In the wake of Nintendo’s catastrophic news last week of a near-$Billion loss for the first half of the fiscal year, critics and fans alike have been weighing in. Die-hard fans say Nintendo will make good because they can’t stand to think of a Nintendo that’s failed. Industry analysts predict a dire future, because, well, instability is fun.
Meanwhile, where’s Nintendo on all of this? Talking about bees. I shit you not.
Nintendo announced over the weekend that Mario Kart 7 will come bundled with an unlockable bee and caterpillar combo that is sure, sarcasm aside, to make the kids squeal. Hell, that cute, little bee is making me squeal, and I haven’t played Kart in a decade.
In addition to bees and caterpillars, Nintendo’s reactionary plan to save shareholder value is to unleash micro-transactions and possibly subscription-based games on the 3DS platform, via firmware update. Yet while in-game micro-transactions and cute, fuzzy bees are sure to incite plenty of slavering from devoted fans, Nintendo is going to have to step it up in order to satisfy investors and ensure their hard-won market lead doesn’t evaporate due to the twin dangers of a slimmer currency exchange rate and aggressive pressure from mobile apps.
Here are my suggestions. Nintendo, let’s talk. I’m currently available for an executive-level leadership role and willing to relocate.
1. Follow the Crowd by Following the Crowd
Part of Nintendo’s 30-year legacy of profitable joy-making includes coming up at a time when consumers didn’t have much choice in how they were entertained. In 1981 you were lucky to have 12 channels on your TV, a dozen more with cable. Today the amount of choice available to the entertainment consumer is staggering, and consumers are increasingly demanding their entertainment go where they want it to go, when they want it, how they want it. Companies that don’t listen get trampled. Just ask Netflix.
Meanwhile, Nintendo. With Wii, 3DS and soon the Wii U, the stalwart company has demanded obedience from developers and consumers alike and both are starting to buck. Third-party game developers have fled from Wii, citing difficulties creating for the system’s unique control scheme, and consumers have refused to warm to 3DS in sufficient numbers to categorize the device as a market leader. Who on Earth could have seen this coming?
Well, Nintendo’s President, Satoru Iwata for one. He predicted the developer revolt over Wii in 2005:
“If the next generation platforms are going to create even more gorgeous looking games using further enhanced functionality, and if that next-gen market can still expand the games industry, then I’m afraid that third-parties may not support Nintendo,” Iwata told MCV prior to the Wii’s launch.
Smart guy. Too bad he didn’t act on that premonition, or Nintendo might not be looking at a billion dollar hemorrhage. Six years on, it’s time to listen to those instincts and give consumers and developers what they want. Neither are likely to forgive another decade of arrogance.
2. Lose the 3DS
It was a brave move to follow the crowd on 3D and release yet another iteration of the hundred million + selling mobile gaming device that has been largely responsible for maintaining the company’s profitability, but it hasn’t sold well and it won’t sell well. 3D is a fad, glasses-less or no, and most people who game on-the-go would rather play cheap games on their phone than give themselves a headache for $40 a pop.
Instead of dragging the operation further into the pit by over-focusing on making this albatross’s game library competitive, better to cut it loose and sail on. It failed to rise. It’s OK. It happens to all the guys. (Well, most of them.)
3. Redesign the Wii U
Iwata is blaming Nintendo’s focus on launching Wii U (as well as the 3DS’s poor performance, slow software sales, the weak dollar and a strike at Santa’s Workshop) for the company’s dismal earnings, all but tacitly admitting that over-focusing on new hardware has induced massive damage in their weak spot: games.
“The period when we needed to shift from the Nintendo DS to the Nintendo 3DS overlapped with the period when we had to prepare for the Wii U,” Iwata told investors.
Great. Thanks for the newsflash, Ace. Now stop making sense and start making the hard calls.
It’s time to shuffle that tethered, low-powered, closed-system device back into R&D and launch it for Holiday 2012 or 2013 as a free-roaming, open-system gaming tablet untethered to a moth-eaten console that will set Nintendo on a competitive footing against the companies that are kicking its ass at the moment: Apple and Google.
A Wii U that can allow only one player to play only certain games a small distance from the TV is a loser. You know it. I know it. If Nintendo doesn’t know it, they’re fooling themselves. Wii U will be competitive against other Nintendo devices and not much else. They may as well call it “My First iPad” and market it to toddlers.
4. Make the Damn Games
Nobody enjoys hearing this, especially Nintendo, but hurry the F* up with those fan-favorite franchises. And make more of them.
Nintendo has sold, to date, more than 80 million Wiis and over 150 million DS devices. That’s a massive install base, most of whom are sitting at home alone waiting for Mario and Zelda to call.
Critics may pan franchises like Madden and Call of Duty for rolling out barely-improved titles every season, but fans buy both of those franchises (and more like them) by the millions. A Zelda every year might not elevate the experience to Zen-like perfection, but then again, you don’t see Activision and EA posting billion-dollar losses.
Nintendo needs to lean on the gas and get some of those “highly-anticipated” products to market a lot more quickly, or else learn the hard way the same lesson as id Software that “When it’s done” is for market leaders. Always. Be. Shipping.
5. Phone Home
This may seem radical, but it’s time for the Big N to look hard at phones, and perhaps even make one.
Let me tell you a tale of a market leader with an innovative, industry-changing idea who nevertheless fell out of favor with the marketplace and is now considered an also-ran. No, I’m not talking about Nintendo (but this could be them in a year). I’m talking about Nokia.
Eight years ago Nokia was the biggest kid on the block in the phone market. They could do no wrong. Today they’re hemorrhaging talent and money and have been forced to approach Microsoft on their knees to beg for a partnership. What went wrong? N-Gage, for starters.
N-Gage was so ahead of the curve it put the company behind the market. Yet what was so revolutionary about the concept? That people would play games on a phone? In 2003 that was, in fact, a remarkable idea that many couldn’t seem to grasp — including Nokia’s customers. Yet Nokia forged ahead, botched the rollout, failed to give consumers exactly what they wanted and dropped the ball in the end zone. A few years later, phones capable of playing games (and more) were all over the place, and millions of people started dropping $0.99 a pop on games that wouldn’t look out of place on one of Nintendo’s handhelds (or the N-Gage). But they weren’t giving any of that money to Nokia.
Nintendo has a golden opportunity now to rechart their course in a bold, brave way. With approximately $10 billion in the bank and a stable of unique, recognizable and market-crushing IPs, they could dominate any niche they chose to enter. All they have to do is swallow the bushido pride and deign to compete on someone else’s playing field.
6. Plan B
Somewhere deep in the bowels of the Big N’s Kyoto headquarters is a red file folder marked “Plan B.” Inside are the details of a slash-and-burn business reduction strategy designed to excise the company’s hardware and R&D arms, leaving behind only what’s necessary to keep alive the shining jewel that has been keeping the company afloat since the beginning: Mario. And Zelda. And Kirby and all the rest of the company’s prized IPs and the design and development minds that have been responsible for propelling those unassuming videogame characters into the hearts of millions.
Sega had a similar plan. After that company had exhausted the limits of hardware buffoonery, they fire-saled their hardware division and withdrew to Japan to focus on turning out new models of their own prized IPs. Except they didn’t have half the inspiration in their closet as Nintendo. Plus, they forget to actually focus on the games. Instead they churned out half-baked and poorly designed shadows of their former selves. Whoops.
If Nintendo can sell hundreds of millions of Mario and Zelda games to gamers who have purchased their consoles solely for the privilege of playing Mario and Zelda games, imagine what they could do on a healthy, thriving platform. Or in the cloud.
This is one of those unique moments in the history of an industry when, years on, we’ll be able to look back and say we knew what was coming. The clues were there. The repercussions plain to see. Whether in the end we’ll be talking about how Nintendo lost it all or saved their own asses and reminded us why they became market leaders in the first place is entirely up to Nintendo. Dear Iwata (or whoever the board replaces him with): Choose wisely.