Nintendo often seems like the rarest kind of corporate entity: one that only inspires feelings of goodwill from its customers both past and present. Even as the company continues to flounder in its current state of financial insecurity, much of the criticism from fans, detractors and industry analysts is delivered as if from a concerned friend, rather than a dispassionate onlooker.

That changed on Wednesday, when Nintendo of America (NOA) responded to a social media campaign asking the company to allow players to enter into gay relationships in its game Tomodachi Life with a flat denial issued to the Associated Press.

The company "never intended to make any form of social commentary with the launch of Tomodachi Life", the statement reasoned. "The relationship options in the game represent a playful alternate world rather than a real-life simulation. We hope that all of our fans will see that Tomodachi Life was intended to be a whimsical and quirky game, and that we were absolutely not trying to provide social commentary."

It repeated the phrase "social commentary" twice in just three sentences. NOA was trying to avoid rocking the boat and ended up doing the exact opposite. Fans responded passionately with anger and disappointment.

There's a lot to be angry about here, and a lot to be disappointed by, too. But more than anything else, I'm confused by Nintendo's logic, because none of this makes sense.

For starters, look at the game itself. Tomodachi Life belongs in a hyper-specific genre of games called "life simulators". It has often been described as the Japanese gaming giant's take on The Sims, that enormously popular Electronic Arts game that lets players indulge in seemingly mundane activities – picking out outfits, going to work, coming home, going on dates, getting married.

'Your life', but not if you're gay. Photograph: AP Photograph: AP

There are tons of games that owe no debt to realism. Those that do, like Madden or Call of Duty, aspire to such a narrow vision of what realism means that a degree of exclusion is understandable. I don't expect to see myself cast as a quarterback for the Giants any more than I feel entitled to be represented as burly meathead who runs around hunting for terrorists. But if you make a game that's meant to simulate life – even a "whimsical and quirky version" of life – and then tell a portion of your players that they're simply not allowed to make an authentic simulation of their lives, something isn't adding up.

But the weirdest part of Nintendo's justification for effectively banning gay marriage in the precious little virtual universe of Tomodachi Life is yet to come. In its statement, NOA went on to say: "The ability for same-sex relationships to occur in the game was not part of the original game that launched in Japan, and that game is made up of the same code that was used to localize it for other regions outside of Japan."

The implication here seems to be that there are value-neutral lines of code at the heart of this game. Devoid of "social commentary", the code was simply copy-pasted from its birthplace in Japan, where the game was first released in April 2013. Tomodachi Life sold 1.83m copies in its first nine months on the market there, so people must have loved this non-"social commentary" version. Why bother tampering with a tried and true formula?

The problem is, that's not true. People did love Tomodachi Life when it launched in Japan. But part of what they loved about it, according to a report by my Kotaku colleague Brian Ashcraft, is that there was initially a bug in the software that allowed players to indulge in gay relationships – or at least male ones. Japanese players were "thrilled by the bug, posting photos of their gay couples online". When Nintendo got wind of the game letting players do things they couldn't legally do in their own country, it quickly issued an update to eliminate the glitch. Dissenting players responded on social media by vowing not to download it.



Nintendo never publicly responded to this story. And given its tight-lipped reputation, the closest we may ever get to hearing anyone from Nintendo speak candidly about LGBT representation is this week's opaque conclusion that it is using its sudden anti-gay marriage stance as "an opportunity to better understand [its] consumers and their expectations" and is "looking to broaden [its] approach to development whenever possible".

Did Nintendo – the world's largest video game company by revenue – really never think about the sexual identity of its customers before 2014? Late last month, one of the developers of the latest Kirby video game mentioned that Nintendo figured out early in the life of that franchise that American audiences preferred an angry-looking version of Kirby over the "cute" one that appealed to Japanese gamers. If the company's market research delves into the minutiae of the expression worn by an innocuous blob, ignoring something like the demographic makeup of that blob's fanbase would appear to be a massive oversight.

KIrby: 'Best known for his superhuman ability to fit large objects into his mouth.' Photograph: flickr

Then again, Kirby is a nominally male figure who's naked, bright pink, and best known for his superhuman ability to fit large objects in his mouth. Maybe Nintendo's market research team didn't want to ask the question because they were scared of what they'd hear back.

Whenever the video game industry does ask itself why it continues to drag its feet on introducing gay characters, however, the answers aren't encouraging. Earlier this year, Assassin's Creed developer Ubisoft let one of its openly gay writers explain that even he could not write a queer protagonist into his own work "because of fears that it'll impact sales".

It's hard to accept that logic since it's rarely backed up (at least openly) with actual data. Plus, it runs opposite to the recent history of every other area in the entertainment industry that comes to mind.

But whether or not you buy Ubisoft's reasoning, such market-oriented thinking hasn't been doing a company like Nintendo any favors lately. The same day that Nintendo explained why it didn't feel the need to include gay marriage in its popular sim game, the company also reported that its earnings for the 2013 fiscal year were even lower than the level it had pre-emptively lowered them to back in January. And that comes after two years of similarly staggering losses.

The company's Wii U console isn't selling well. And the 3DS, that beloved mobile system on which Tomodachi Life will soon appear for gay and straight gamers alike in America, isn't doing so hot either.

I didn't cover any of this financial news, however, because I was too busy playing the amazing new Mario Kart that's coming out later this month. Which gets to the real source of my confusion here: how is a company that consistently produces phenomenal work so thoughtless at the same time?

I don't have an answer to that. So just let me play the part of a concerned friend once more and say: come on, Nintendo. You're better than this. And it doesn't seem like you have much more to lose anyway.