This is part of a much larger article. For the previous entry in this article, please click here.

3.

“Nintendo is not a resource-rich company, with only a little more than 5,000 employees on a consolidated basis. We cannot achieve a strong presence by imitating others and simply competing in terms of size. We have often received advice on overcoming our weaknesses in comparison with other companies and have been questioned about why Nintendo doesn’t follow suit when something is already booming. From a medium- to long-term standpoint, however, we don’t believe that following trends will lead to a positive outcome for Nintendo as an entertainment company. Instead, we should continue to make our best efforts to seek a blue ocean with no rivals and create a new market with innovative offerings as a medium- to long-term goal” (Satoru Iwata – President of Nintendo).

Hiroshi Yamauchi once stated that “there are many people in the industry that know nothing about games. In particular, a large American company is trying to do engulf software houses with money, but I don’t believe that will go well. It looks like they’ll sell their game system next year, but we’ll see the answer to that the following year”. Well, that American company beat the Gamecube in terms of market penetration and recently buried the Wii U with its own XBox One console. That American company has also gone out of its way to foster an exceptionally talented in-house studio portfolio – whether bought outright or assembled through aggressive head-hunting (ie 343 Industries). This strategy has also been appropriated by Sony whose own award winning The Last of Us proved that their own development teams have the talent to go head to head with Nintendo’s finest, and that Nintendo can no longer solely rely on its reputation as offering the best games.

Nintendo should stop believing its own hype, and start realising that its suffering from a case of “Emperor’s New Clothes”.

Since entering the industry, both Microsoft and Sony have aggressively courted stalwart Nintendo third party developers (over many, many years) in order to ensure access to exclusive content for their respective machines – such as Treasure with its Radiant Silvergun and Ikaruga releases, or Square Enix with its Final Fantasy franchise. For them, their foray into the electronic entertainment sphere was always considered to be in for the long haul, and both companies have made strategic moves accordingly.

My advice therefore would be for Nintendo to drop its blinkered arrogance and to take a look at what their competition is doing. If the competition is “trying to do engulf software houses with money”, then Nintendo needs to act accordingly and work towards offering third party developers a more favourable Return Of Investment. This could be through offering comparatively favourable licensing agreements, as well as breaking with anti-competitive traditions and ensuring that third parties have access to the best development tools and libraries at their disposal so as to ensure that development (and porting duties) for the Wii U and 3DS is an effortless joy. After all, the more companies that release games for Nintendo’s machines means the more the games there are for Nintendo console owners – who have a far richer palette of games to choose from. Nintendo also earns more money through licensing fees and through having more games and consoles sold.

Promised 1

When the Wii U was first publicly unveiled, Nintendo took great steps to emphasise its commitment to the “hardcore gamer”, but like most of Nintendo’s promises in recent times, these have come to be seen as being rather hollow as time has gone on. And although exclusive titles such as Bayonetta 2 and Lego City Undercover were unveiled during the Nintendo Direct broadcast, since then hardly anything of note has been announced. This is incredibly worrying, as the lack of announcements regarding compelling software, and the ensuing silence since then, has done little to inspire confidence in prospective owners and developers who have consequently come to see the Wii U as being a fool’s errand and hardly being worthy of a long-term investment. In short, if the market has been fooled once, then this would only serve to damage Nintendo’s brand image, as the market would certainly not be as willing to trust Nintendo again with its next console.

As development costs also escalate, the risks associated with any given project are going to correspondingly increase. As a consequence therefore, and as the gaming industry matures, we will start to see a greater number of studio acquisitions and incorporations as time goes by. Nintendo needs to realise this, and start going out of its way to acquire more third parties (like what Sony did with Naughty Dog etc).

You would therefore think that with all that money at their disposal, Nintendo would find it relatively easy to bolster their development resources, so as to ensure that their consoles would have a rather healthy (and diverse) selection of key exclusive software that appealed to the hardcore gamer. So it seems rather surprising to discover that they haven’t sought to acquire “hardcore gaming” Japanese fan favourites such as Platinum, Treasure, Cave, Sandlot etc. Or attempt to purchase a controlling stake in AAA companies like Sega, Konami, Capcom, Rockstar and Ubisoft. Or even gone out of their way to hire new development staff and assemble a few new studios that cater to Western tastes through aggressive head-hunting, or by acquiring whole studios outright in the West – such as Vince Zampella’s and Jason West’s Respawn Entertainment (Titanfall).

Most-Anticipated-FPS

Not only that, but Nintendo also emphasised a commitment to indies as early as September last year (alongside Sony and Microsoft), yet whilst Sony and Microsoft have been able to get exclusive indie games like Brothers, Don’t Starve, Olli Olli etc on to their platforms, to a large extent Nintendo’s promises have since predominantly come to be to referred to as all talk and hollow vapour-ware – again damaging consumer and industry confidence in the company.

Aside from its collaboration with Platinum, what I’m surprised about is why Nintendo doesn’t utilise more of its enormous cash reserves to springboard creatively ambitious game projects that present a low risk and are seen as a low investment. EA managed to successfully accomplish this with its “EA Partners Program”, and even companies like Sony and Microsoft have gotten in on the act by helping to finance and publish third party indie games such as Journey, Rez and Ikaruga.

Why isn’t Nintendo looking towards projects that appear on crowd-funding sites such as Kickstarter, and financing games such as Hyper Light Drifter ($27,000), To The Death ($400,000), and Unsung Story ($600,000) and then publishing them exclusively through its own Nintendo eShop? Most indie games only require incredibly modest development budgets of around $100,000-150,000 (which is a laughably paltry amount for a company of Nintendo’s size), so why not just invest in a few indie projects so as to help bolster the profile of your machines, and to create the impression that you care about indie game developers and their success on your platforms? After all, Sony (via key personnel such as Shahid Ahmad) have managed to achieve this brilliantly with their own struggling Vita handheld, and its no wonder that the Vita now outsells the Wii U as it has come to be seen as the tiny little platform that offers incredibly rich and diverse experiences through games like Hotline Miami, Spelunky, and Guacamelee! The Vita also has an arguably better lineup of indie games then either the 3DS or Wii U for 2014 (with games like Dustforce, Helldivers, Hotline Miami 2, The Binding of Isaac: Rebirth having been confirmed so far). And I haven’t even begun to talk about the Playstation 4 which recently received ports of Don’t Starve and Contrast.

psvita-indies

But let’s not forget about AAA development either, as Microsoft and Sony have both shown that they are prepared to go the distance and do whatever it takes to secure highly anticipated third party content for their platforms. And despite both the XBox One and Playstation 4 consoles having only been on the market for around two months, already both sets of early adopters can look forward to third party games that are either exclusives, timed exclusives, or have exclusive DLC for their respective platforms – eg Dead Rising 3, Titanfall, Call of Duty, Watch Dogs, The Order 1886 etc.

“There are many people in the industry that know nothing about games. In particular, a large American company is trying to do engulf software houses with money, but I don’t believe that will go well. It looks like they’ll sell their game system next year, but we’ll see the answer to that the following year” (Hiroshi Yamauchi – former President of Nintendo).

Clearly, the strategy of engulfing software houses with money is working incredibly well in today’s modern age. And it seems ironic (given M Yamauchi’s scathing comment on Microsoft’s XBox strategy previously) that Nintendo would itself find its software starved Wii U game system selling for nearly half its original launch price after having only been on the market for 15 months. And if the Wii U’s performance doesn’t improve, then retailers will soon be dropping support and practically giving the console away via firesales.

Why can’t Nintendo stop acting like the tight fisted Ebenezer Scrooge, follow trends, and also appropriate similar strategies adopted by its rivals, so as to offer exclusive content that doesn’t just cater to marginalised Japanese interests (when taken into context from a global perspective)? Games like Monster Hunter are too Japanese-centric in terms of appeal, and Wii U exclusives like Bayonetta 2 are bargain bucket, low risk investments that will never set the charts alight in the West. What Nintendo needs to do is approach the games industry from a more global perspective, and curate exclusive gaming experiences that offer worldwide appeal.

With the best selling Pro Evolution Soccer now rumoured to only be coming out on Playstation 4 (for which there are rumours that Sony paid for exclusivity), I’m surprised that Nintendo haven’t tried to revive its “unprecedented partnership” with EA by signing up future entries of the FIFA franchise exclusively for its machines. After all, FIFA regularly tops the sales charts worldwide and is one of the strongest performing titles on the market today (both from a critical and commercial perspective).

And what about other blockbuster games – such as Grand Theft Auto 5 which went on to become the “Fastest video game to gross $1 billion” according to Guinness World Records? Clearly the notion of Wii U securing AAA exclusives would have been a major coup for the platform, and a clear indication that Nintendo was prepared to go the extra mile to ensure that the biggest hits were released “Only on Nintendo” – if only to increase viable confidence in their platforms and to ensure that they were perceived as being more inclusive of mainstream gaming audiences (and not just catering to the small demographic of children).

But money can only take a company so far in an industry where fostering relationships helps provide support and offset downturns in company fortune. This is something that Microsoft and Sony have both aggressively pursued, as they’ve sought about engaging in strategic partnerships with companies that were once resolutely loyal to Nintendo. Gone are the days when the likes of Capcom, Konami, Square Enix etc would publish their biggest titles only on Nintendo hardware, and also gone are the days when a Nintendo machine would stand for a rich, vibrant catalogue bursting with the weirdest and most wonderful of games. Contrast this with Nintendo’s present fortunes now and every one of its machines (including the 3DS) appear to be suffering from a severe lack of choice and breadth of software.

Despite Nintendo loyalists claiming that Nintendo have the necessary funds to survive such a downturn, they should note that money doesn’t breed loyalty or engender respect. And Nintendo certainly doesn’t possess the necessary drive and inclination to foster and maintain relationships in order to ensure that third parties remain committed to them, despite wanting the “Wii U to be the console that every developer wants to publish on” (Scott Motiff – EVP Sales and Marketing for Nintendo of America). It’s not surprising to think therefore that developers would be scared off by Nintendo’s half hearted attempts to court them, when Nintendo’s entire history is littered with examples of it not committing to what it’s said, and always making half hearted loser promises along the way, so as to leave hopes unfulfilled.

As an example, Ubisoft (who have also recently stalled support for Nintendo’s home console if rumours regarding their cancellation of Watch Dogs are to be believed) were all set to release Rayman Legends exclusively on Nintendo’s Wii U – with the console being touted as the lead platform. But even though the game was formally announced at E3 2012, and all subsequent updates pointed towards it as being a Wii U exclusive, the Wii U’s poor performance in the marketplace (together with the industry’s rapidly dissipating confidence in Nintendo’s ability to compete as a hardware platform holder) forced the publisher’s hand into making the title multi-platform.

“People do not play with the game machine itself. They play with the software, and they are forced to purchase a game machine in order to use the software” (Hiroshi Yamauchi – former President of Nintendo).

Ultimately, the principle reason as to why Nintendo has floundered with its consoles (including declining sales for its 3DS platform) is because Nintendo doesn’t go out of its way to court third party developers, and also treats them with a degree of contempt. No wonder Nintendo’s once faithful allies sought out greener pastures, to the extent that Nintendo now looks rather lonely, with its present situation mostly attributed to its console library (including handhelds) looking rather anaemic in comparison to rival systems (which do, incidentally enough, have compelling content that you can’t get anywhere else). And to support this theory, the following list compiles all upcoming third party games to be released for the Wii U in 2014 (according to Amazon UK):

The Lego Movie: Videogame
Pac-Man and the Ghostly Adventures HD

One cannot help but think of Hiroshi Yamauchi (former President of Nintendo) when he stated that “people do not play with the game machine itself. They play with the software, and they are forced to purchase a game machine in order to use the software”. If this is true, and if it’s all about the games, then where are the games? Nintendo’s got the money, so why doesn’t the company throw a party in order to get more developers on its side, and give gamers a compelling enough reason to purchase their Wii U machine?

Click here to go to Part Five.

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