Nintendo in Crisis

September 2, 2013 at 3:00 PM by John Siracusa

When Apple was on the ropes sixteen years ago, there was no shortage of advice about what the company should do to save itself, much of it fueled by a deep love for Apple’s products. It takes a diehard Apple fanatic to create something like the iconic “Pray” cover from the June 1997 issue of Wired magazine—coupled with the faith that there are enough like-minded readers to appreciate the sentiment. A decade later, those of us who spent the 1990s worrying about Apple felt relieved, and maybe even a little nervous about Apple’s newfound power. It was a hell of a ride.

Nintendo engenders the same kind of affection and loyalty. Like Apple, it has a recent history of defeat followed by unlikely triumph. Nintendo’s dark times were not as bad as Apple’s; the N64 and GameCube were outgunned by the PlayStation and PlayStation 2, but Nintendo wasn’t days away from bankruptcy at any point, nor did it have to buy another company to save itself.

Now the roles appear reversed. Apple is in a bit of a slump (or so the narrative goes), but it’s a comparatively mild crisis of expectations. Apple’s products are still in demand and selling in large numbers. Nintendo, meanwhile, is experiencing one of the most disastrous console launches in its history—and that’s not even the worst news, according to some observers. It’s the handheld market where Nintendo is in the most trouble, they say.

As expected, people who don’t want to live in a world without a successful, thriving Nintendo feel compelled to offer their heartfelt suggestions for saving the company. It’s this same compulsion that has briefly driven me out of my months-long Mavericks-review-writing haze to offer my own perspective.

Schrödinger’s Console

I agree that Nintendo is in trouble. Before considering possible solutions, I’m forced to ask a tougher question: can it be saved? Some say no, that it’s only a matter of time. I think it comes down to this. As long as there continues to be a market for devices that are primarily designed to play games, then it’s possible for Nintendo to live to fight another day.

If not, then I fear the worst. Nintendo is not equipped to produce and maintain a long-lived, general-purpose software platform. Precious few companies have ever done it. You know all their names: Microsoft, Apple, Google. I don’t expect to ever see Nintendo on that list.

I think there is still a market for game-only (or at least “game-mostly”) hardware products. I’m not sure how long it will last, but I’m betting this upcoming generation of consoles will sell well enough in the aggregate to maintain the status quo, at the very least.

Assuming I’m right, Nintendo has all the tools it needs to pull itself out of its current tailspin. To understand how, just look at how Nintendo has always done it: with hardware and software working together to provide new, fun experiences.

How Nintendo Succeeds

The NES was Nintendo’s first big video game success. After the game console crash of the 1980s, home video game software alone was not going to lead Nintendo to riches. Personal computers were still expensive and wouldn’t have mass-market penetration for years. Any attempt to field an Atari-2600-like hardware product would surely be met with skepticism.

Nintendo’s solution required hardware and software. The hardware: an Atari-like game console, yes, but also…a robot? Yep, and a light gun, too. Very few games used these accessories, but you can be sure they were featured heavily in all the initial advertising for the NES. They were hardware decoys, misdirections. They existed to get the NES into homes. Once there, a tiny mustachioed trojan plumber spilled out of the belly of the beast and conquered a generation of gamers.

Now consider the Nintendo 64, the company’s first 3D console. The Saturn and the PlayStation beat it to market by years, and both had the good sense to use optical disks instead of cartridges. Though the PlayStation came to dominate that generation, it was the Nintendo that transformed 3D gaming forever with the potent combination of Super Mario 64 and the Nintendo 64 controller—hardware and software products that were designed together, and it showed.

Mario 64 taught the world how to make a good 3D game. Though it couldn’t save the N64 from an ignominious fate in the market, it left its mark on gaming history and perhaps singlehandedly kept Nintendo relevant. The idea of releasing a 3D gaming system today without a standard analog stick is absurd, but that’s just what Sega and Sony did in 1994. After the N64 was revealed to the world, analog sticks quickly appeared on both the Saturn and the PlayStation—hastily tacked onto the existing controller, in the latter case, but I’m sure that was only a temporary condition, right? (Sigh.)

Then there’s the Wii. Nintendo sacrificed hardware power for a novel input method and low price, then paired it with software that explained the value proposition to the world. After two generations of defeat at the hands of Sony, Nintendo put itself back on the top of the game console market.

None of these examples would have been possible if Nintendo didn’t make both the hardware and the software. And I didn’t even mention the Game Boy product line or the dual-screened DS, two of the top three best-selling gaming platforms of all time. Again, impossible without hardware and software synergy. This is how Nintendo succeeds.

When I read the current crop of advice for Nintendo, much of it focused on how to survive in a world where iOS comes to dominate portable gaming, I think about how it would have helped Nintendo at its previous low points. Nintendo should make games for iOS, some say. If you can’t beat ’em, join ’em.

At the tail end of the GameCube’s life, Sony had sold many times more consoles and games than Nintendo over the course of a decade. Should Nintendo have started writing games for the overwhelmingly dominant Sony platform? Would that have helped Nintendo achieve Wii-like success? I don’t think so; no amount of software alone could have done that.

The game software business is tough. It’s hit-driven, like Hollywood. Most games lose money or break even. A few big winners fund all the others—if you’re lucky. A game development studio going out of business shortly after releasing a critically acclaimed game is not unheard of. (Hell, the best game released last year bankrupted its developer.)

Consolidation is rampant in game development. Small players are routinely snatched up by behemoths that have a better capacity to absorb the inevitable losses that come with games that are not monster sales successes.

This is not a world that Nintendo should aspire to enter. Better to stick with hardware platforms that it controls, profiting from both the hardware sales and the fees collected from third-party games sold on its platforms. That’s the kind of steady (and potentially enormous) income that will keep Nintendo afloat as it works on the next big thing.

iOS Does What Nintendon’t

Even if Nintendo sticks to its guns, and even if the market for game-focused hardware continues to exist, Nintendo still faces some big challenges. A gaming platform doesn’t have to compete with iOS on its own terms, but it does have to at least match it in the areas that are relevant to gaming.

Right now, Apple is crushing Nintendo when it comes to the software purchase, installation, and ownership experience. Hell, even Steam—a PC gaming platform—embarrasses Nintendo’s e-commerce efforts. My Nintendo games should not be tied to a piece of hardware. My purchases should transfer seamlessly to any new Nintendo device I purchase. Illegal emulation should not be the easiest way (or only way) to play classic Nintendo games. Nintendo needs to get much, much better at this stuff—fast.

Apple is also winning when it comes to market access. It’s much easier for a two-person team to write an iOS game and put it up for sale than it is for that same team to get a game onto a Nintendo platform. Expensive, formal, limited developer access has no place in the modern gaming world. Nintendo needs to wake up and smell the App Store.

Let’s-a-Go!

A lot of things have to go right for Nintendo to get its mojo back. It’s worth reiterating: if the market for dedicated gaming hardware disappears, I fear it’s game over for Nintendo as we know it.

But if the time of the game console is not yet at an end (handheld or otherwise), then Nintendo has a lot of work to do. It needs to get better at all of the game-related things that iOS is good at. It needs to produce software that clearly demonstrates the value of its hardware—or, if that’s not possible, then it needs to make new hardware.

Any advice that leads in a different direction is a distraction. There’s no point in any plan to “save” Nintendo that fails to preserve what’s best about the company. Nintendo needs to do what Nintendo does best: create amazing combinations of hardware and software. That’s what has saved the company in the past, and it’s the only thing that will ensure its future.

© 2010-2020 John Siracusa