Nintendo’s New Direction – Part 1

Nintendo is under fire right now. Under fire by the gaming community, as many find their latest home console, the Wii U, an inferior piece of hardware not worth purchasing. Under fire by various analysts within – and some outside – of the gaming industry. Nintendo can’t seem to catch a break, no matter what they do. Through all the different negative spheres of influence, there is one conversation that almost always arises: Nintendo is losing third party developer support incredibly fast.

Everyone has the answer for the company, though; some type of business plan to begin making only software, or allow Nintendo franchises to be used on mobile devices, or even still, to release a new next-gen console to replace the Wii U. Third party developers began abandoning ship towards the end of last year, and it has only gotten worse over 2014. How has it gotten this way? Yes, the Wii U has been out a year over the other two consoles, but it still has a larger install base than the Xbox One, with Mariokart 8 and the upcoming Smash Bros. U surely bringing even more gamers to the console – so it can’t be install base. Third party developers want to make money, no matter where it comes from, so if the right games are made for the system (without any shenanigans), they should sell, right?

Many have simply fallen into an answer that has some merit behind it, but ultimately, I believe is not the cause for all these developers seeming to purposefully attempt to sink the Nintendo console. The popular answer, which is partly true, is that Nintendo is clueless in this modern era of gaming. However, I am going to go against popular opinion and claim that the loss of third party support isn’t because the Wii U is a failure, but because Nintendo is adopting the idea that they will become independently successful without them. Before focusing on the Wii U, though, I want to make a point in regard to the Wii.

The Wii was a huge financial success, selling an incredible amount of units, mostly due to the audience it reached; it appealed to a large group of consumers who weren’t necessarily gamers. In addition, the Wii had tons of third party support, right? This is where I want to point out that much of the third party support was either shovel ware or didn’t sell too well. Yes, it had the stellar No More Heroes 2, but how did that sell? Or what about Red Steel 2, which really utilized the Wii Remote? Well, how about a sports game that has historically sold well worldwide; check out the stats for FIFA ’13 for Wii, for the Xbox 360, and for the PS3. Now, you may think that these numbers are fine, but third party developers don’t believe that. Did you know that Zombi U sold roughly 700,000 copies, yet Ubisoft considered the game a failure.

When you compare the numbers to first party titles, such as Mario Galaxy 1 and 2, Skyward Sword, Donkey Kong Country Returns, and Mariokart Wii, you see that first party titles were where the money was truly at on the Wii. Even the high profile, massive selling game that is Call of Duty: Modern Warfare 3 sold a little over 700,000 copies (remember Zombi U?); incredibly poor compared to the other versions (Xbox 360 and PS3).

In addition to poor sales, by what third party developers claim presently to be poor sales, there were even some very popular franchises that completely avoided the Wii. Case in point, the Assassin’s Creed series. The truth is, third party developers have never truly seemed to make a huge profit on Nintendo consoles, and their leaving has been a long time coming. Yet, the Wii sold incredibly well, and Nintendo was never called a failure during the reign of the Wii. Third party support was there, but the quality was marginal at best; it was just hidden behind the quantity of third party games. More isn’t always better, and these numbers proved it. The right games are the ones that make money on specific systems. Just Dance sold very well on the Wii and Skylanders Giants sold decently as well. These were perfect for the system, and for the audience, so they sold well.

The decline with third party support, I believe, began towards the end of the lifespan of the Wii; they were probably frustrated at sales during the time, but because the system continued to sell so well, they didn’t want to abandon it completely. So, isn’t it reasonable to think that during this period of time, Nintendo noticed that their first party titles sold incredibly well, especially when compared to third party titles?

Fast forward to this year, a few months back when Nintendo had their shareholders meeting. It was revealed – to everyone’s surprise – Wii U consoles were not selling at a loss. In other words, Nintendo wasn’t losing profit on every Wii U sold, but rather, gaining profit. This is huge. So, if Wii U consoles aren’t selling at a loss anymore, and first party titles still sell very well on a system that is surrounded by controversy and general hate, why wouldn’t Nintendo devise a plan to become the main provider of software for their system?

For instance, I have a good friend who recently purchased a Wii U. He bought the NSMBU bundle, then bought Mariokart 8 and Super Mario 3D World. Nintendo just made quite a profit with one unit. And the statistics show that he will most likely purchase other first party titles, such as Donkey Kong Country: Tropical Freeze and the upcoming Smash Bros. Wii U. With every purchase I just discussed, Nintendo gets the profit. Their system, and their games.

Now, like I said before, third party titles wouldn’t disappear; the landscape would change. We will have more collaborations like Hyrule Warriors, building relationships between manufacturers. There will be titles that still sell very well, from developers who actually want to make Wii U versions of their titles, such as the Skylanders series. One final way Nintendo will utilize “third parties” is by buying them or “saving” them. There is proof of this: Bayonetta 2 was bought by Nintendo when no one else would publish it, and Devil’s Third by Valhalla Games was “saved” by Nintendo to be an exclusive. I believe Nintendo is moving towards this method; no more courting third party developers and being pushed over by their demands because they need sales for their ridiculous production costs.

In addition, Iwata has stated before that their goal at Nintendo is not to lay employees off. There will undoubtedly be layoffs over time, like recent events, but this is absolutely minuscule compared to what is found in other companies these days, like Microsoft and Sony. With this new business plan for hybrid third party games, doesn’t it fit with what Nintendo aims to do with employees? You are giving them solid work, and rewarding their hard efforts. This builds morale, and (hopefully) leads to more quality games. Also, if the collaboration is fruitful and a good experience, then why wouldn’t these developers keep coming back to Nintendo? In fact, check out what Itagaki (Devil’s Third) said about Nintendo, and what Kamiya (Platinum Games) stated about the gaming company. These are good relationships, and if fostered correctly, will grow into bigger and better things; for both the companies involved and gamers.

So far, I’ve made my case as follows:

  1. Nintendo’s traditional relationship has been lacking since even the Wii era, requiring a new “method” to giving their consumers software.
  2. The Wii U is not selling at a loss anymore, so any Nintendo software or hardware is profit for them, regardless of third party titles.
  3. Third party titles will not be approached traditionally anymore, as what we have come to know as traditional; Nintendo will specifically help them financially to bring them on board, not simply court them and bend to their demands.

Now, my final reason for believing Nintendo is purposefully moving away from third party developers? They are creating their own studios. Let’s look at a very recent story that no one really seems to be giving enough attention to – Nintendo creating a studio from the ground up. “Garage” is being created from scratch, and the first title from this endeavor is the much anticipated Splatoon, coming out next year. Garage is full of new talent, eager to push boundaries and not conform to any gaming cliché. But, Garage won’t be the only studio like this, as Miyamaoto has stated more are being developed right now.

But can Nintendo provide enough software to fill the space? It is Nintendo’s job to satisfy their customers with software and hardware usage; that means sufficient quantities of games. It appears that the company has that covered as well, beginning with the recent release of Hyrule Warriors. Hyrule Warriors in September, Bayonetta 2 in October, Sonic Boom in November, and Smash Bros. U/Captain Toad’s Treasure Tracker right around the corner. If the rumor is true, then Nintendo will have a big game per month, which started last month. All without the help of traditional third party relationships.

Nintendo is leaving third party developers; it may have been very subtle for a time, but it is obvious now. This would explain why developers like Ubisoft and EA have treated the Wii U so terribly – if you don’t believe me, just look at what Ubisoft did recently with how and when they are launching Watch_Dogs for Wii U, or how EA handled Need for Speed: Most Wanted U last year. This tactic is absurd to most of the gaming community, because third party games make the gaming world go ’round, right? This also adds to my case, as Nintendo has seemed to “go against the flow” for some time now (I mean, just look at the Wii and how unconventional it was with its controllers and target audience).

My warning to this method: make sure to cater to the West. It is no secret that Nintendo still tries to cater to their Japanese fans, but this needs to change. The Japanese gaming market has undoubtedly moved to a more mobile focus, and the West is where the massive amount of sales will come from. In order for this method to work, Nintendo can’t forget the Japanese game market while the West must be the main focus; titles like Sonic Boom are the right steps towards this mindset.

The question remains, though: would this be a successful journey? Right now, what I would call a “transitional period,” it is a little rough. But I have no doubt Nintendo will bounce back next year, and has begun to already. Sales are up, stock is up, and their software lineup is very impressive, especially for a company with such little third party support. Is this a good move? Should Nintendo cut their losses and essentially throw money at third party developers in order to reestablish traditional relationships? I’ll speak about that in the second part to this article. Whether you agree with me or think I’m a complete madman, you have to see that Nintendo has regained their focus on something. And, in short, I believe it will be an innovative move to a new version of “third party support.”

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