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The disruptor gets disrupted: how Apple is beating Nintendo at its own game

By

August 11, 2011

The Nintendo 3DS

The Nintendo 3DS

In an industry obsessed with polygon counts and frame rates, Nintendo's Wii console and DS handheld were the proverbial knives at a gunfight. They were grossly underpowered compared to the competition, meaning Nintendo could sell them at a profit from day one. Their innovative control methods ensured they still sold like hotcakes. An animated GIF of Nintendo's Shigeru Miyamoto and Satoru Iwata holding a DS that printed money became the go to picture to run alongside quarterly announcements of Nintendo's gargantuan profits. If a disheveled man emerged from a time-traveling DeLorean with tales of a near-future Nintendo struggling to sell its latest handheld, I'd have been more surprised about the Nintendo thing. So what on earth happened?

A wild STEVE JOBS appears! STEVE JOBS uses DESTROY VALUE. It's super effective!

Late last year, Steve Jobs told the press that Apple was activating 230,000 iOS devices every day, with a staggering 200 million already in the wild.

According to 148apps, there are 72,185 games available in the iOS App Store, of which 28% are 99 cents and 38% are free.

To say that 1% of these games would be worth playing would be an overly generous estimate. Most will pale in comparison to the console games they emulate. Many will take longer to download than they will to grow tired of, if they aren't quit in disgust and deleted immediately. Others will be lost in the noise of the App Store. Occasionally, one will appease the zeitgeist and make a fledgling developer very wealthy.

But what exactly is the alternative that Nintendo proposes?

NINTENDO used HEAD IN THE SAND. It's not very effective!

Satoru Iwata told AllThingsD that the ad supported, freemium and high volume/low cost models of mobile gaming "destroy the value of the game software" and made it clear he is not willing to lead Nintendo in that direction.

Unfortunately, the mass market has spoken - a firehose of cheap and disposable games on a multi-purpose device wins over a drip feed of expensive and...well, less disposable games on a dedicated gaming handheld.

It might take you somewhere between 30-50 hours to play through The Legend of Zelda: Ocarina of Time, one of the most critically acclaimed games of all time, on your 3DS...but how many iPhone games can you get for that US$40? How many can you get for the price of the 3DS itself?

EA CEO John Riccitiello recently told Industry Gamers that consoles represent just 40% of the market, down from 80% in 2000. The casual market that Nintendo fueled with the Wii has jumped ship to cheaper pastures.

Big publishers like EA are coming along for the ride. That NBA Jam game you can get for $0.99 on the iPhone and $4.99 on the iPad is exactly the same as the $39.99 console version (...and it's one of those rare ports that plays beautifully without physical buttons). This probably sounds insane to someone who doesn't realize that they're completely different markets, or that there's people like me who will buy the iPad version and the Xbox 360 version.

What about testing the waters with a stripped-back Mario title in the vein of Canabalt? Basically guaranteed to sell millions, and won't devalue the Mario brand at all - indeed, it would introduce Mario to a generation of kids who had never had a Nintendo at home. Give them the first hit for next to nothing, and get them nagging Mom and Dad for a 3DS in time for Super Mario 3D Land.

What about releasing a SNES controller dock for the iPhone with some classics from the 16-bit era like Super Mario World and Donkey Kong Country? Charge $50 for the controller and $5-10 for the games. That's like a license to print money. Alternatively, what about a strategic move against Apple by throwing its support behind the Android platform, or a partnership with HTC or Samsung?

According to the San Francisco Chronicle, investors are pushing for an embrace of mobile too. Nintendo's share price jumped after JPMorgan Chase & Co. told its clients that Nintendo may start making games for non-Nintendo hardware in June, and fell again after an official rebuttal just hours later.

Qualcomm, makers of the Snapdragon chipset that powers many modern smartphones, also sees mobile phones becoming the consoles of the future. Already some Android phones and tablets feature HDMI outputs and the ability to connect to a console controller via USB or Bluetooth.

There's only so long a company can ignore the market, the industry, and investors.

SONY wants to fight NINTENDO. SONY uses IMPRESSIVE LAUNCH LINEUP! It missed!

With the casual market adequately catered for by the mobile space, Nintendo is increasingly reliant on adoption from the hardcore market. What a shame that Sony had to go and unveil the PS Vita this year, a device that has the hardcore set drooling over its dual analog joysticks, generous 5-inch OLED screen and console-caliber graphical prowess.

On launch, the Vita will have Wipeout 2048, Uncharted: Golden Abyss, LittleBigPlanet and Super Stardust Delta - and titles from system-selling franchises like Assassin's Creed, Bioshock, Call of Duty, Killzone, Mortal Kombat and Resistance are in the pipeline.

With Sony's recent admission that the PS Vita won't be released outside Japan until 2012, contrary to its original statement, the executives at Nintendo must be feeling like they've just dodged a bullet.

But can one original Mario title (Super Mario 3D Land), two Nintendo 64 ports (Star Fox 64 3D and The Legend of Zelda: Ocarina of Time 3D Edition) and a few third-party titles really compete with the generous array of games headed for the Vita?

NINTENDO used PRICE DROP. It's...?

There's a chicken/egg situation with consoles - people don't want to buy a console without a large library of games, but developers don't want to make games for a console without a large install base.

The 3DS is hurting as a result. With big third-party titles like Assassin's Creed, Megaman and Saints Row being cancelled, and Nintendo looking massively unprepared with its own meager software lineup, there's no rush to buy a 3DS.

Late last month, Nintendo announced it would drop the price of the 3DS from $250 to $170 on August 12. Is this enough to push the 3DS to a critical mass by the time the Vita drops? Only time will tell.

Feel free to chime in in the comments section.

About the Author
Tim Hanlon Tim originally came to Gizmag as a developer, much to the dismay of anyone who had to maintain, build on, or rewrite his code. After wearing every other hat that didn't have a head for it, he became CEO in 2010. He's a racing sim tragic, an amateur martial artist, a nacho enthusiast, and a (mostly) reformed electronic musician.   All articles by Tim Hanlon
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10 Comments

It is exactly what I already predicted two years ago!

I was told the usual stuff"controls on an iPhone are crap, not a dedicated gaming device, etc). Well, I was right in the end :)

Skipjack
11th August, 2011 @ 05:59 am PDT

I agree with the sentiment of this article. Time for Nintendo to innovate once again!

Great work Tim.

Arnold Aranez
11th August, 2011 @ 08:43 am PDT

Mr Hanlon misses some points: If the Apple strategy was the winner in the long run, (a) the world would be full of brick/mortar "99 cent stores", (b) you would be driving a us$2500 Tata car instead of a Honda or BMW. (c) Apple would not be so restrictive and imposing to developers of apple stores apps if it wasn´t playing a little insecure (d) the digital market changes direction on a sec. Who would say we´d have Android 4 years ago? What if Google goes into gaming or if someone creates a new plattform? What if Jobs quits its job?

I flew Narita-LAX recently, and a Nintendo hardware cinematics expert was across the aisle. A boring trip had me asking on Zelda and Mario on IOs, following the stockowners pressure. At one time he smiled and just said... "yeah, maybe they do an awful mistake, but my friend, just wait for next year´s christmas, an taste what we are now baking, ha ha!

gaulloa
11th August, 2011 @ 09:51 am PDT

Well, Nintendo HAS licensed their titles to other platforms in the past. Probabily as a result of the settlement of the Magnavox (Baer) patent case, Nintendo licensed IP to Philips/CD-I:

http://en.wikipedia.org/wiki/CD-i_games_from_The_Legend_of_Zelda_series

William Volk
11th August, 2011 @ 11:57 am PDT

@gaulloa: So sad what the noble fanboy has become these days. You're not even a good troll, just... *pathetic*.

You said: "If the Apple strategy was the winner in the long run, (a) the world would be full of brick/mortar "99 cent stores""

Family Dollar has 6,617 stores and Dollar Tree has 4,009 stores, according to Wikipedia. What does Yahoo Finance have to say about their valuations?

http://finance.yahoo.com/q?s=fdo $5.78B

http://finance.yahoo.com/q?s=dltr $7.99B

And Nintendo's?

http://finance.yahoo.com/q?s=ntdoy.pk $2.38B

Not only are you wrong about (a), but you're EPICALLY WRONG on top of conflating brick-and-mortar and DIGITAL SALES.

The rest of your points are just as sad:

(b) Making assumptions about what other people value and purchase with no actual relevance to the discussion at hand

(c) http://finance.yahoo.com/q?s=aapl $346.49B -- Quit projecting your own insecurities

(d) "Just because nothing is going my way doesn't mean every single fact won't change tomorrow!"

And then an anecdote about meeting an insider who offers a cryptic (or perhaps just incoherently fabricated) quote to give your fellow fanboys hope that the battle isn't already lost.

Your Fanboy Rating: D-

Your Troll Rating: F

Bob Humbly
11th August, 2011 @ 12:09 pm PDT

Nintendo with their 3DS has repeated Sega's error with the Saturn. Not enough launch titles and many of those underwhelming.

Gregg Eshelman
11th August, 2011 @ 01:50 pm PDT

The 3DS was real? I thought that was just a terrible joke. Who on earth would buy that? In any event, nintendo is around for the long run. No one thought their last model would work, and it does.

Sadly, this goes hand in hand with nintendo's inability to see a problem. "Screw sony, lets get phillips to make our SNES CD-attachment." or "No one wants CD games, why do you think no one bought ours?" or "3D games thats the way to go unlike every other time we've tried."

Kamrom
11th August, 2011 @ 04:04 pm PDT

I have a 3DS, and I love it! The 3D only works for some people though. My dad can see it, but my mom has a hard time. It works great for me.

Sean Lijek
12th August, 2011 @ 03:56 am PDT

"EA CEO John Riccitiello recently told Industry Gamers that consoles represent just 40% of the market, down from 80% in 2000". How does this translate into actual sales figures, because surely the casual market has resulted in more people playing games? So 40% of this bigger market could be equal to 80% of the possibly smaller 2000 one. It's probably not but it would interesting to know, because even if a dedicated console has a smaller percentage of the market it might still sell enough units to be profitable. I think that makes sense, but sorry if not.

Shooty
13th August, 2011 @ 08:41 am PDT

It's the same old story: Nintendo vs whoever else is trying to beat Nintendo! Hasn't anyone learned anything about Nintendo in the last 30 years? They build quality products that don't break, are the most entertaining, and are so far ahead of the curve that it takes the market about 2 years to even understand what it is! If they fail it will be the FIRST time they ever have! I wouldn't count on it!

RTR
20th August, 2011 @ 06:33 am PDT
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