How Nintendo Games Make Nintendo Crash

Nintendo is having an existential crisis. With yesterday’s WiiU sales estimates slashed by half, forecasts cut by ￥80bn (USD 767 million) and a total yearly loss projected at ￥25bn (USD 240 million); it’s hard to see Nintendo’s living room console bouncing back from the depths it quickly reached after its lackluster launch a year ago.

Nintendo claimed they wanted to bring the “core” gamers back with the WiiU. Core gamers, the portion of the gaming population that spends the most on games and plays traditional – some might say violent – adventure and shooter games had been left in the cold with the Wii and the great push into casual gaming Nintendo had undertaken with this previous console. Core gamers along with the gaming press anticipated that the WiiU would answer their call for HD graphics, Blu-ray drives and generally be able to compete with the successors to Sony’s PlayStation 3 and Microsoft’s Xbox 360.

But Nintendo shied away from taking their console back into the hardware race they last took part in in 1996 with the N64. The company changed since then and it became so successful in handheld gaming with its DS, followed by the widely successful Wii console in 2006 that Shigeru Miyamoto, the legendary game designer behind Mario and Zelda, continued to focus on gameplay experiences as the driving force behind Nintendo’s edge.

The problem with taking gameplay experiences, that are mostly software driven, and elevating them into a company-wide policy to make new hardware is game design is hardly an exact science and consumers have repeatedly either adopted widely (in the case of the Wii) or rejected entirely (in the case of the Wii’s predecessor, the GameCube) hardware being force-fed to them.

In the days when gaming was a niche entertainment market fueled by core gamers; those who played games bought consoles in order to play their favorite exclusive franchises such as Mario and Zelda and this policy would definitely work. Software pushed hardware sales, and software exclusivity ruled the day as not playing one’s favorite game was simply not an option.

But twenty years later, with every single device in our hands able to play games, Nintendo has been blindsided by the rapidly changing gaming landscape. “Out-casualed” by mobile gaming played by everyone around the world and “out-cored” by the PlayStation 4 and the Xbox One, Nintendo finds itself once again in its own pool, one that follows innovation trends and empties out whenever the competition offers more or faster. And when Nintendo called out for third-party publishers to create more exclusive titles to support WiiU sales, the answer that followed from Ubisoft CEO Yves Guillemot pointed out the chicken and egg conundrum: Nintendo wants more games to sell WiiU consoles, and publishers wait for bigger sales before committing to making exclusive WiiU games.

It should come as no surprise then that calls to resign for Satoru Iwata, president of Nintendo, were heard yesterday. Just as it should come as no surprise that he quickly shot them down. What was more of a surprise however was Nintendo’s admittance to looking at smart devices for new business growth; a move long called for by business analysts such as Michael Pachter of Wedbush Securities but that Nintendo had always downplayed in the past.

It’s unlikely that Nintendo will suddenly change gears and join the hardware race once again with Sony and Microsoft. Consolidating on the strength of their handheld business is a much surer bet, particularly if the next version of their successful DS line-up uses all the features smartphone users are now used to. Online gaming was never Nintendo’s strong suit to say the least, so it will take some time for the company to react to the smartphone market.

Mario and Zelda games are not going to appear on your iPhone tomorrow either as Nintendo is, rightfully so, too keen on controlling the quality of their software to simply release their game on every smartphone under the sun. But Nintendo clearly needs to free their software from their hardware if they’re going to see continued growth and not fall victim to hardware cycles they create for themselves.

Photo: Photo Giddy/Flickr under Creative Commons