Nintendo could attempt to salvage its financial fortunes by following Sony and becoming the Netflix of console gaming. Much has been made recently of Nintendo’s dismal fiscal results, over the 2013 holiday season. Based on the vastly underperforming Wii U, Nintendo will post a $240 million loss for the year. And while Nintendo can absorb this loss, in the short term, due to the large amount of cash on hand, the numbers tell a sad story for the venerable gaming company.
The original Wii was seen as something of a renaissance for Nintendo. Their previous consoles, both the GameCube and Nintendo 64 (N64), paled in comparison to rival machines from Sony and, later, Microsoft. Nintendo’s stubborn decision to stick with cartridge media in favor of the then emerging compact disc format was a significant contributor to the poor reception of that console. Indeed, it was, in part, because of a failed partnership between Sony and Nintendo to produce a disc drive based machine that caused Sony to enter the console marketplace in the first place. In a way, Nintendo is responsible for creating its chief rival.
But the original Wii turned Nintendo’s fortunes around. The casual gaming market was beginning to take shape. As the technology became more accessible, and as more people were turning to less rigorous games, the Wii exploded on the scene and offered gamers – of all types and all ages – an opportunity to get involved. Its motion sensing technology was so well received by gamers that both Sony and Microsoft attempted to incorporate aspects of it into their own consoles and software. Alas, as with all trends, Nintendo could only ride this wave of success for so long. That is why, now, with the poor performance of the Wii U, Nintendo could attempt to salvage its financial fortunes by taking a note from Sony and try to become the Netflix of console gaming.
In 2012, Sony purchased streaming company Gaikai. Its technology would be used to stream video games over the Internet. Recently this began to come to fruition as Sony announced PlayStation Now – a streaming service that will allow customers to stream almost any game from the Sony catalog onto various devices, including non-Sony platforms. This is perhaps the most interesting aspect of PlayStation Now, and the aspect that Nintendo should pay the most attention to.
Historically, Nintendo has been notoriously proprietary. The only way to play Nintendo’s games was to do it on their hardware. Of course, any company would prefer that customers have to buy their hardware in order to play games, but in the 21st century this stubbornness is hurting Nintendo, as the recent news regarding Wii U sales demonstrates. Nintendo may have the best, most entertaining, games available; but, if customers are not buying the hardware, they cannot access the software and the games, essentially, go to “waste.”
However, if Nintendo can abandon this stubbornness, and if they would be willing to allow their games to be played on other platforms, they could generate far more interest in their games. There is little doubt that franchises, such as Super Mario, The Legend of Zelda, Donkey Kong, etc., are some of the most beloved in gaming. It is these titles, along with the continued success of the handheld 3DS that is keeping Nintendo in the game. As great as these games are, no one is playing them, because no one is buying the Wii U. Opening the door to other platforms could solve this problem and create more interest in Nintendo’s best products – its games.
Streaming could take this to the next level, and that is where the Netflix analogy can be applied. Sony’s service will allow games to be played not only on PlayStation consoles, but on smart TVs and various mobile devices. Essentially, almost any device with an Internet connection could possibly play host to PlayStation Now. Nintendo could grasp this similar opportunity. Their games are, mostly, family friendly, more casual and tend to be less demanding from a technical or graphical perspective. Combined with the explosion of casual, mobile gaming and the potential exists for Nintendo to capture a vast, new market.
Right now, the news for Nintendo is far from good. Their president Satoru Iwata admitted flatly, “we failed.” Well on the heels of failure, new approaches must be considered. Einstein was famous for saying, insanity is defined by doing the same thing over and over and expecting a different result; Nintendo’s ruthlessly proprietary approach could be considered “insanity,” based on the recent financial results. So, it could only benefit Nintendo to follow Sony and make an attempt to become the Netflix success story of the gaming industry.
Editorial by Christopher V. Spencer