We’ve talked about Blue Ocean Strategy and disruption. We’ve talked about many other strategies as well. But we don’t often talk about the cancer underlying it all. There is a sort of rot permeating Nintendo that no marketing perfume can conceal. It has been growing for decades.
The Ultimate Big Problem is that the decision makers inside Nintendo (e.g. Iwata and Miyamoto) wish to define the company in a way different than how Nintendo customers wish to define it. Every business is ultimately defined by its consumers.
Let me give some examples of this conflict in other businesses. Wal-Mart, for example, was tired of having the reputation of selling cheap and crappy goods. So Wal-Mart decided to sell high end electronics. Now, would you want to buy a $2000 laptop from Wal-Mart? How about a $3000 TV from Wal-Mart? Of course you wouldn’t. Why? Consumers have defined Wal-Mart as a low end product store where you can get many products conveniently and cheaply. No one associates Wal-Mart with luxury goods. All of Wal-Mart’s efforts to sell these luxury goods failed for that reason.
Another example is Amazon trying to get into the food business. Customers define Amazon as a mail order business. No one buys their groceries through the mail. But Amazon wanted to go into food because groceries was what kept foot traffic going in their competitor: Wal-Mart. People feel uncomfortable buying their groceries from Amazon because that is not how people define the company.
So how do customers define Nintendo? And how does Nintendo define itself?
How Customers Define Nintendo-
Customers see Nintendo as a maker of family friendly games that are very high in quality. People have the expectation of buying a Nintendo product and still be enjoying it decades later. People associate Nintendo with the arcade side of games from platformers and action games.
People do not define Nintendo as someone who makes non-family games. No one buys Nintendo hardware or software with the expectation that it has an expiration date- that they are to throw it out within a few years. No one associates Nintendo with PC gaming.
How Nintendo defines itself-
While Nintendo sees itself as making family friendly games in a high quality way, Nintendo’s definition of quality differs from the Nintendo customer. The Nintendo customer’s definition of quality is a game they never get tired of playing (like Super Metroid or Super Mario Brothers). However, Nintendo’s definition of quality is ‘invention of gameplay concepts’. When asked to make more 2d Mario, Miyamoto angrily retorts, “I’ve made that game before! I do not wish to make it again!” Nintendo sees games as actualization of ‘gameplay concepts’ they theorycraft all day in Nintendo’s offices.
Nintendo also sees itself as a technology company. Why? It is because the developers spend so much time playing with new technology. However, customers never see the ‘new technology’. Technology must be old in order for it to be produced for the mass market.
Due to believing they ‘create new gameplay concepts’ and that they ‘embrace new technology’, this combines to Nintendo believing all their products have an expiration date. And I don’t mean an expiration date like “nothing sells forever” but more like an expiration date of “game console lifecycle is five years, period”.
Customers want Nintendo to make wine which ages well. Nintendo instead insists on making milk which expires fast. Much of this is Nintendo’s confusion that ‘surprise’ rules consumers’ interest. If this was true, why are we still playing first person shooters and 2d platformers in mass?
Nintendo also tries to distance itself from the arcade whenever possible. Instead of making arcade games, Nintendo says it makes ‘integrated hardware and software’. What the hell does that mean? It means ‘we use new technology to conjure new gameplay concepts’. While arcade includes that, arcade implies a different sort of gaming that revolves more around reflexes.
“What do you mean that Nintendo tries to distance itself from the arcade whenever possible?” I mean when Iwata insists of Nintendo’s toy making past. Nintendo’s toy making past doesn’t compare to its arcade making past. And when I say arcade, I do not mean video games. One of Nintendo’s biggest entertainment hits were arcade-like shooting galleries made from abandoned bowling alleys where people actually shot guns like you did at a carnival. Nintendo never really did that much in the toys. But the reason why Iwata brings up the toys is because it gives license to how Iwata wishes to define Nintendo.
Now that we have the conflict of the dueling contexts of how the consumers and Nintendo see the company, see how this ‘Big Picture’ animates Nintendo’s ebb and flow.
Rise of Nintendo in the 80s and early 90s
The NES, SNES, and Gameboy did what people wanted it to do and were primarily arcade games at home. The NES was a generation behind when game developers were going 16-bit in 1986. The Gameboy remained black and white while competitors had ‘better technology’ in the Lynx and Game Gear.
“But how can you say people wanted Nintendo to be this when no one knew what Nintendo was then?” I’m not saying that. I am saying that this is how Nintendo established itself as a company in video games. Once Nintendo established itself with arcade gaming, it cannot change it especially if there is continued demand for it. It is like Wal-Mart establishing itself as a cheap goods store and then trying to sell luxury goods. Consumers won’t change their definition of the company because the company wishes it.
I keep trying to bring up this time and era to point out how and why customers define Nintendo the way they do. I’m sure Nintendo thinks this is all ‘nostalgia’ and tries to brush it aside.
“But if Nintendo did what consumers defined it, it would still only be making cards.” No, Nintendo would still be making games. And guess what? Nintendo is still a games company. Yamauchi tried to branch off into rice and love hotels, but a reason why those didn’t take off is because people saw Nintendo as a games company, not a rice company.
Decline of the N64 and Gamecube Eras
This is where the contrast of the two contexts begin. Nintendo thought the N64 and even Gamecube was wonderful because of ‘new gameplay concepts’ and all the other stuff mentioned above as Nintendo’s definition of itself.
However, the N64 and Gamecube did not fit consumers’ definition of Nintendo. Nintendo was moving more and more away from its arcade roots. The games were becoming funky. Instead of being a family friendly console, people saw the N64 and Gamecube as a kids only console.
Why the Mature Adults Didn’t Work on the Gamecube
In the waning days of the Gamecube, Nintendo pushed to do more ‘mature’ games on the Gamecube. None of it helped the Gamecube because consumers wish Nintendo to be a family friendly game making company, not a ‘uber hardcore mature’ games platform.
Why the DS lost so much momentum in its first year
Consumers do not define Nintendo as ‘creator of new gameplay concepts’ and ‘integration of hardware and software’. The touch screen ‘gameplay’ was not interesting to consumers. For some reason, Nintendo tried to make the DS as a portable N64 which is not what people wanted.
Why NES Classics and NES themed hardware sold so well
Consumers were giving Nintendo a message the way they wish the company to be.
Why the DS gained so much momentum so fast
The DS began to be how consumers define Nintendo. When people point to games like New Super Mario Brothers or Mario Kart DS, what do those games represent? Arcade gameplay. The forced touch screen mechanics became largely ignored. The DS was being presented as a general games platform instead of ‘must use two screens or touch screen for unique gameplay concepts’. Screw ‘unique gameplay concepts’. People want fun games, not ‘unique’ games.
Unlike previous Gameboy iterations, the DS was marketed as a family friendly deviced aimed not just at children. And unlike Nintendo’s previous hardware and the PSP, the DS was not marketed as ‘the technology’s new wonder boy!’
Why the Wii Exploded On Launch
The Wii was what customers thought of as Nintendo. In the consumers’ eyes, the Wii wasn’t ‘new’ so much as it went back to the arcade roots of console gaming. Wii Sports Tennis was nothing more than a motion controlled version of PONG.
Nintendo, however, misanalyzed Wii’s success. They thought people liked the Wii because of the ‘surprise’ of motion controls and its ‘integrated hardware and software’. Nothing could be further from the truth as games like Super Mario Brothers 5 would reveal.
Why Wii Music wasn’t successful
People define Nintendo as making content, not in getting customers to make content for them. It is why Wii Music died so fast.
Why Metroid Other M wasn’t successful
Metroid: Other M is a perfect microcosm of the dueling contexts. Sakamoto had his context of Metroid. The customers have their context of Metroid. When Sakamoto’s vision of Metroid didn’t match the customer’s vision of Metroid, the customers reacted with hostility and didn’t buy the game.
Why Mario Kart Wii was so successful
Nintendo’s vision of Mario Kart parallels with customers’ definition of Mario Kart.
Why 3d Mario and Aonuma Zelda do not have longterm sales
Nintendo’s vision of Mario and Zelda does not parallel the customers’ definition of Mario and Zelda. This is important because it is the customers who are paying for Mario and Zelda. They (without realizing it) define the series, not Nintendo.
Why Super Mario Brothers 5 exploded
This is very important because NOA has placed Super Mario Brothers 5 into the Wii package (replacing Mario Kart Wii) hoping to reverse the loss in sales.
Nintendo is, once again, misinterpreting why Mario 5 exploded in both software and hardware. They think there is a huge demand for 2d platformers. This is true in part, but Nintendo is missing the Big Picture.
To the consumers, Mario 5 (and NSMB DS) was not about 2d platforming as it was about a DEFINITION FOR NINTENDO. People were very excited because it seemed like Nintendo was being Nintendo again. This is the type of games people expect from Nintendo. No one wants ‘wacky gameplay concepts’ or ‘integrated hardware and software’. Notice that neither of those two things were present in Mario 5′s success.
Why the 3DS and Wii U disappoint
They do not feel like Nintendo products. Consumers have a definition for Nintendo but Nintendo does not wish to be that Nintendo. The 3DS seemed to be more about pushing 3d technology and 3d content which has nothing to do with arcade type games. The Wii U seems to be more about gobbling up the Xbox 360 or PlayStation 3 markets which greatly annoys people. How can the Wii U have a Nintendo identity if it has Xbox 360 and PlayStation 3 games on it?
“Because of this controller with a touch screen on it!” Derp.
Nintendo has been responding to the 3DS and Wii U problems from a specific standpoint. The marketing is wrong or the games were wrong or the timing was wrong or the price was wrong. But Nintendo needs to look at the Big Picture. Is Nintendo actually acting like Nintendo in the minds of consumers? Or is Nintendo just being selfish and doing whatever they want due to vanity or something else and defining themselves differently than how consumers see them?
Nintendo doesn’t need a filling. It needs a root canal. The way how Iwata and Miyamoto are defining Nintendo is incorrect, and the market is punishing them for it.
Why New Legend of Zelda would sell very well
And lastly, why would a New Legend of Zelda sell so well? Aside from that fact that such gameplay is desired, there is the Big Picture. A New Legend of Zelda would again demonstrate a potential shift in how Nintendo defines itself.
However, Nintendo only has one shot at this. New Super Mario Brothers Mii and other 2d Mario games cannot and will not replicate the Mario 5 or NSMB DS explosions because the market is aware these games do not represent a shift in how Nintendo defines itself. It is the same incorrect Nintendo definition with some 2d platformers sprinkled in. Now, would the Virtual Boy or Gamecube sold if 2d Mario was on it? No. The reason why is because there was far more wrong with those consoles than a type of game. It was the direction and philosophy of those consoles.
When will Nintendo be Nintendo again? Not in the eyes of Iwata or Miyamoto but in the eyes of the customers who are paying for everything. Until Nintendo matches the definition of the business to how the market perceives and desires Nintendo to be, we can predict with 100% accuracy that there is only stagnation or decline in Nintendo’s future.
