Friday, August 12, 2011

Investor logic versus actual logic.

We will eff your ish up!!


It amazes me the things I've been reading lately about what Nintendo should and shouldn't do. The most interesting thing I've read so far is that Nintendo should stop being stubborn and release games onto iOS and Android devices, And for that statement I have a few choice words...




Let's begin by discussing the origins of these statements. I had been getting ready for work and read this article on venturebeat. To which my reply was both irritation and vocal disappointment. Let's look at some snippets from these articles.



"Nintendo investors are extremely unhappy with the company’s nearly 30-year old strategy of making games only for its own consoles and have started demanding the company make games for smartphones as well, according to a Bloomberg report.
Nintendo did not immediately respond with official comment. 
Investors should rightfully be dissatisfied. The new 3DS handheld has had poor sales, with less than a million units sold in the U.S. in its first months. This prompted an unprecedented,desperate 32 percent price cut in the U.S. and a 40 percent price cut in Japan. The biggest problem with 3DS sales, Nintendo said a few weeks ago, is that it doesn’t have enough high-profile games. It hopes to correct that later this year with the release of Super Mario 3D Land, Star Fox 3D, Mario Kart 7, and Kid Icarus: Uprising.
Then there’s the underwhelming Wii U, which looks more like a small upgrade to the Wii rather than an entirely new console. While the Wii was extremely successful in selling units on its motion control scheme, it wasn’t nearly as strong in game sales. Sony’s PS3 and Microsoft’s Xbox 360 both look poised to keep churning out good game experiences for the next few years, while Nintendo’s next offering hardly increases power and only adds in a gimmicky touch-screen controller. 
However, Nintendo President Satoru Iwata has said in the past the Japan-based company will only make games for its own devices as long as he’s in charge, showing a frustrating inflexibility to realize the challenges of the next few years. Nintendo has sold 4.3 million 3DS units worldwide so far, but Apple alone last quarter sold 20.3 million iPhones, 7.54 million iPods, and 9.25 million iPads. Think of how many more potential customers there are to sell games to. 
“For many consumers, the phone or tablet is now the mobile game console of choice without the need to carry cartridges or disks and a much lower average price per game,” Gartner mobile analyst Michael Gartenberg told VentureBeat. “Given Nintendo’s strong intellectual gaming properties, it’s certainly something they need to consider and how their software business can grow relative to their hardware business." 
I agree that Nintendo should still invest time and money creating unique game experiences for 3DS. Since Nintendo has already invested itself in this hardware, it should create premium games that make it a must-have system for hardcore gamers. Heck, it should reserve its very best handheld titles for the system to justify the $30 to $40 price tag on those games. 
But the company needs to sell on the iPhone and Android too. For example, it could easily resell some of its most popular classic games on the iPhone and Android. I know plenty of iPhone owners who would shell out $5 to $10 to replay well-made versions of Super Mario Bros. 3 or The Legend of Zelda on their phones. Nintendo could also make original touch games starring lesser-known characters like Wario and Bowser. WarioWare for iPhone, anyone? 
Gaming heavyweights Electronic Arts and Square Enix have already released several titles for smartphones, with the understanding that they need games for every possible platform. EA’s Sims titles are great fun on the iPhone and Android, while Square Enix has released remade versions of older Final Fantasy titles for iOS. Nintendo could take a similar approach. 
I fully expect the 3DS to be the last handheld that Nintendo makes. As smartphones and tablets get more powerful, they will become even better gaming units, and they provide much more outside of gaming than a 3DS can. Nintendo needs to wake up, and soon, if it doesn’t want to become the next Sega. Of course, Sega went downhill after it canceled its Dreamcast console and gave up on hardware. The company took Sonic and its own games across all platforms, but not in an effective way. 
Do you want to see Nintendo release new and classic games on the iPhone and Android platforms?"
Do you really want to hear my answer, Sean Ludwig? No! Hell No!

First of all let's break this down into digestible segments.

"Nintendo investors are extremely unhappy with the company’s nearly 30-year old strategy of making games only for its own consoles and have started demanding the company make games for smartphones as well, according to a Bloomberg report.
Nintendo did not immediately respond with official comment.

Let's take into fact that the company's 30 year strategy of being a hardware developer with an in-house first party development staff is what kept the company alive for all this time (and extended it's 125 year lifespan).  The 3DS will be, in fact, the first piece of  hardware that is being sold at a loss since the Virtual Boy, with its' massive (though, reasonable) price cut. So given the fact that Nintendo has bounced back from many an incident unscathed and has had two major pieces of hardware that printed money for them last console generation, why are we now starting to default back to 2006 reasoning from one setback?  If I were Iwata I'd be holding my comments back as well, however it would only be because I would pretty much tell these guys where to get off.

Investors should rightfully be dissatisfied. The new 3DS handheld has had poor sales, with less than a million units sold in the U.S. in its first months. This prompted an unprecedented,desperate 32 percent price cut in the U.S. and a 40 percent price cut in Japan. The biggest problem with 3DS sales, Nintendo said a few weeks ago, is that it doesn’t have enough high-profile games. It hopes to correct that later this year with the release of Super Mario 3D Land, Star Fox 3D, Mario Kart 7, and Kid Icarus: Uprising.


Emphasis mine, for reasons you probably already understand. Yes, there are fewer high profile games, and less new or fresh uses of IP. The new crop of games could fix this. We have yet to see...

Then there’s the underwhelming Wii U, which looks more like a small upgrade to the Wii rather than an entirely new console. While the Wii was extremely successful in selling units on its motion control scheme, it wasn’t nearly as strong in game sales. Sony’s PS3 and Microsoft’s Xbox 360 both look poised to keep churning out good game experiences for the next few years, while Nintendo’s next offering hardly increases power and only adds in a gimmicky touch-screen controller.

Emphasis mine. I will now bring to your attention, the updated list of Nintendo's current million seller games. This is in addition to the  79 titles that have achieved this status in the Wii's Library that were announced back in May of 2010. So let me ask the writer is it no strong game sales, or no time to actually do research? hmm.

The other part of this paragraph is also suspect in the fact that we're assuming Sony and MS have an actual game plan. Currently, I just noticed that iOS and Android favorite, Fruit Ninja has been released for Kinect. That doesn't really give me any more hope than i already had for the future of HD motion gaming. Also, Opinions never count as facts....ever.

However, Nintendo President Satoru Iwata has said in the past the Japan-based company will only make games for its own devices as long as he’s in charge, showing a frustrating inflexibility to realize the challenges of the next few years. Nintendo has sold 4.3 million 3DS units worldwide so far, but Apple alone last quarter sold 20.3 million iPhones, 7.54 million iPods, and 9.25 million iPads. Think of how many more potential customers there are to sell games to.

Ahh, the "crystal ball" defense. "By refusing to put your games on other people's consoles you're not understanding the challenges of the next few years".

Understand this; Sega decided to go third party after the Dreamcast failed to perform against the PS2. What was the result of that, you may be asking? Well after a series of failed mergers, and barely keeping afloat, they're now resorting to "best of" compilations,  phone ports and publishing duties. The first party games they do have, are being thrown out at an increased rate, and in some cases are hardly even as good as what they used to be.

 That's not just an example, that's a cautionary tale. The second thing to note is that we're banking on mobile gaming like it's going to be secure well into the next couple of years, which we don't even know for sure. A common fallacy is that customers today mean customers tomorrow. If that's the case then why didn't the PS2's audience migrate fully into the PS3's audience? Additionally why didn't the PSP's audience migrate to the PSP go's audience? For the latter I think we all know the answer....


“For many consumers, the phone or tablet is now the mobile game console of choice without the need to carry cartridges or disks and a much lower average price per game,” Gartner mobile analyst Michael Gartenberg told VentureBeat. “Given Nintendo’s strong intellectual gaming properties, it’s certainly something they need to consider and how their software business can grow relative to their hardware business." 
Now we're ignoring the fact that the DS and 3DS has downloadable games, through it's E shop/DSware service and through the Virtual Console service. This comparison is also only being used against physical media which the price point also provides added content and replayability as incentive of purchase. Again, no research is being done, and the facts are being fudged to make one device look better.
I agree that Nintendo should still invest time and money creating unique game experiences for 3DS. Since Nintendo has already invested itself in this hardware, it should create premium games that make it a must-have system for hardcore gamers. Heck, it should reserve its very best handheld titles for the system to justify the $30 to $40 price tag on those games. 
So in order to properly do this they should send only their lower quality titles to the phone services, and keep their top tier products to themselves? I can seriously only roll my eyes so far into my ocular cavities. You're trying to make me test my limits, aren't you?

But the company needs to sell on the iPhone and Android too. For example, it could easily resell some of its most popular classic games on the iPhone and Android. I know plenty of iPhone owners who would shell out $5 to $10 to replay well-made versions of Super Mario Bros. 3 or The Legend of Zelda on their phones. Nintendo could also make original touch games starring lesser-known characters like Wario and Bowser. WarioWare for iPhone, anyone? 

Or they could continue to do this using the hardware they already have. Hilariously, those same users mentioned, likely already own a DS or a Wii for those titles (Which are sold for the same prices). In addition, It's also likely to say that those same people already have emulators which play NES or SNES games on their devices as well. This means that even on the off chance that this does happen the way they want it, They would be still playing the crap out of the emu games and not buying up the ports (whamp whamp).

 Gaming heavyweights Electronic Arts and Square Enix have already released several titles for smartphones, with the understanding that they need games for every possible platform. EA’s Sims titles are great fun on the iPhone and Android, while Square Enix has released remade versions of older Final Fantasy titles for iOS. Nintendo could take a similar approach. 
Electronics Arts and Squeenix are third party companies to begin with. They have no hardware development arms, they have nothing else to bring in revenue other than games. Of course they need to put out as many games as possible on every platform available. This is why they're cutting down on the number of exclusives, however, if you remember - Both had the opportunity to put their titles on the console with the highest market share. One did to an extent, and the other decided to give the Wii strange side titles and offer up their best efforts to the HD titles (Techncally, both did, but still ).
I fully expect the 3DS to be the last handheld that Nintendo makes. As smartphones and tablets get more powerful, they will become even better gaming units, and they provide much more outside of gaming than a 3DS can. Nintendo needs to wake up, and soon, if it doesn’t want to become the next Sega. Of course, Sega went downhill after it canceled its Dreamcast console and gave up on hardware. The company took Sonic and its own games across all platforms, but not in an effective way. 

Like I discussed in the 3DS post - If the nay-sayers had their way, the Gamecube would have been the last major console release, and Nintendo was expected to bow out of first party development altogether. So to hear people say such a thing now is incredibly facetious and preposterous.  If this were a horse race, the writer would have taken the snapshot as the horses were right out of the gate, and declared the winner from there. Logically, we can't do that, so we won't. It's just best to sit back and see how things play out.

Smart phones and tablets will become better gaming units.. when they shed their additional features and become dedicated gaming devices. Until then, they will continue to be the one stop entertainment center for the waiting room, bathroom and break room. Handhelds and consoles will still be there for larger scale entertainment, as well as PCs for the PC gamer and so on. It amazes me that these writers seem to live in some sort of fantasy world while in the real world people are just playing phone games as a means of passing time between tasks.

The Sega comment rears it's head finally, but this is only done in a sense to scare Iwata and Nintendo into doing what the writer and the investors want. Ultimatums seem to only work as a means of getting people to do what that person wants. An over protective parent forces their child to choose between someone they're dating or them, or a jealous lover uses this as a means to manipulate someone into choosing them over someone else. In most cases ultimatums never work, and the person either chooses opposite of what that person who established the ultimatum wants, or neither out of spite and a show of both independence and defiance. Nintendo will not become the next Sega, because Iwata knows that porting out their games to the competition is the wrong answer. The answer is to provide good games with compelling content in order to bring in the fans, while utilizing the features of both the 3DS and the Wii U to instill a sense of value and interest.

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As you're reading this you probably think that i'm downing investors. Well yes. Investors aren't always right, and what seems to be a logical solution ( Forcing Nintendo to port games to the App store for an unprecedented number of potential dollars) could easily spell disaster for those who spent years building the company into the financial empire it has become. Of course, one doesn't bother to see this once their eyes are clouded with dollar signs. All they see are potential gains. Of course if the mobile gaming trend switches directions what are these guys going to say? "Sorry, Nintendo. My bad" Isn't going to recoup massive losses any more than what they're having to do with the 3DS relaunch campaign.

 Forbes has an interesting article that discusses how seemingly logical thinking can easily backfire on investors. Apparently, what appears to be logical thinking in the case of forcing a company into a third party situation should be set aside and perhaps we should allow the company in question a means of figuring out what's best for them. Nintendo has been doing well under Iwata's run for quite a while, now. One setback isn't going to spell disaster this early in the game.

 Likewise, the "doom and gloom" scenarios should be completely disregarded until otherwise proven, because that's really what's prompting the Investors into seeking some sort of action. This is a likely FUD (Fear Uncertainty and Doubt) ploy by viral marketers and mobile gaming zealots to get rid of Nintendo as a competitor. In fact, my suspicious mind would believe that iOS and Android games are in desperate need of something along the lines of a "Mario" or a flagship title to even begin to be on the level of the heavy hitters, so instead of trying to use their first party powers to do so, they would rather just attempt a forced "buyout" situation to intimidate Nintendo into bending to their will. That's how I would imagine that would go down. It's an interesting theory, and I wouldn't put it past Apple, the same company who tried to disrupt E3 with it's own conference, to do something along these lines.

The Moral 

The moral of the story is that we shouldn't let others use fear to goad us into doing what they want. Or else we'll wind up like Charlie the Unicorn, and you know how he turned out.....



Candy Mountain, Indeed.

1 comment:

  1. Pretty much the behavior of idiotic investors who got lucky and let the good luck swell to their heads a little.

    One can only hope that Nintendo gets it's focus back, with the setbacks and all, before they listen to the wrong people.

    ReplyDelete