The conference I have been waiting for has finally arrived. Iwata has to explain his actions to the investors. He knows he is in such big trouble that he brought Miyamoto along! hahahaha
I’ll wait until it is translated into English so I could read it in full and get the correct context. I will avoid journalists trying to cherry pick quotes to use for sensational reasons. It is better to read these things in full than rely on saucy quotes from someone else. Even not reading it is preferable than relying on saucy quotes.
But I will excuse just one quote. Here it is:
“As you probably know, the current situation of Wii cannot be defined as healthy. The price cut seems to have the least impact here than other parts of the world. It is our urgent mission to recover the momentum of Wii during the holidays utilising Nintendo’s strength. The total Japanese market size is less than one sixth of that of the US, and about one fourth of the four major European countries. There exists major differences in market size today. When we compare the unit hardware sales, Japanese sales are about two-sevenths of the US, and more than half of the four major European countries. It can be said that Japan today is the challenging market for home console software to sell. Since the software we launched at the end of 2008 did not go on to sell for an extended period of time, and we were not able to launch very strong titles in the first half of this year, we have seen a significant drop in software sales this year. As a result Wii Software unit sales share is just below 50 percent of the entire home console software market so far in 2009.” – Satoru Iwata
Iwata is saying several things in this quote.
First, he is stating the obvious about Japan. Folks, Japan is a dying country. There is little to no immigration, people there are not having babies, so there is a population decline. The economic mood there is a depression. That, of course, is a “challenging market”.
Second, he says Nintendo was unable to release strong software in the first part of 2009. I don’t know why this is. But there you go.
Third, he says Nintendo’s big software released in 2008 stopped selling and did not sell consistently. In other words, they were not evergreen titles. The big software Nintendo released in 2008 was Wii Music and Animal Crossing Wii, two games championing the new “User Generated Content” direction Nintendo had adopted. Both games tried to use the consumers’ “creativity” for its content with Wii Music being the extreme example.
Naturally, there is tons of garbage on the Internet about Iwata’s quote. People, who didn’t like the Wii in the first place, are bringing out whatever answer they want and slapping it on. Wii is “unhealthy” because it doesn’t have enough “hardcore games”, didn’t release “Disaster” in America, hasn’t released Pikmin 3, and one person laughably said Nintendo needs to release more Fire Emblem (yeah, that is the momentum builder right there, Fire Emblem!).
What you are not hearing from anyone is discussion about why the Wii declined in the first place. Either people are missing that Nintendo switched gears toward a User Generated Content strategy after 2007 or they are deliberately ignoring it.
What we have just witnessed is Shigeru Miyamoto’s “Virtual Boy”. The Virtual Boy, if you do not remember, was the creation of Gunpei Yokoi who could be considered a genius in his own right. He invented the D-Pad, the Gameboy, the Game and Watch, helped make Donkey Kong, Metroid, Kid Icarus, and the Super Mario Land games. The Virtual Boy, while perhaps looking logical in that time period from those who made it, is considered insane today. Gunpei left Nintendo shortly after.
Miyamoto has a bizarre obsession with “creativity” (more on this in a later post). Apparently, he believed that consumers’ imaginations would be fired up by User Generated Content software. Nintendo execs were so sure User Generated Content would be standard that they even began to call it by its abbreviation: UGC. Will Wright is also a big believer in UGC (see Spore), and Wright and Miyamoto are good friends. But I am not sure who infected the other with UGC. Miyamoto might very well have been the originator of it. Even when recently called out on it, Miyamoto blames the consumers for “not understanding Wii Music”. hahahahah That, to me, suggests UGC was his baby and that he was the driving advocate of it in the company. Iwata, who tends to let Miyamoto get away with things, let it go. Fils-Aime, who should have realized instantly that it did not match disruption at all, likely confused the Technocrati (using new computer technology to reshape things) with disruption (which happens all the time apparently. Christensen complains how widely misunderstood disruption is).
So what we witnessed was a failure at all the levels of the Nintendo executives. This bad move got past Miyamoto, got past Iwata, and got past Fils-Aime (Fils-Aime is the torch carrier of disruption in the company. I suspect it is he who introduced it to everyone there).
What I love about disruption and even Blue Ocean Strategy is that the blame of a product’s sales cannot be excused by macro-forces or the employees. No, the blame goes straight to the top. Many years from now, people are going to look at UGC move that Nintendo made and go, “What the hell were you thinking?” just as we do today with the Virtual Boy. In the future, it will be understood that gaming is obviously in the content business, just as books, movies, and music are in the content business.
This was Nintendo’s arrogant moment. They declared that UGC would change the very nature of video games and that it was a “game changer”. The only thing that changed was Nintendo’s momentum (zapp!). Nintendo execs should thank God that they made the UGC move at the height of the Wii success instead of using it as a basis for a new console. UGC is radioactive because it is Anti-Content. In a content business, this means consumers will FLEE from you as opposed to merely being annoyed you aren’t making games they like. UGC breeds hostility (though, consumers won’t articulate it is UGC. They will just know that there is no game there and wonder why they paid $50 for a game that has nothing in it). In a way, it would have likely have been better to make no software than to make UGC software.
With Motion Plus, I figured Nintendo had delayed many of their games to take advantage of Motion Plus. I thought this was the reason for the vacuum of software at 2008. I did not realize how huge Nintendo bought into UGC. UGC is, essentially, Anti-Content, so Nintendo saw no reason to put out more Motion Plus games but wanted to wait to see how Wii Sports Resort performed.
This was stupid. They should have struck the iron when it was hot. By the time they release more motion plus games, the iron will be cool. Only a company that hates content could embrace UGC so completely. And this would explain why Nintendo didn’t follow up on the Motion Plus launch. Nintendo did not see that people were hungry for more content that uses these motion plus devices they bought. This is why they bought a Wii in the first place, to play games with these new controls. Only EA followed through (and if you did not like sports games, there was nothing for you).
So I see UGC direction as a distinctly Anti-Content philosophy that has diseased the entire company and explains why Nintendo’s output has been so poor and so sparse lately. Nintendo’s content is what creates the special bond between the Nintendo customer and the company.
I suspect Miyamoto adventured with Iwata to the Investor’s Conference not only because Iwata was in trouble but Miyamoto has to be feeling major guilt (but won’t say anything publicly).
And now a word from GoNintendo comment dweller, WiggyMaster:
The first glimmer of hope from Iwata in a long time.
Seeing this from him is almost certainly a signal of a change in focus from those here-and-there buyers to the more focused gamers.
Lol, Malstrom… how wrong you were. And how right I was.
And what was I wrong about, WiggyMaster? He doesn’t say!
I’ve been criticizing Nintendo’s UGC direction so much this year that people write in and tell me to stop! One person said he would stop reading my site because I was just saying that “Nintendo was doomed” (which wasn’t the case, since I knew they would have to stop going in this anti-content direction).
Has WiggyMaster missed the continued presence of Wii Fit and Wii Fit Plus sales that continue to this day?
I am not so much a champion of Nintendo’s strategies as I am a champion for shattering the “Game Industry” and returning games to the gamers. I long for the day when customers, both current and non-customers, are put on the pedestal. It is the passion of the gamers that matter, not the passion of the developers or analysts or suits. Customers are never talked about anymore. The only presence they have is when NPD numbers come out. And NPD is seen as some magical oracle declaring truths instead of a collection of sales which indicates what the customers want and don’t want.
Remember, I am in the Expanded Market. This is also why I have an advantage over people in the “Game Industry” and ‘hardcore gamers’ in talking about the Wii success and/or the movements of the Expanded Audience. I’m one of them.
The latter 2008 games had one Core game and one Expanded Market game, Animal Crossing Wii for the former, Wii Music for the latter. Iwata is saying that both these games didn’t become Evergreens. So you can’t say the “Expanded Market’ evaporated. These were duds on both the Expanded and Core markets. The huge sales for Wii Fit Plus and Wii Sports Resort should reveal that the Expanded Market is still right there.
I’m amused that people talk of the Expanded Audience as if they are space aliens or that they are drooling retards. Being part of this Expanded Audience, I enjoy shoving the “casuals are retards” right back at these people. Expanded Market folk can get on the Internet and can talk to you as I am doing now.
I am here to tell you that gaming does not belong to you. Gaming does not belong to the “Hardcore”. Gaming does not belong to the “Industry”. Gaming belongs to the gamers.
Gamers did not leave gaming. To the contrary, gaming left gamers. Games got more violent, more buttons, more cinematic nonsense, that they drove away people. The “Game Industry” did not realize this because they mistook sector performance for industry performance. They thought gaming was growing where it was the gamer-growing-older with a growing wallet, population growth, and globalism with new territories around the world. Gaming, itself, was not becoming more popular.
Since gamers didn’t leave gaming but gaming left them, two types of Expanded Market exist. The first are those who are gaming virgins. Since gaming has overshot them, there has been no opportunity for them to play. The second were those gamers where gaming left them. While I’m a member of the second, the two groups are very much identical in spirit.
The primary difference between the Expanded and Core markets is that time, not money, is the value that Expandeds care about. This is why price cuts are a big deal to the Core Market and the standard way of things in the “Game Industry”. They do not matter much to the Expanded Market. Time is what is of value. Expandeds would rather pay more for something that wastes less time and is more useful than something that is cheaper and takes up more time.
Hardcore games are ‘crappy games’ to the Expandeds because they are a waste of time. It is a waste of time learning the controls, the tutorials, for a game that is worth playing only once if even then. The story and “narrative” is a joke. A movie is a better value since it is superior in ‘story’ and ‘acting’ and takes much less time.
User Generated Content is a big waste of time. I can’t sell the content I make so what the hell is the point? This is one of the many reasons why it flopped with the Expanded Market.
Why is 2d Mario preferred over 3d Mario in the Expanded Market realm? Very simple. The “hub” in Super Mario Galaxy can take five minutes just getting around. That is ridiculous. I can beat a 2d Mario game in that amount of time. It takes more time to run around in that 3d Mario game to do a level. In a 2d Mario game, the content is more concentrated in regards to time. 3d Mario has you run around in circles for a single level. Then, they repeat that same level for five more stars with minor altercations to it. 2d Mario, on the other hand, has you consume more content in less amount of time. This is why 2d Mario rules. With a choice of two experiences in a limited time, of either beating a few levels in Super Mario Galaxy or playing all the way through Super Mario Brothers 3, which is the better value? SMB 3 all the way!
I do not like things that waste my time, especially entertainment. Back in the days of the arcades, it was understood that time was at a premium. But since gaming has been on consoles for so long, the entire “Game Industry” has forgotten that time is the constraining resource.