Nintendo Considering "New Business Structure"

The article's title makes everything sound so unnecessarily ominous.

If Nintendo decides to spread out over multiple devices, good on them. Im pretty sure thats what helped them build their war chest to begin with. Having been buying systems since before time I can say I was always excited to play the arcade ports of nintendo games on my atari 2600, 5200 and colecovision.

jumping ship on dated console tech would free up resources to do what they do best, make games.

Surely nintendo can weather a poor generation after the success of the wii? I'm sure in a few years they'll bounce back with some other crazy new device. I would be very sad if they got out the hardware game as they're really the only games company that really does try new things every generation.

Nintendo can do one of 3 things. They can cut the price of the WII U significantly, down to like 100 bucks, in hopes that such a move will spark a huge wave of new buyers. They can phase out the Wii U and release a true next gen system as fast as humanely possible, so it will be on level ground with the PS4 and Xbox One. Lastly, they can stop producing console hardware altogether and put all of their focus into the handheld markets and producing games for the Xbox One and PS4.

As much as Nintendo may hate the idea of becoming software only on the console side, it could potentially be a great move as Nintendo could sell a LOT of copies of its 1st part software on next gen consoles. At the same time they would be getting rid of all the costs associated with hardware. Its a FAR safer business strategy than producing your own hardware. Nintendo could focus on doing what it does best, creating great games.

Please, Microsoft has innovated the console market more than Sony and Nintendo combined these last 2 generations. Online gaming (Xbox Live), high definition graphics, achievements, matchmaking, digital distribution through an online store, Xbox Live Arcade, Indie games on consoles, TV & Movies through a game console, demos for every game, gamerscore, etc.. All were seen first on Xbox.

Sure, Nintendo innovated as well, but definitely not as much as MS has. Not to mention, the aspects of the market that Nintendo innovated haven't had as big of an impact on the console market as MS's innovations have. Motion controlled gaming, while big during the original Wii's lifespan, has not significantly changed gaming much at all. On the other hand, MS's innovations have significantly changed the entire landscape of console gaming. For example, without digital distrubution through Xbox Live Arcade, and now the Playstation store, new content (add ons/microtransactions) would not be possible. Add ons are a part of pretty much every game that gets released now. Most of the big releases now have season passes. It was Xbox Live and Xbox Live Arcade that started these changes. Then you have online multiplayer. Almost every game released now has an online multi-player component.

The overall market is very different from what it was when the original Xbox launched and that is mostly due to the innovations that MS brought to the console market.

Try releasing some games for the Wii U first?

Sorry admittedly I stopped reading your post after that doosey of a first paragraph. Let's go over some of your points 1) Online gaming: Ummm are you not aware that games have been online capable since the mid 90's? 2) High definition graphics: do you really think high definition graphics weren't a thing before the 360 and Microsoft just invented them for it? Come on man.

Now I feel bad for not buying a WiiU...
I don't think Nintendo's core design of the console is bad, however... In fact, I want to get it more than an XBO or a PS4... they just don't have enough value there for many people (myself included) to spend $300+ on it. If it went down to $200 this past holiday season, they would have went flying off the shelf, I'm sure.

They should have had Smash Bros, a new Zelda, Mario 3Dworld, and other stuff available a lot sooner. I have no idea why they though another 2d Mario platformer and a bunch of 2nd party games already widely available on other consoles would be enough.

NSMB sells a lot better than anything else they do. NSMB Wii U will have a ton more sales than 3D World, guaranteed.

Sega hasn't done great because of Sega, not because they went 3rd party.

Nintendo had a good run, but no amount of bowing will save them this time. Its time to hang it up.

Also they seem to be a pretty lean company. According to wikipedia they only have 5200 employees. Whereas Sony for instance has 150k employees. Now of course Sony has a ton more products and higher revenue, but if you compare Nintendo's total equity of $10 billion with Sony's total of $28 billion it seems like Nintendo will be okay for quite some time.

At this point, Nintendo feel's like an athlete still playing way past their glory days. At a certain point, you've got to hang it up and that's okay.

True, but...Sega kept beating the Sonic 3D game dead horse long after people didn't want it anymore.

The problem with Nintendo stepping out of the hardware business is that Nintendo's strategy is to build new hardware and then throughout the lifetime of that hardware go through a checklist of franchises they are willing to bring back and make changes to those franchises informed by the changes they made to the hardware. They are trying to appeal to players by building one game for each significant franchise, a game they hope will be must-play enough for each person that they will buy the hardware.

This is different than other publishers and console manufacturers who are trying to fill slots in each quarter and trying to figure out how frequently they can produce sequels to popular franchises without completely sacrificing the quality that the players expect. Which is why you often see a trilogy of games plus often one extra right near the end of the console cycle.

Moving out of the hardware business means that Nintendo is reliant on other companies hardware innovations. Nintendo stated with the WiiU they were happy because they had 100% control over the screen on the controller, so Nintendo doesn't even love the fact that you could be playing their games on whatever screen you happen to own because they don't have control of the image quality. For them to hand over hardware control completely to another company would be a pretty crazy step for them.

From the statement they made it sounds like they haven't given up on the hardware business, and with the sales of the 3DS they definitely don't want to be getting out of the handheld business. It sounds like for the moment they are taking a harder look at producing phone / tablet games to appeal to their stock owners, but they would be looking to produce new games that fit touchscreens rather than releasing classics with on-screen controls.

Want to improve WiiU Sales? Put in compatibility to play DS and 3DS games on that thing. Tell me that wouldn't sell.

Nintendo is a company that needs a major restructuring. New people, new sensibilities, new ideas. The fucking cloistered, paternalistic Japanese corporate culture cliché has been strangling them for well over a decade, resulting in ever-diminishing output, increasingly budget product, and a business strategy that consists of little more than trying dumb, niche shit and hoping something sticks (both in terms of software and hardware). They're dying anyway so the worst that could happen is a little ambition and risk expediting their demise.

It seems to me that Nintendo's best action is to fully dedicate themselves to creating handheld devices and games that go along with it. The Wii U is a bust; that is pretty clear now and no amount a fanboy arguments will change that. The system is going the way of the Sega 32x, Saturn, and the Dreamcast--meaning its only a matter of time before the system dies. Nintendo is already slowing down the amount of units being made this year and I'm sure a major price drop is coming soon as well.

However, the 3DS is clearly Nintendo's hardware of the current video game generation. Their handheld games sell like their console games used to. The company should be grateful they have that to fall back on and commit to it. Unlike Sega whom failed in the handheld medium, before they failed in the console medium, leaving them no choice but to become a third party developer and make software.

With the Japanese social landscape becoming increasingly hostile (maybe too strong a word) to console gaming, I am not surprised that Nintendo would be considering a larger focus on mobile gaming.

I personally wouldn't mind seeing some Zelda or Metroid games on iOS, but I'm loathe to see those games dumbed down for touch controls.

@ruthloose:

I got nothing against the guy, but there's too much at stake.

Except for the part where Sonic is still one of their highest-selling franchises. A couple years ago when Sega posted a huge loss, they specifically named three best selling "core franchises" that they were going to redouble their focus on: Total War, Football Manager, and Sonic.

A lot of people have this image in their head that Sonic is still scraping the bottom of the barrel but that really bad Sonic game is 8 years old as of this year. Sonic's not completely out of his rut, but Sega's made a pretty good effort at digging him out with games like Sonic Generations.

I have to disagree @patrickklepek. As others have said, sega is still around which i doubt they would if they had continued making hardware.

Also Nintendo has the benefit of having a very, very strong first party lineup. I imagine wherever they would go, their fans will go too.

But hey all speculation, etc etc.

This isn't Modern Nintendo at all; the N64 and Gamecube were massively more expensive to develop for. I remember hearing that a PS2 devkit was something like $2500, but a Gamecube devkit was $15000.

That being said I can't imagine it's that expensive, what with how Nintendo's warming up to indie developers. Those types of people don't have a lot of money to spread around. I can't imagine Renegade Kid is more willing to spend money on Wii U devkits than, say, Capcom.

Making hardware a generation behind isn't really a bad thing, though. Sony and Microsoft set literally millions of dollars on fire launching the 360 and PS3 and even though they started turning a profit on those systems three or four years ago, I don't think they've recouped everything they spent just getting them out the door in the first place. And now they're starting the process all over again with the Xbone and PS4.

Nintendo, on the other hand, is sitting on a billion dollars in the bank because they're deliberately not as bombastic with their hardware. It's easy for the consumer to say how much better Sony and Microsoft are, because all you see is pretty graphics. But that stuff comes at a significant cost. The Wii U flagging is but an unfortunate misstep Nintendo, but if the Xbox One or Playstation 4 were in this position it would practically be an apocalypse scenario for Sony or Microsoft.

Nintendo is a very strategic company. Even when they take risks, it's not as though the entire company is on the line. It may look lame or silly to you, but that's only because Sony and Microsoft are so willing to dance on the razor's edge. Nintendo's always been about playing it safe and taking their time to let the fruits of their labor fully ripen.

That was the entire problem with the Wii U; they had one year to prove to the world that it was worth owning, but they were just too slow. That uphill battle is now probably too steep to surmount.

Nintendo, however, will persevere. Even if the Wii U is out, the company itself is nowhere even close to the same desperate position Sega was in when the Dreamcast was cut off.

same boat, played that game a little with my brother because he got an Wii U but i wish i didn't have to buy an Wii U just to play more of it.

@blazehedgehog said:

You make it sound like there weren't any other really bad Sonic game after that. Also, you are forgetting that they mentioned 4 game franchises: Aliens was the other core franchise they wanted to focus on, and look how well that went.

Finally, the problem with SEGA is not that they don't have good franchises (Fantasy Star, Yakuza, Valkyria Chronicles, etc) other than Sonic, but that they don't care about the western market, even when its huge. They make the absolute minimum to support SEGA of America and SEGA of Europe. They lost the Bayonetta IP due to bad support. They even have a launch game for next generation, but they don't want to sell it in the west because they can bother to put subtitles on it.

But I digress... Even when Nintendo follows SEGA in its decision to abandon the console manufacturer market, I have confidence that they are competent enough to make it work. Their IPs have a pretty strong presence in the west too, so they don't even need to work hard to sell Mario or Zelda games.

Personally, I think Nintendo should sweep the Wii U under the rag. Now that the next generation is here, Nintendo is trying to play catch up, now more than ever, but doesn't have the support of the 3rd party, the sales to lure them in or the marketing of the Wii... They should put all their guns in the handheld market, which is were most of their money comes from anyway. At this point, they would have to invest heavily on R&D if they want to create something to compete with the PS4/XB1/PC.

I guess you can only release underpowered hardware and get poor 3rd party support for so long before the market catches up to you.

This just isn't going to happen; people keep making comments like this, but they don't understand Nintendo's world-wide success as a company. 3 of the 5 best-selling consoles of all time were manufactured by Nintendo, with the DS holding the #2 spot, and the Wii -- yes, that console which everyone loves to hate -- holding the #5 spot. (Microsoft doesn't even appear until we get to #9.)

If you look at the actual sales numbers: the only console manufacturer which actually struggles to be in the console race on a world-wide level (since we should not just be talking about America here) is Microsoft. The Nintendo DS all by itself has out-sold every single console Microsoft has manufactured combined, and part of NIntendo's sales model -- since the NES -- has been to profit on console sales. Most console manufacturers sell consoles at a loss in an effort to make it up in licensing fees, but not Nintendo. Nintendo has $20 BILLION in liquidity; and more than ONE TRILLION DOLLARS in assets. Nintendo has more assets (and definitely more liquidity) than GOLDMAN SACHS.

Nintendo has been the worlds largest console manufacturer (measured by revenue from console sales) for decades, and still holds that title. For Sony and/or Microsoft to dethrone Nintendo on a global level they'll basically need a miracle, or for Nintendo to literally hibernate for 10+ years.

It seems that the majority of these people assume that because Nintendo does poorly in America that it's a failing company, but America has kind of been small potatoes to Nintendo for a very long time now, and -- by sales comparison -- Microsoft's Xbox series is the smallest potato in the world-wide console market.

It's called ethnocentricity, people, and it's not a good thing; if you're going to participate in a discussion about a GLOBAL company: look at global sales numbers, and think globally.

Nintendo will probably still be making game consoles until long after we're all dead.

Well, this is obviously a sign of the gaming apocalypse. The only logical course of action is for all developers to go back to developing games for the Playstation 2. Otherwise we're all doomed.

I think Nintendo's most painful problem is their inability to do digital distribution well enough. Arguably, they have/can crush it sales wise when it comes to making games that come on discs/carts and go in their hardware. I think the mobile phone world, specifically iOS has a lot of potential usage for plying their back catalog of NES, SNES, and GB/GBC ports (last time I looked Android had more emulators than you could count, so no need to bother there). I think the idea that Nintendo would make original content for phones is a farce, but building more goodwill among the folk who aren't buying Wii U's or don't realize yet that they want a 3DS with more full featured mobile gaming, couldn't hurt. As it is, the Virtual Console situation is downright abysmal. Let someone else, namely Apple, handle a bit of the digital distribution and rake in the money with ports of Super Mario at $5-$7 a pop.

As for the touchscreen control issue (that Jeff has mentioned in podcasts previous), I think there's enough finesse for most games when done well. Super Crate Box and League of Evil are extremely tight platformers on iOS that use touchscreen d-pad and buttons very well. If they were willing to put a bit more work into the ports, they could add bluetooth/wifi networking for multiplayer. Hell, that exists now in emulators, and is perfectly serviceable for a game of SNES Mario Kart over the internet. Obviously Pokemon Red/Blue also comes to mind, and could leverage networking as an excuse for a higher price. I mean honestly, if Square Enix can get away charging $10+ for mediocre ports, Nintendo could surely do better than that.

@driftspace: You presume too much... Funny to be accused of ethnocentric without knowing my gender, nationality or ethnic background. Just a heads-up: I am not American... But even then I would be hard pressed to call that market "small potatoes", or ignore that, in any other markets outside of Japan, the Wii U is the least sold console of the next generation, and the one least supported by third party.

You also presume I am talking about Nintendo abandoning all hardware, when I am just referring to the console side of things. You know, the branch Nintendo had to reduce its expectation to a third, forcing a restructure and a statement from the chairman to its shareholders. That part is fact, not something I just presume.

I was addressing the statement/concept that Nintendo is doing a bad job in the console market as enthnocentric, and not necessarily the people; ethnocentrism refers to viewpoints, anyway. I'm sure people in Asia don't see Nintendo as "failing," or needing to exit the console sales business, for example.

About your nationality: you say where you are from in your profile, and while you are not "American" in the sense that you are from the USA, you are from "the Americas," and not from Asia, where Nintendo has seen most of their success. Regardless: this isn't about you, and was not meant as insulting.

I do agree with you that "the Americas" are not "small potatoes," (sorry for the hyperbole) but I think part of the reason so many "Americans" are upset at Nintendo is because Nintendo seems to proceed with its designs without regard to what "American" gamers want. America is not Nintendo's first consideration, and why should it be? The majority of the planet's population lives in Asia!

I apologize if I upset you, as this wasn't really all about you; I was mostly just frustrated with the trend of posts where people compare Nintendo to Sega, say that they should get out of the console business, etc. when, in fact, Nintendo is today (by the numbers) the most successful game console manufacturer of all time. Sega never even got close to that. You spoke about Nintendo following Sega as though it was inevitable, and I don't think history or the numbers support that possibility at all.

Why should/would Nintendo exit the console business when they're still on-top globally?

Another issue here is that people are treating handhelds and home consoles as different markets, which isn't appropriate; they are all "consoles." Yes, it is true that Nintendo's biggest successes have been handheld consoles, but the Wii was nothing to laugh at; it outsold PS3 and XB360.

Maybe Nintendo will stop making home consoles (and I doubt it) but I'm pretty sure they will never stop making gaming consoles altogether.

Just stick to the fucking 3ds. God damn.

It would be awesome to see Nintendo making both games and peripherals (Wii remote, Wii U tablet, etc) for PC, especially if they played cross-platform with their consoles. Guess they're talking more about smart phone games though... or maybe something like iFruit.

Nintendo must be considering making an android gaming phone based on a chip like the Nvidia Tegra K1.

I've been saying since before the Wii U came out that Nintendo should go the way of Sega, but when I say that I never meant that I want them to make shitty Mario games on other consoles and become irrelevant. I just mean as far as dropping the dying hardware and switching strictly to software.

Pokemon on iOS will make Nintendo's profits skyrocket.

A PS4 and Xbone Zelda game would outsell almost anything else out there.

Smash Bros. Melee is still the best version and is still played in big tournaments everywhere even though the game is over 13 years old. If they released an online multiplayer enabled version on Steam, the number of active online players for a Nintendo game would break all records in like a day.

Release all the older generation Nintendo games as downloads for PSN, XBLA, Steam, iOS, etc., and watch people overload servers trying to download them on the first day. It would be ridiculous. Some people would buy the games just to see how crazy it feels to be playing a Nintendo game on their iPhone or Playstation even if they don't particularly like the game.

This is just the tip of the iceberg for how much success Nintendo could have if they would only unshackle themselves from the hardware and exclusivity and just spread out into everything else. I really hope they realize it before it's too late.

@thatdutchguy: Yeah, I have been turned off to Nintendo's home consoles since the Nintendo 64. Nintendo needs to go back to the NES and SNES days, that is to say, they need strong 3rd party support. Can they repair the damage after almost 2 decades of bad decisions? I don't think so.

@ruthloose:

If anything, it seems that leadership that results in financial gains is anti-consumer, vulgar, and crass.

Worst scenario I see out of this is some iOS Pokemon abomination and Nintendo following suit with Square Enix, and releasing hideous, poorly controlling versions of their classics on iPhones.

You're right about Black Knight, but it's also a spinoff. From what I've heard, there's more than one "Sonic Team" at Sega, and Black Knight was the B-team. So it's easy to forget that it exists.

Before the Wii U came out ... like when the Wii was out? The #5 best-selling game console of all time? You said that Nintendo should stop making hardware while they were manufacturing the home console which out-sold Xbox360 and PS3 by more than 20 million units? You said this during the time that Nintendo nearly sold more DS consoles than PS3 and Xbox360 sales combined?

I'm going to guess (and hope) that you do not consider yourself a financial advisor.

You say "dying hardware" like Nintendo hasn't been making any money, but Nintendo is (right now, regardless of the news about a projected profit loss) the most financially-successful console manufacturer in the entire world. The margin by which Nintendo leads all-time global console sales is massive: more thanhalf a billion Nintendo consoles sold over the last 30 years. The majority of Nintendo's success is directly from hardware sales.

Why is this fact so difficult for people to understand?