Will Next-Gen Cripple Nintendo?

March 30, 2013 | By | 24 Comments

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In 2006, Nintendo released a console that many expected to fail and cited the motion control gimmick as a reason as to why. To everyone’s surprise, the Wii caught on like a wildfire and retailers couldn’t keep them on store shelves. The company struck a gold mine by managing to tap into a market that had yet to be discovered, engaging soccer moms, the elderly, young kids, and casual gamers alike through easy-to-use gaming software like Wii Sports. Unfortunately, while the Wii was a huge commercial success, the platform was riddled with shovelware, poor third-party support, and finally, when tablet gaming took an upwards swing, the Wii’s sales began to suffer. Despite these shortcomings, gamers who owned the console were still exceedingly happy with the strong first party support that Nintendo has been known for since the NES.

It’s at this point in time that many thought maybe Nintendo was turning over a new leaf and finally moving away from the disastrous retail experiences it had produced the previous two generations that featured the Nintendo 64 and GameCube. When the Wii U released, it did very well at retail. It wasn’t an immediate commercial powerhouse like its predecessor, but it did exceedingly well and gamers were happy with the end product. Many thought that with the inclusion of strong third party support, the Wii U would correct the issues plaguing the Wii and that third party developers would embrace the platform. At first, this looked to be the case as the Wii U launched with popular titles like Assassin’s Creed 3, Mass Effect 3, Darksiders 2, Batman: Arkham City, and Ninja Gaiden 3. Sadly, these third party titles were not nearly successful enough during the launch window and most sold poorly.

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From this point, third-party developers and publishers took notice of the lack of software sales outside of Nintendo’s core lineup of first-party offerings. Shortly after the system’s launch, Ubisoft announced that Rayman Legends, originally planned as exclusive to the Wii U, would be releasing on multiple platforms and, despite the Wii U version being finished, they were launching all versions simultaneously. This left a gaping hole of respectable software releases on the console and in return, console sales have suffered. Unlike the Wii, the Wii U saw devastatingly low retail sales in North America in January and February. Sales in January ended up being a dismal 57,000 while February sold only 64,000. We’ve yet to see sales figures for March, but given that March saw the release of the highly anticipated Monster Hunter franchise and a sleeper hit in LEGO City Undercover, it should provide the console giant the opportunity to increase sales significantly.

Depending on how things pan out with March sales due to two strong retail releases, one might think that Nintendo may be able to turn things around. However, after GDC 13 took place this past week, it looks like that uphill climb is going to be a little bit tougher for Nintendo in the long run. Over the course of the week, DICE showed off the Frostbite Engine with Battlefield 4. While the reception to this trailer was critically high, the tidbit of information that the Wii U would not be able to run the Frostbite Engine is a huge blow to Nintendo bringing in third party support. Considering major franchises like Mass Effect and Dragon’s Age are also planning to utilize this engine, it’s highly likely that they won’t be making an appearance on the Nintendo platform. Obviously developers choosing to use this engine do have the option to dumb it down enough to operate on the Wii U, but at that point there is a strong chance it will be a significantly inferior product and in turn, will hurt sales figures.

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On the heels of the announcement that Frostbite would not support the Wii U, it was revealed that Epic’s Unreal Engine 4 would have the possibility of being scaled to the platform. While the ability to scale the engine is great in theory, developers will have to spend extra money in development in order to make this happen. If the Wii is any indication to go on, a lot of dev teams will decide not to spend the added cash. Frankly, this is a much larger blow to Nintendo’s platform than one may initially think. When you take into consideration how widely licensed Unreal Engine 3 is by developers, it goes without saying that a strong chunk of third-party titles from AAA developers won’t be releasing on Nintendo’s console. Over 200 titles licensed Unreal Engine 3 during this generation cycle and considering the abilities that were displayed in the tech demo for Unreal Engine 4, these numbers may climb.

This is a strong indication that, once again, Wii U owners are not going to be provided a consistent lineup of third-party software and will have to rely on strong first-party offerings from Nintendo. Of course, this is going to be perfectly acceptable to a lot of gamers. After all, Nintendo’s core franchises have sold tens of millions of units over its lifetime and will continue to sell extremely well. However, this should be a detriment to overall retail success and may push Nintendo back into the 20-30 million units sold range as the N64 and GameCube were.

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In the end, Nintendo isn’t going to disappear regardless of the sales figures produced by the Wii U throughout its cycle. There is a good chance that Nintendo is going to be quite profitable over the long run of this generation, but one must ask: Is it worth spending the money on research and development of new console for the next generation? The answer to that remains to be seen since it’s way too early to truly tell. Obviously Nintendo is still raking in cash on the handheld front and it’s doubtful that will ever cease to be reality as the grip they have on that market is God-like.

However, how much more profitable could Nintendo be if they finally broke down and decided to develop strong third-party titles themselves for the PlayStation and Xbox consoles? They could still own and dominate the handheld market, but they would also be tapping into a much larger user base by releasing titles on the competitor’s platform as well. If Microsoft and Sony can combine to sell 170+ million units this next generation — which is highly possible — would that be better in the long run for Nintendo rather than trying to push Mario on a platform that may only sell 20 million units? Regardless, this upcoming generation of consoles is going to be an indication of what we can expect from Nintendo in the future and we’re all curious to see how it ends up.

  • http://www.facebook.com/travisntucker Travis Tucker

    It seems like Nintendo has really just alienated third-party developers, dating back to the N64 really and I think that has really come back to bite them, especially since the last two consoles have been built around gadgets that only Nintendo and a select few developers have gone out of their way to utilize. Ultimately, I would prefer to see Nintendo become a strict developer for Sony and MS.

    • http://StealthyBox.com/ Scots

      I don’t think anyone would disagree that the thought of a TRUE next-gen Mario or Zelda experience on the PS4 or 720 is an intriguing one.

      • Helghast

        I’ve always thought about that. Imagine a Zelda game but with amazing graphics (not that they are bad currently, but it couldn’t hurt).

        • Monaro

          Zelda on Red Engine 3.0. Just putting that out there.

  • Aiddon

    If anything I think Sony and MS have a better chance of tanking what with how they keep being irresponsible with their tech. Whenever I hear about 3rd parties whining about Nintendo I’m reminded of a jerk having smacked somebody and then trying to blame the victim. Nintendo deserves better and if anything I have wouldn’t blame them for telling 3rd parties to get over themselves and take a hike.

    • Douche McTimber

      Especially Sony, they’re all lies, overhype and underdeliver.

  • TwinTails

    Um, they never said it wasn’t compatible with the Wii U, they said they themselves weren’t going to port their own games to the Wii U. Other companies are still free to do so.
    http://nintendoenthusiast.com/14645/developers-can-port-unreal-engine-4-onto-any-console-they-want/

    And the console still has strong indie support and they’re partnering up with more Japanese developers.
    http://nintendoenthusiast.com/13065/wii-u-indie-games/
    http://www.nintendolife.com/news/2013/02/talking_point_the_emergence_of_niche_japanese_titles_into_the_nintendo_mainstream

    Besides, Nintendo stated they would rather go under than go third-party.

    • Unknown Fox

      Thanks for the information, Twin. I’ve edited the article to reflect this.

  • http://twitter.com/Stealth____ Stealth

    Crappy article from a nothing. No fact, just generalizations

    stay classy

    • Helghast

      What?

  • heavenshitman1

    Like stated in this article, Nintendo would profit anyways, and if they do keep profiting, they probably wouldn’t just go 3rd party for the sake of it. Being a hardware manufacturer gives em more control over their games. They can still depend on licenses to give them income. Instead of rushing games to make a cut on Playstation or XBOX. Which sooner or later, could kill their game quality and watch em fizzle like Sega has done over the years
    Funnily enough , other articles point out that the heralded new Tomb Raider was a financial non-success despite excellent sales. Going by that account, all the devs that will produce games off Frostbite and Unreal Engine 4 are already doomed. Devs cost are just way too high now. There’s so few companies that can afford to produce these games.
    WiiU may turn out to be the only system that can be profitable for devs this coming gen

  • Glen Livet

    You should start drinking. Have one on me squirt.

  • kerriganmarois

    you use stats the whole article until you assume that Nintendo would be better off going third party.

    Sony and MS can’t afford a console failure and Nintendo can. I know there’s the obvious connection with dreamcast but Sega had multiple console add-on failures before that.

    Maybe the Wii u failing will tell Nintendo to get a next gen box ready for four years from now. Nintendo has the cash to sustain risky bets like the Wii u, whereas ms and Sony can’t.

    • Unknown Fox

      It’s not a matter of being able to afford a failure. Nintendo is ran by its investors and shareholders. While failures aren’t going to bankrupt the company, the individuals sitting on the board are eventually going to prefer not throwing money into a pit with no true return, especially when they can put forth more money into the handheld market and yield a much larger return on their investment.

      • Seeker

        The Xbox division lost Microsoft -$7,510,000,000 (-7.5 billion) from 2002-2007

        The PlayStation division lost Sony -$4,782,106,749 (-4.7 billion) from 2007-2010

        Why didn’t Microsoft and Sony investors and shareholders tell them to give up on their gaming divisions?

        source – http://neogaf.net/forum/showpost.php?p=19625436&postcount=90

        • kerriganmarois

          Not to mention Nintendo’s controlling shareholder is from the root family. He is steeped on tradition, which is pit out proprietary hardware and support it with exclusive software. This won’t change until he dies.

      • Seeker

        The Xbox division lost Microsoft -$7,510,000,000 (-7.5 billion) from 2002-2007

        The PlayStation division lost Sony -$4,782,106,749 (-4.7 billion) from 2007-2010

        Why didn’t Microsoft and Sony investors and shareholders tell them to give up on their gaming divisions?

        source – http://neogaf.net/forum/showpost.php?p=19625436&postcount=90

        • Unknown Fox

          Why would Sony cut a division that has made over $350 Million dollars since 1998? By now, that division has probably turned a profit in the 1+ Billion range.

          As for Microsoft, they were just entering the market within that duration. I think it’s widely unfair to judge that time frame. How much money has Microsoft created since 2007 within its gaming division? I’d wager that it is in the hundreds of millions.

          I’m also not sure what this has to do with Nintendo. Microsoft and Sony aren’t dependent on the success of a handheld market where as Nintendo has made the bulk of their money in the handheld division, not console division. Perhaps you should try out this link, which isn’t as dated as that one (2010, really).

          http://www.nintendolife.com/news/2013/01/nintendos_financial_results_bring_operational_losses_but_overall_profit

          This discusses Nintendo’s financials in January of this year. Where they are continually posting losses in the gaming division in regards to hardware/software. I would call that a cause for concern.

          • Seeker

            I was just using your logic, I wasn’t seriously proposing they shut down their gaming divisions.. But by your logic they should. Microsoft should stick to their Windows division since it makes way more money than Xbox, and Sony should stick to their Financial Services segment since it makes way more money than PlayStation.

            Also you keep implying that Nintendo makes no money on consoles when they’re coming off their most successful console ever. Why give up on consoles when even the Gamecube made a profit for Nintendo.

            The Wii sold nearly 100 million consoles (99.38 to date).
            And the Wii sold 863.53 million software units. That’s almost as much software as the NES and SNES sold combined (879.07).

            Nintendo’s recent losses are small compared to what Sony went through over the recent times. If you’re looking for a cause for concern, then I’d read this article on the state of Sony. It’s a few months old but still very relevant today. – http://www.notenoughshaders.com/2012/09/08/the-ten-year-decline-of-sony/

          • Unknown Fox

            You weren’t using my logic at all. My logic was that Nintendo could easily increase profits by staying in the handheld market and reaching a larger market through third-party software releases on Microsoft and Sony’s consoles.

            Microsoft and Sony don’t have another “division” in gaming that they can rely on. The Vita has been a catastrophic disaster by commercial standards and Microsoft has zilch.

            Please also get off of what the Wii managed to do. The Wii was easily the dumbest luck this industry has ever seen. If the Wii had released in 2008 (and the PS3 and 360 did as well), it would have sold no more than 25-30 million consoles. The Wii captured the tablet market before the tablet market existed. Nintendo is not banking on the Wii’s success and that is glaringly obvious by the significantly poor sales that they’re currently receiving around the world.

            PS: Thanks for contributing to the comment section. I like your interaction and even though we disagree, I’m glad you’re creating discussion ;) Feel free to stick around and throw your opinion out freely.

        • Helghast

          Have they really lost that much money? How do they stay in the gaming market with those numbers?

  • Russell Gorall

    The only things the console needs is an immediate price drop and hard drive upgrade. Put this in a $200 package, it is a $200 console.

  • http://slapshot82.wordpress.com/ Chris I.

    I’m not sure who penned these words, but whomever it was – fantastic piece! Somebody here knows a thing or two about how the gaming industry actually functions, and can write without a hint of bias or entitlement in their work. Quite impressive indeed.

  • Blake

    nintendo was and still is my favorite game system. It actually has games that are appropriate for kids, whereas xbox and ps3 have mostly M rated games. Xbox and ps3 dont care about how the kids could be influenced as long as their games get bought and they get money. Nintendo actually cares.


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