we have less "Iwata hints" about their direction.
NINTENDO QUOTES
Nintendo's latest earnings Q/A (thanks swerve) gives some hints of the future, however:
Genyo Takeda (General Manager said:
Shigeru Miyamoto (General Manager said:
This would be my take on what's going on:
SCENARIO ANALYSIS
My thinking is that Nintendo always plays these situations with scenarios. Picking the one most likely to give them sustained profit.
A. What would happen if Nintendo would launch before PS4/720?
+ Can offer graphics that consumers consider impressive at a low pricepoint
+ Driven by maturity of 5 year old Xbox 360 level architecture
+ Capturing current brand equity while its hot
=> Low Risk / Predictable Outcome.
B. What would happen if Nintendo would launch at the same time as PS4/720??
- Need to either 1) Match PS4/720 spec OR 2) come up with an innovation of Wiimote grade
- Wiimote is a once a decade innovation like iPhone (see iPhone UI -> iPad UI)
- Matching PS4/720 spec at launch is going to be prohibitively expensive to Nintendo
=> Very high risk / High cost / Unpredictable outcome
C. What would happen if Nintendo would launch after PS4/720??
- Same downsides as in scenario B, plus
- Must be even more innovative than in Scenario B as the "late comer"
- Massive brand erosion to Wii as PS4/720 will match Wii controller and improve on Wii graphics 100x
- Leads to disappointed users and drop in brand equity
=> High Risk / Moderate Cost / Unpredictable outcome
STRATEGY CORNERSTONES
Nintendo is facing an inconvenient "binary break"
Wii technology doesn't scale any further - it was a one-off "get out of jail card"
Wii put Nintendo a generation behind in technology, and somehow it needs to catch up
Catching up at the beginning of the generation is very expensive - mid generation it's cheap
Wii is leading on mindshare, controls and mass adoption
Nintendo does not need to introduce new controller schemes
Nintendo does not need to change the terms of the game, the game is favourable
Nintendo can afford to compete in the terms of the market
Wii is losing in 3rd party support
PS3 and Xbox 360 games can't be ported to Wii due to it's outdated architecture
Publishers find creating a specific Wii version too cumbersome and unprofitable
Market has largely rejected "watered down" versions of games on Wii (e.g. Dead Space)
Commonalities bring economies of scale to 3rd party development
Nintendo needs to support common development pipeline to get no-brainer ports
Xbox 360 and PS3 getting motion controllers opens up a chance for common cross platform motion titles[/B]
Especially PS3 Gem and Wiimote are similar in terms of interface
Classic Controller can support all PS3 and Xbox 360 games
Making a Wii comparable with the power of Xbox 360 is the best of all worlds
Wii continues its stronghold on the casual market
With all the big 3rd big party games on board, it becomes the "no brainer platform"
Starting from scratch, Nintendo can make the device much more cost efficient than Microsoft - just like GameCube was comparable to Xbox but considerably more cost efficient
This is the perfect time to attack
Microsoft and Sony are distracted with their motion controller initiatives, however futile they may be
Before the beginning of their next generation, Nintendo can make a huge dent to their current market on their technology
Once Sony and Microsoft come out with new consoles, they will be - again - too powerful and expensive to mass market, so Nintendo can afford to catch up later
Consumers adoption of HD is hitting 50%
PRODUCT OUTCOME
Here is how I would play my hand in this situation:
Introduce soon a console that is on breathing distance of Xbox 360, but much cheaper to do - think difference of GameCube and original Xbox
New console it backwards compatible with all Wii titles. New games not downwards compatible, just like GBA games don't work on GBC
User base transition handled like GBC > GBA or GBA > DS
Branded as the evolution of Wii - iPod style naming
Introduce at Wii launch price point and design, to replace Wii in the channel as fast as possible
This way current massive Wii sales are channeled directly to the new console, making it leader day one
Consumers will embrace this, significantly improved new value proposition
So, there you have it. How I think Nintendo can play it's hand and catch up with the technology curve.
OPEN QUESTIONS
The only questions I have is
- What architecture Nintendo could use to achieve backwards compatibility with Wii
- What Nintendo does in terms of optical media
- What this would mean to Metroid: Other M and new Zelda
- Why is it so extraordinarily quiet - we haven't heard a single thing - which we usually do
