Posted by: seanmalstrom | October 27, 2020

Deflation is hitting all gaming

One odd practice Nintendo is doing is putting ‘limited time’ on digital games. Why is Nintendo doing this?

By definition, digital products cannot be ‘sold out’ as they are always in stock. So what gives?

Nintendo might give a convoluted answer saying that Super Mario 35th (or whatever it is) Anniversary is just a special event type of thing, but it still doesn’t make sense.

During the NES days, Nintendo was described as marketing their games like ‘Godiva chocolates’. Little has changed over the years. Nintendo wants to make heavy profit off their software. Nintendo makes little if no profit from their hardware. This explains why Nintendo is in no hurry to ‘price down’ their games unlike Sony and Microsoft platforms. Keep in mind Sony and Microsoft are more interested in selling platforms instead of games. Sony’s platform is more general entertainment base while Microsoft’s platform is online.

The ugly truth going around is that deflation is hitting the video game market HARD. Deflation is the opposite of inflation The video game product, the asset, is deflating. It is becoming valued less and less and less. It is harder and harder to sell games at the price they once were. Even indie games which, for some, make incredible products rarely go over $15 to $20. Contrast that to indie games in the 8-bit or 16-bit days putting out $50-$60 games (and that is not including the inflation of the currency over decades).

The entire point of ‘Blue Ocean Strategy’ was not so much to sidestep competition but to raise the market value of the product. The Wii has ‘value’ because it is motion controlled. The DS has ‘value’ because of the touch screen and two screens. The Switch has ‘value’ because it can switch between home console and handheld. This ‘hardware value’ is designed to flow into the games so all the games have this value. Breath of the Wild has value not just as a video game, but it has value because you can play it on big TV or on the handheld (like every Switch game). BOW was marketed exactly as that.

I really, truly, do not believe this ‘adding value’/Blue Ocean Strategy that Nintendo does is a response to competition but due to macro-economic deflation. Before Nintendo shut the lid on themselves, they revealed that… at one time… video games were special. They were mysterious. Today, they are common place. As computers spread and become more popular, the games become more and more as commodities.

Nintendo does not want this. (Apple wants this. Microsoft wants this. Not sure if Sony wants this.)

How can Nintendo make a game that will hold its value and not become a commodity? This is the question that is likely asked for every Nintendo product now being considered.

I believe a big reason for Switch sales is due to the physical ‘cart’ for the games. This gives collectors a reason to buy every game they can. Digital sales are there too, but there are tons of companies making ‘limited run’ physical carts of various games. Someone is making money off this.

The translation of sales into digital is rapidly furthering the commoditization of gaming. Less and less people are willing to pay $60 or more for a ‘digital’ game.

Disruption starts off slow but eventually the floor collapses. Digital news was a curiosity, it slowly grew, then suddenly the floor collapsed beneath the traditional news as everything went to online digital.

Nintendo’s limited ‘digital release’ for games is fooling no one and is a blatant attempt to arrest control from commoditization.

Nintendo WANTS Super Mario 3d All Stars to become ‘Godiva Chocolates’. If it has endless digital release, no one would care about it. The value in those games would slowly drop to zero.

Gamers see this themselves when they pirate and emulate entire libraries of consoles (which I am sure the reader would never do!). Once obtaining the entire digital library of a console, the value plummets, and the gamer doesn’t play the games.

I don’t think Nintendo has figured out how to stop the deflation of gaming. But let me point out one thing: 2d Mario has been available digitally, and in many other forms, for a long, long time. While 2d Mario has suffered deflation, how much of that is more due to passage of time itself?

My point is that Nintendo was not worried about 2d Mario being deflated with infinite digital release like they are their precious 3d Marios.

Why are you so scared, Nintendo? You don’t think 3d Mario’s “value” will hold without being a ‘limited release collector’s item’? Bahaha.

If you wonder why Nintendo doesn’t just ‘throw all their games up’ on the Online Service, this is why. Nintendo is willing to commoditize their 8-bit and 16-bit library to push their online service, but they are not willing to do it for their N64 Era plus games yet.

Nintendo might hold the best IPs in gaming, but as game assets deflate, what happens with the IPs? Is Mario more valuable today than he was ten to twenty years ago? Doubtful. Zelda? More questionable due to the BoW success. Metroid has gone into the toilet but that was due to bad games.

Governments, including the US Government, is printing TRILLIONS and TRILLIONS of dollars. How can gaming NOT deflate from this practice?

Due to free-to-play model and Microsoft’s ‘Game Pass’, people are going to expect to play any video game for free or for very little money.

Covid 19 wiped out all of Nintendo’s non-gaming business plans (like the theme park), so all of Nintendo’s eggs are in video game sales. How can Nintendo withstand gaming deflation?


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