One of the tragedies of the console market is the loss of what a First Party is and what a First Party does. Until recently, every console maker was a First Party and third parties jumped into the markets the First Party created.
Sony and Microsoft are First Party Game Companies only by name. They own internal game studios. But they are not game companies. One of the reasons why Sony succeeded unlike other non-First Party Game Companies was flooding the market with third party software. Nintendo has eventually caught on to Sony’s trick and this is why you see the total amount of software for the DS and Wii race slightly ahead of the PSP and, especially, the PS3 since the launch until now. Microsoft’s console strategy appears to be little more than ‘throw money at it’ which is how Microsoft can get so many third party exclusives.
Gamers of the past will recall the First Party Console Companies very well. They were, entirely, game companies. First Party software was the ‘lead’ software which defined the console’s philosophy. It was the First Party’s job to create killer apps to sell the hardware. This would create a large amount of install base for third parties to hop into and profit from. The responsibility of the First Party was pretty high as the software had to keep pushing out hardware sales.
So what happened to the First Party Game Companies like Sega and all? The big fear among the console companies was that a computer company would come in and, leveraging its cheaper ways to make hardware and larger money supply, would dominate the market. They thought NEC entering the market with the Turbographx-16 would be this threat. But the system never really caught on. The console companies breathed a sigh of relief, but their worst fears were realized with Sony. You know the story from then on. Even very talented First Party companies like Sega could not compete with companies like Sony. Nintendo couldn’t compete either (who changed to ‘winning’ by not competing, but Nintendo’s business jujitsu is detailed everywhere else on this site).
Since then, the definition of First Party has changed to mean not a game company that makes game hardware but anyone who makes game specific hardware, the behavior of the First Party Game Company has fallen to one company: Nintendo. Nintendo has not changed its ‘First Party’ behavior since they first started making game consoles.
Since Sony and Microsoft are not real game centric First Party companies but computer companies, their marketing has successfully hid the differences between their behavior and Nintendo’s behavior in a remarkable way. Microsoft and Sony’s ‘computer console’ behavior is considered ‘normal’ while Nintendo’s First Party behavior, unchanged since the NES, is portrayed as ‘eccentric’. This change in context has engulfed the analysts as well as the entire Game Industry. Only consumers, especially Nintendo consumers and other consumers of First Party companies such as Sega or Atari, truly see that Nintendo is behaving as First Parties used to.
Let me give an example of this. When a publisher says, “Our game will not outsell a Nintendo game on the Nintendo system.” This has always been the case. And the reason why is that Nintendo software is designed to be killer apps to sell the hardware. The only way a third party will outsell a game centric first party game is if the third party game sells hardware. And no third party wants to sell the hardware. They’d rather not spend the time and money necessary for them to do so. Remember, third party games on Sega systems never outsold First Party Sega games. The only third party games I can think of that did were probably Electronic Arts’ sports games and Capcom’s Street Fighter 2 but my recollection is hazy on the sales numbers of that time.
The reason for this post is to explain why Iwata is saying that First Party games that sold millions and would be a ‘success’ for a Third Party could be a ‘failure’ for Nintendo. It is not because Nintendo is operating on a different plane of existence or has super duper high expectations. Console business is a cuthroat business of momentum. The success and failure of “First Party” sales is determined by the momentum of the console. Nintendo, as First Parties did, sees it as their job to keep the momentum going for the system.
First Party games have no trouble selling. Aside from having the name and talent of ‘Nintendo’ on them, Nintendo has a very muscular marketing arm where they could flex to get a game like Wii Music seen by everyone. So it is wrong to see the First Party software success in terms of sales.
If the software maintains or increases hardware momentum, the game is a success. If the software has no effect and decreases hardware momentum, the game is a failure.
Did Wii Music and Animal Crossing Wii increase the momentum of Wii sales? No. Wii sales dropped everywhere. Now, it could be argued that it was supply finally meeting demand. But I expect Nintendo to interpret it as disinterest growing instead of everyone finally happy to get a Wii.
Before we go through this small list, we should note that Nintendo does, to my bafflement, put out games that apparently no one buys in any significant number and keeps doing it not unlike the Hanafuda cards. Is there really a market to justify making games like Fire Emblem and other really niche titles over and over again? Nevetheless…
Did Wii Sports create momentum? Well, duh.
Wii Fit? Yup.
Mario Kart Wii? Yes.
Now we run into a tricky issue with the sequels to Gamecube games. They could be said to be increasing momentum by getting Gamecube players over. But as well see, Nintendo is realizing that sequels to Gamecube games isn’t going to get them too far anymore.
Twilight Princess? Yes, especially in America. However, the sales are in line with the standard Zelda fanfare. Twilight Princess didn’t perform exemplary. In Japan, it could be considered a failure as it didn’t push the Wii in any way.
Super Smash Brothers Brawl? Yes and in all territories.
Super Mario Galaxy? Yes but only in relation to 3d Mario. In Japan, Animal Crossing Wii has surpassed Galaxy’s sales there. Galaxy did nothing to sell the Wii in Japan. I currently call Galaxy a failure and people write to me saying, “How can you say that? It sold like 8-9 million!” Doesn’t matter if it isn’t pushing hardware sales. If Galaxy’s mission was to perform momentum at Sunshine or Mario 64 levels, it has worked in America. But Miyamoto wanted Galaxy to sell at 2d Mario levels, and it is nowhere close. (Which would explain why Nintendo is making a 2d Mario)
When Nintendo means ‘major titles’, I believe they are referring to ‘Momentum Games’. Meaning, these are the key games they are placing to drive their momentum and are often the big holiday releases. They are not referring to games like Punchout!! or Excitebots.
For example, in SNES Era Donkey Kong Country was a major Nintendo release. However, so was Super Metroid. Super Metroid vanished from the sales charts rather rapidly. Nintendo likely considered Super Metroid a ‘failure’ which is probably why we didn’t see the return of Metroid for almost ten years. Super Metroid didn’t create any significant momentum for the SNES anywhere.
Was Legend of Zelda a system seller for NES? Sure. What about Startropics? No. Startropics sold well enough for a sequel, but its lack of selling hardware is probably why the series got canned permanently.
Nintendo does occassionally focus on getting third party games aboard so they can be ‘major releases’. Since such chosen third party software is considered a ‘major release’, meaning to increase the momentum of the console, Nintendo goes all out in support.
Street Fighter 2 appearing on the SNES was a major release for an example. Dragonquest IX and Monster Hunter 3 are major releases for the DS and Wii as a more recent example.
In Japan, the plan was to have a three pronged attack with Mario Kart Wii and Super Smash Brothers Brawl and Mario Galaxy. The idea was for so much excitement over these titles that everyone would buy the games, and the Wii would begin rocketing on its own and attract greater third party support. While Brawl and Mario Kart sold software in Japan (Galaxy really didn’t), the hardware of the Wii wasn’t permanently boosted. Iwata declared the three pronged attack a failure and considered that Japan needed a different strategy. It was shortly after that when Nintendo announced Monster Hunter 3 for the Wii.
Increasing the momentum of the hardware sales is far more important than software sales because because hardware sales lead to increased software sales down the line. People buying the DS for NSMB may eventually buy Brain Age or Kirby or even Fire Emblem.
When momentum drops for the Wii, Iwata would say something like, “It is because the latest software we released didn’t maintain momentum” which means, in Nintendo’s eyes, as not quality software. This is why Iwata is saying Wii Music and Animal Crossing Wii were not ‘good’. Iwata is not saying it as, some hardcore journalists believe, that Iwata read some blogs and went, “OMG, the ‘real’ gamers do not like my game!” Nintendo quality is entirely measured by the momentum of the console.
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