Thursday, June 17, 2010

Opinion: Why Nintendo failed at E3

Let’s get the disclaimer out of the way from the start: Nintendo’s presentation blew me away. The 3DS announcement has me more excited about a console than I’ve been for a long time, and the list of games that Nintendo rolled out will keep me occupied for a long, long time.

But at the same time I am concerned that Nintendo has failed at E3 in understanding the games industry, by failing to acknowledging that the industry is changing, and failing make any move to address those changes.

That change is the slow but steady move from retail-based gaming to online. Just about every major publisher has recognised the shift: EA, acquiring social networking vendor Playfish last year, was very candid that it was reducing the number of retail games it would publish, while hoping to substantially build its online presence. Square Enix, too, has been steadily developing its iPhone capabilities, and it too has turned its eyes towards social networking games.

On the console vendor front, Sony has long invested in its online and digital download mediums. Indeed, the development to its PlayStation 3 online network was the most impressive part of its presentation. There is the feeling that Sony is keen to do away with retail entirely, and between the work-in-progress that is the PSPgo, and the capabilities of the PlayStation Plus, it has set itself up to do just that.

Microsoft, for its part, is expanding its online service into nine new territories, showing the vendor is serious about building its global online presence.

Finally, there is a potential new entrant to the industry, one that all three major vendors should be watching closely. OnLive, the subscription-based project, has a set-top box option, essentially creating a fourth console for consumers to choose.

Even if digital download games and online play doesn’t fully replace the need for retail, it will be a cornerstone for the industry in the near future. Nintendo has been slow in the past to adopt online play – ignoring it at a time where Sega and Sony were taking their first tentative steps with the Dreamcast and the PlayStation 2. In the current generation, the Wii and DSi’s online capabilities are severely inhibited by unnecessary policies and unpopular restrictions, such as friend codes and stringent restrictions on the size of games developed for both consoles.

It was important for Nintendo to announce some kind of firm online strategy going forward, but it didn’t. Other than a casual mention that the WiFi capabilities of the 3DS would be somewhat enhanced over the DSi, there was no other details laid out. Nothing about what shape the 3DS’s online services would take, no news on additional services beyond online play and a games shop, and no suggestion of a premium service.

My concern is that Nintendo is simply not investing enough R & D money on creating a great online experience for consumers. As wonderful as the 3DS looks to be, if Nintendo ends up in a position where it’s missed the online boat completely, it will find itself back in the era of the Gamecube, where it was struggling to find any kind of voice at all.


  1. Nintendo has already been experimenting with games purchasable online through its WiiWare and DSi shops. Sure, they're not exactly spectacular, but at least they work. Satoru Iwata even stated that they're working on an enhanced network that does not require a "monthly fee" so hopefully that will improve as the 3DS approaches launch.

    Regarding online services in general, I don't believe that every nation is like the United States where every kid and his dog has access to a credit card. I'm a US citizen myself but I live in the Philippines and people here SELDOM purchase stuff from the internet. XBOX Live subscriptions are unheard off, much less XBLA. Even iPhone/iPod Touch apps are never downloaded (legally). Kids take them to the nearest amateur computer shops to get them jailbroken. Now I'm not saying that every country is like this either. What I'm saying is that retail games still have a spot in the market to be profitable. I know kids who actually saved up their allowances for games that easily couldn't get pirated (such as Pokemon HeartGold/SoulSilver, Bowser's Inside Story, any PS3 game). Filipino kids can't touch their parents' credit cards. It must be some kind of Filipino mentality; these people don't trust the internet with their money. First, for adults, the very idea of typing their credit card number in a secure form is just the same as posting their social security number on Facebook. Nobody ever buys stuff from Amazon or eBay over here. Second, this is a country where every adult still seems to disapprove of video games. I mean video games have been so mainstream for more than 20 years now but they still see it as the devil, they corrupt the minds of children. The point I wanted to get across is that retail games are here to stay and they are vital for nations where culture and general conservatism just seem to render any form of online purchase, transaction or subscription quite worthless. Of course, this is just my opinion. Nintendo shed light on the 3DS. That made them win E3 in my eyes.

  2. The Internet is not yet ready in 99% of the world for gamers downloading their retail games.
    Maybe it would if they would embrace a torrent-like distribution model, but that will never happen.
    3DS has persistent online, and if you look at some of the interviews on their e3 website, you can learn more on the features they're bringing it, many of them involve internet connections.

  3. Thanks for the comments - it's good to get the other side of the argument :-)

    I'll just say again, from a business perspective, I'm concerned about Nintendo. I have a lot of faith that when EA, Ubisoft, Activision, Square Enix, Microsoft and Sony all see digital distribution and online play as critical to their future in the industry, that that is where the industry is going.

    I'm not sure that Nintendo's on the right track by standing this one alone, and I personally felt its E3 presentation, from the online side of things, was very weak. Hopefully I'm proven wrong :-)