What if none of it matters anymore? The quality of the games, the consumers’ demand, and so on? What if trade policies shape the gaming marketplace for the Next Generation.
“What are you talking about, Malstrom?”
Above: Pictured above: Malstrom, the Most Interesting Gamer of the World
History is cyclical, and many people missed the Big Stuff in Generation Seven because they did not study the earlier generations. There were analysts who thought consoles began with the PlayStation 1 (Generation Five). I’m serious! Anyone familiar with Generation Two and Three saw the Wii phenomena coming. But analysts did not study the Atari 2600 or NES phenomenons.
One big, big factor in the earlier generations that no one knows today is the walls around trade. Global trade really came into being with the collapse of the Soviet Union and the end of the Cold War. Did you know that it was very difficult to get Tetris from the Soviet Union? Did you know that in the 1980s, the entire Congress was using Nintendo as a political football as japanese cars were being burned in American cities? History will repeat again. The trade walls are going to go back up. Watch and see.
When we look at the upcoming NX, there is something we are forgetting that could totally upset the apple cart: the exchange rates. Nintendo is a Japanese company, as is Sony. Just google ‘Nintendo and exchange rates’ and see what you get. Go ahead. Do it. I’ll wait right here.
One of the hits you will see is a book called ‘Introduction to Corporate Finance’. It specifically mentions Nintendo as Nintendo is one of Japan’s biggest exporters. It talks about exchange rates. Look at it, reader. Read what it says.
I used to think the marketplace success was largely determined by popularity of demand of the product. This is still true to a point. However, exchange rates have to be placed into the analysis pots. After all, each Nintendo president goes on and on about exchange rates in every corporate briefing.
Japan is devaluating their currency, the Yen, to be able to compete in the global market. The devaluation of currency is a very much a marketplace concern, but it is more of the field of the political side than business side, yet it changes the business outlook.
Let us say a certain blonde haired presidential candidate wins the US presidency and gets his way. Not only will a literal wall go up, trade walls will go up too. The three countries that he has mentioned with dislike as ‘unfair’ has been Mexico, China, and Japan. Japan? Really? Even the New York Times is surprised and ran this story on it. Let’s listen, dear reader.
Japan’s currency has fallen as much as 40 percent against the dollar since 2012, though it is up somewhat this year. The decline has made Japanese carmakers like Toyota and Honda more profitable by increasing the value of their overseas sales.
Japanese officials say the yen’s fall is simply a side effect of domestic policies aimed at ending persistent deflation, not a deliberate effort to gain an edge in trade. Yet Prime Minister Shinzo Abe campaigned openly in 2012 for weakening the yen to aid Japanese manufacturers.
I wonder if Nintendo, Sega, and other Japanese companies could have done what they did in the 1980s if the trade walls were still put in place. But I interrupt myself, let us read the NY Times together, reader:
No one can accuse Mr. Trump of coming to the issue late. He has been saying many of the same things for decades.
“They come over here, they sell their cars, their VCRs. They knock the hell out of our companies,” he told Oprah Winfrey in 1988. In a Playboy interview in 1990, he said: “First they take all our money with their consumer goods, then they put it back in buying all of Manhattan.”
Now we are back in the 1980s. Remember this book?
Sheff wrote it as a way profit from the anti-Japanese sentiment back then. Today, we see the book as a history book.
Here is the rub: if the trade policy with Japan changes, it will change gaming. Sony and Nintendo, two of the three console manufacturers, will find it very difficult to compete in the United States and perhaps the rest of the world. Microsoft’s Xbox could even win Generation Nine.
This realization hasn’t hit the gaming world yet, but it soon will. I’m not Malstrom by accident, you know. An enterprising game journalist (oh, that term!) should explore the concepts of corporate finance, exchange rates, and how that might all change.
Anecdotal, I will tell you one thing that might also change. A big retro game shop near me is doing well in part because they buy low and sell high. They buy the games low from Mexico. I’m sure other retro game stores do this too. If that easy access is cut off, I wouldn’t be surprised if retro games suddenly begin to surge in cost.
Welcome to Generation Nine.