Monday, November 5, 2012

Understanding Nintendo Part 1: Toys Over Tech

Understanding Nintendo Part 1: Toys Over Tech

There are few names more closely associated with video games than Nintendo.  Hell, for years 'Nintendo' meant 'video games' - as in the phrase "Hey, do you want to play Nintendo?"  Over 27 years (more if you count the arcade games, and Game and Watch) Nintendo has consistently brought excellent and innovative content to gamers.  After the Atari crash, Nintendo took the risk of bringing out a new home console - a market many had deemed permanently deceased.  In the process they reshaped everything - what a console is, how it's made, marketed, sold, and how the software is licensed.  While it is likely that somebody would have tried a console sooner or later, Nintendo did so many unique things and set so many precedents that it is not an exaggeration to say that Nintendo is responsible for console gaming as we know it.  Nintendo drives the evolution of controller design - starting with the d-pad on the NES and going all the way up to motion controls and touch screen controls that we see now, and they have created countless classic games (sometimes inspiring entirely new genres in the process).  To a great degree Nintendo sets the agenda for gaming.  Yes, competitors sometimes copy Nintendo, sometimes one-up Nintendo and sometimes diverge from Nintendo in calculated ways - but at all times the fact remains they are reacting to Nintendo.  Nintendo is a force that cannot be ignored.

So it has been for my entire life, and so it will be for the rest of my life too... right?

I'm not so sure.  Perhaps the world has changed, and Nintendo as we know it just doesn't have a place in it anymore?  But most of all, I think a lot of typical gamers misunderstand Nintendo.  I've never spoken to anyone from Nintendo - I don't have any inside knowledge - but what I know about Nintendo I know from reading two books (Game Over and Nintendo Magic, to my knowledge the only books written about the company) and countless interviews in various publications.  Add to that a lifetime of close observation and I feel like I have a pretty clear picture of what Nintendo is all about.

I'm going to break this up into two parts - hardware and software.  Otherwise this might prove to be too long.

So hardware first.

These days it is common to see complaints about the tech in a Nintendo console - it is "old" technology, behind the times, not nearly as cutting edge as people would like.  The only thing false about this accusation is the implication that this is somehow new.  In fact, Nintendo hardware has always been based on "old" (Nintendo would say "proven") tech.  It is a key component of their business strategy.

But perhaps I'm getting ahead of myself - let's back up a minute and assess exactly how Nintendo came to be in the game business anyway.

It is common knowledge at this point that Nintendo has been around a while.  Since 1889, in fact, when it was founded to make playing cards (not Western style playing cards, but Hanafuda cards:  It was founded by  Fusajiro Yamauchi, and the company stayed with the family right up to Hiroshi Yamauchi, Fusajiro's great grandson, who was president of Nintendo during their rise to video game stardom.

For some reason, Hiroshi tried to take the company in many different directions.  Taxi cabs and love hotels.  These ventures failed and Nintendo was nearly driven into bankruptcy.  Even the playing cards weren't selling as well as they once did.  Hiroshi needed to save the business and this meant expanding beyond playing cards - but in a way less haphazard than what he had tried before.  Since Nintendo already had a number of distribution partners in the entertainment world (owing to their cards) this expansion took the form of other entertainment products - toys and games for children.  Hiroshi hired a number of talented engineers and designers - notably Gunpei Yokoi - and Nintendo developed a number of extremely successful toys.  Nintendo next secured the rights to distribute the Magnavox Odyssey (an early console) in Japan.  Nintendo sought to break into the arcade business but it's fortunes in that market were not too successful at this time (don't worry - astounding arcade success would come soon).

What might be considered Nintendo's first video game breakthrough came when Gunpei Yokoi was riding the train to work.  He saw a business man playing with a small calculator and Yokoi realized that the same technology that allowed a calculator to display different numbers could be used to make a simple game.  This technology had only just become cheap enough to be used in mass market products.  The result of this brainwave was the Game and Watch series of handheld games.  They were a huge success.

In fact, some of Yokoi's earlier toys had used cheap technology too.   This is a lesson Nintendo has never forgotten - success depends not on how revolutionary the tech is, but on how inventively the tech is used.  One element of that is the user interface.  If the player is physically interacting in a new way, then it doesn't matter if the tech is familiar - the experience itself is fundamentally new.   Fun Fact: in order to keep the profile of the games low, Yokoi invented the now standard cross shaped D-Pad.

Game and Watch was a success, but the same could not be said of Nintendo's arcade games.  A particularly disastrous attempt to break into the American arcade market had left Nintendo with a large number of unsold cabinets.  Nintendo needed a new game that would use the cabinet's hardware - and they needed it fast.  The job was given to a promising young designer by the name of Shigeru Miyamoto.  The game he created was Donkey Kong.

So that story tells itself.

With the arcades conquered, Nintendo set its sights on the living room.  The result was the Family Computer, or Famicom, known in America as the Nintendo Entertainment System.  Just like the Game and Watch products, the NES used proven tech, but at the same time the NES pushed the boundaries of what had been offered in that type of device before.  Compared to earlier consoles, such as the Atari, the NES was vastly more powerful.  But it was hardly cutting edge in the computer world.  For example, it had an 8-bit processor, but the chip manufacturer's were already making 16-bit processors -they just weren't affordable enough for a mass market consumer product.

Anyone reading this knows about the success of the NES.  Nintendo sold tens of millions of them.

The core premise of Nintendo's strategy in those days - buy proven, affordable tech and use it in new and novel ways - has been vindicated again and again and again.  The most successful consoles from Nintendo's competitors actually do the same thing.

For example, the Playstation, which Nintendo essentially commissioned from Sony (whoops!), used a more affordable storage format than the cartridge.  Sony realized before Nintendo that the CD format had become "old" - affordable and proven tech that people were comfortable using.  As such it was a more desirable format than the kind of large cartridges that the N64 used.  Additionally, Sony went with a nice and reliable 32-bit processor, while Nintendo, forgetting their own rules, went with a relatively expensive and complex 64-bit processor.  Developers loved the Playstation and spent the whole generation complaining about the difficulty of developing for the N64.

It is common now to talk about Nintendo's business decisions as if they make no sense.  Nintendo is "quirky" and "different" - Nintendo chooses their own path.  In fact, most of Nintendo's decisions are perfectly logical - as long as you remember one simple fact.  Nintendo, at its core, is still a toy company.  They are not, and have never been, a tech company.

Look at the difference between Nintendo and Sony.  Sony is a tech company.  They make computers, they make DVD players, they make all manner of consumer electronics.  This informs how they design their console - even the very first Playstation was also a CD player.  PS2 was a CD/DVD player.  With the PS3, we have an all purpose home entertainment center.  It costs Sony almost nothing to add this functionality (after all, they are manufacturing these components anyway).  The controller, on the other hand, is incredibly consistent in it's design, with only the most modest of adjustments made over time.  This too, to me, is suggestive of a company which has other tech (such as computers) as their frame of reference.  After all, when making a new lap top, you change out the CPU and the GPU - you don't redesign the keyboard.

Because of their background, Nintendo has a fundamentally different approach.  People often complain that Nintendo doesn't offer some of the perks of their competitors.  But since Nintendo is not a general tech company, they cannot offer those features at the same price as their competitors.  In order to offer DVD playback, for example, they would have to buy a DVD player from some one (not Sony, one presumes).  Nintendo does not own any factories or manufacturing plants of their own.  They partner with other companies for all of their needs.  I don't want to white wash any of Nintendo's poor decisions though - it is true that had they wanted to, they could have used standard DVDs as their storage format and standard DVD readers, and they could have offered DVD playback for basically no additional cost.  Nintendo instead went with non standard formats in order to combat piracy - having made that decision they could not also offer DVD playback without adding significantly to the system's cost.  The same goes for any number of features.  Why can't Nintendo offer an online service comparable to Microsoft?  Answer: Because Microsoft has been doing this for decades and Nintendo has absolutely no comparable experience.

What Nintendo can do is focus on providing a unique user experience unlike anything else on offer.  Fundamentally this is what they have always done, but it is much more noticeable now as Nintendo's innovations drive them off in some truly unexpected directions.  They are clearly concerned with the physical act of interacting with their machines.  Going all the way back to the beginning this is true - the d-pad was more convenient and easier to use than the old joysticks.  When 3D emerged, what did Sony's controller look like?  It looked exactly like a Super Nintendo controller with an extra set of shoulder buttons.  Nintendo, on the other hand, realized that D-pads were no longer adequate and they changed up the interface by adding an analog stick.  Nintendo also decided it might be fun if the controller shook like crazy when you blew up something so they added an accessory that did just that.  It's totally non functional, and yet it was a significant addition.  Sony copied both features shortly.  The Game Cube controller improved on Sony's Dual Shock in every conceivable way, except inexplicably they lost one of the shoulder buttons.  But that wasn't good enough - they were no longer in a leadership role, but were now reacting to Sony.  Wisely Nintendo refused to continue in that direction and so they shook things up big time.  With the Wii and Wii-U we continue to see Nintendo looking for new ways for people to interact with their machine.  In my opinion this is one of Nintendo's defining characteristics.

But I'm getting ahead of myself a bit.  What was Nintendo thinking with the Wii?

The Game Cube era was a serious low point for Nintendo.  In Nintendo Magic Satoru Iwata (current president of Nintendo) stated that had Nintendo's follow up performed identically to the Game Cube they would have gone bankrupt.  Some soul searching led Nintendo back to their roots - affordable, "old" technology used in novel and inventive ways.

It is often claimed that Nintendo wanted to attract "casual" gamers/consumers and deliberately abandoned "core" gamers in the process.  I don't think this is true - rather I think Nintendo simply wanted to replicate what they'd done with the NES.  I think Nintendo was right to recognize that they stood little chance of competing directly with Sony.  Because of how their company is structured they simply cannot offer exactly what Sony offers at the same price point.  They will always be either under powered or over priced.  With Nintendo's missteps in the 32/64-bit era, they opened a door for Sony that can never be shut.  A generation of kids became Playstation gamers, not Nintendo gamers, and Nintendo is unlikely to win them over.  It was imperative that Nintendo secure their future by winning over a new generation of kids  - hopefully converting them to lifelong Nintendo fans.  The way to do this was by offering exactly what they offered with the NES, when they converted the entire world into fans.  That is, an affordable entertainment experience that is unlike anything else on offer.

While Nintendo did want to attract new gamers (something their immediately preceding consoles had utterly failed to do) I don't believe Nintendo ever intended to abandon "core" gamers.  If you look at Nintendo's first party published games during the Wii's life, it is about 2/3rds "core" titles vs. 1/3rd "casual".  Nintendo was also aware of the fact that a lack of 3rd party support hurt them in the previous two generations.  It's funny to say now, but I think Nintendo intended to turn that around with the Wii.  The Wii should be easier and cheaper to develop for than either the PS3 or 360.  The new controller possibilities should have appealed to creative designers, and the games they made would have to be exclusives, since no other competitors had similar options.  This risk taking should have been more reasonable to 3rd parties thanks to the reduced budgets the Wii allows.  The Wii should have had a library of creative exclusives unlike anything else on offer.  That was what Nintendo wanted.

Why didn't that happen?  Nintendo obviously underestimated how totally the industry would shift to multi platform titles.  Even with a large number of units shipping, nobody wanted to develop exclusives for the Wii from the ground up.  Far better to develop for PS3/360 and port to the Wii.  Furthermore, those that did take the risk on a Wii exclusive were met with poor sales.  Had those games sold better, there definitely would have been more cool content released on the system.

In the end, I think the blame for the Wii's suboptimal library goes equally to risk averse 3rd parties who were simply not interested in making daring exclusives and narrow minded gamers who were skeptical of the Wii from the beginning.

And yet, the Wii itself was a major success.  Nintendo made a bundle, their own first party games sold like crazy, and they shipped more units into more households than any Nintendo system since the NES.  Now they are preparing their follow up.  Two weeks to the day from the time I'm writing this, the Wii-U will be released.  Nintendo is in a period of major transition.  They need to find their place in the modern gaming landscape.  The Wii was the first phase of that transition.  The Wii - U will be the second.  It is unclear at this time quite where Nintendo stands - but by the end of this generation we will know.  If the Wii-U manages to attract the "core" gamers back, Nintendo may have finally reclaimed a throne they haven't held since Sony appeared on the scene.  If not, Nintendo may be permanently sunk.  I suppose something in between could happen, but it's hard to see where they go from here if this fails.

So this is it - the big moment - the moment all those "casual" Wii gamers become just "gamers" and all those snobby "core" gamers also become just "gamers" and everyone owns Nintendo.  Or not.  If the general state of the console industry is anything to go by I think Nintendo may have some tough hills to climb.

I have sensed for a while now that the console space and the PC space are collapsing into each other.  The consoles are increasingly PC like and PCs have gotten so much easier to use than they used to be - loading up a game on Steam is almost as easy as using a console.  My hunch is that this trend will continue, and if that is the case, that is a path Nintendo is ill equipped to follow.  Additionally, although I can't relate personally, many gamers do seem to want their consoles to be entertainment centers and that is ALSO a path Nintendo is ill equipped to follow.  You can see them trying, with Wii TVii and even the Wii has Netflix functionality and so forth - but they are not the first to do this.  Their whole strategy is based around being first - offering that novel experience.  When it comes to making their console an entertainment center they are playing catch up.

If Nintendo is to survive there is a crucial question that must be answered - do people still want dedicated gaming consoles?  Because in many ways a console is a toy.  It's not like a iPhone/iPad, which has a clear utilitarian purpose as well as entertainment.  Nintendo's consoles in particular are definitely toy like - physical objects that people interact with in a physical way.  Fundamentally, despite the marketing hype, they serve no real purpose except game play.  Has the time for such a product passed?  If so, I fear Nintendo cannot survive.

Can Nintendo hope to move as many Wii-Us as they did Wiis?  Frankly I can't imagine it.  I had a job for a while that had me regularly visiting retirement homes - they all had Wiis in them.  I actually asked on of the ladies there if they thought they would want to upgrade their Wiis when the new system came out.  Let's put aside for now the fact that they had no idea there was a new system coming out (that's not really surprising, especially at the time I was asking) the point is her answer was no.  They only used the Wii for showing photos and bowling.  They didn't need to replace it unless it broke.  The core pitch is different - the idea of moving your body to control a game has a certain appeal.  It appeals to kids who like to move around.  It appeals to parents who worry games are too sedentary.  It appeals to nerds like me who think it gets us one step closer to the holodeck.  Besides all of that it is fundamentally new - nothing like that had ever existed before.  Touch screens and tablets are just not like that.  Hell, in some ways the Wii-U is just like a blown up DS.  They show some pretty cool, novel uses for the tablet in their promotions.  People playing Go, looking at the lay of a golf ball, etc.  I'm not sure that that's compelling enough to get people who aren't gamers to drop money on it.  And I'm not sure it's compelling enough for skeptical gamers who have never owned a Nintendo console to drop money either.  IGN has a talk show type thing called "Game Scoop!"  In one recent episode they polled several editors as to whether they were more interested in the Wii-U or the iPhone 5.  Unanimously they answered the iPhone.  Their reasoning was that the iPhone would clearly affect their life but the Wii-U they weren't sure about.  Every one agreed they would wait and see.  Well, that kind of waiting around is why more games didn't materialize on the Wii.  If that's a common attitude among serious gamers, it's a bad sign for Nintendo.

Relevant bit at 10:20

This is why the news that Nintendo is selling the Wii-U at a loss troubles me.  That leaves Nintendo solely dependent on software for their profits, and I question if the Wii-U can generate the kind of software sales they will need.  For that model to work two things have to be true: A.) There need to be a lot of users on the platform and B.) Said users need to buy a lot of software.  The Wii moved one hundred million units, but could not generate software sales to save its life.  The Wii-U is bound to move fewer units - is it realistic to expect the software support to be there?

But in fact, if there's one thing we can say with absolute certainty about Nintendo, it's that Nintendo's first party games will be good.  Really good, actually.  That is another area where Nintendo has a somewhat unique approach.

But that's another topic - coming soon, Part 2: Software!

*A note on the style of this essay: Since this is not an academic essay, I didn't take the time to formally source each fact referenced in this article.  What I can say is that nearly every fact I mention in this essay comes from one of two books: Game Over: Press Start to Continue by David Sheff ( and Nintendo Magic by Osamu Inoue (  Additionally many of the facts can be verified via Wikipedia.  Of course, my opinions are solely my own.


  1. "The Wii moved one hundred million units, but could not generate software sales to save its life."

    The Wii has sold nearly 900 million units of software to date. Wii owners bought games, and they bought a lot of 'em.

    "Even with a large number of units shipping, nobody wanted to develop exclusives for the Wii from the ground up."

    A huge number of Wii games were exclusives, some of which were later ported to other platforms. That was one of the console's major strengths, you couldn't get a lot of Wii games anywhere else.

    1. Well, yes. I suppose I'm a bit contradictory there actually. I suppose what I meant to say was "The Wii did not generate as much software sales as one would expect" and similarly "Developers did not make as many exclusives as you would expect them to, given the number of systems sold".

      For example, how many quality exclusives are on the Wii? I would say, just thinking about my own collection and some others I overlooked, maybe about 25. Then there are the ones that didn't come out here, so maybe there's 35 or so total. That is, quality exclusives that should appeal to most gamers (of course there's lots of shovel ware that's exclusive to the system, but I'm not counting that).

      Compare that to the PS2 - in 2006, 6 years after release, the PS2 had shipped about 100 million systems (according to this site: So that's pretty similar I would say - but think how many more exclusives there were. Dozens and dozens of them I'd say. The PS2 has the massive, extensive library of high quality titles that aren't on any other platform. Why doesn't the Wii have the same kind of library? Any game built from the ground up for the Wii would almost have to be an exclusive (at least until the Move came out). And they shipped enough consoles to support that kind of development. My conclusion is that developers a.) didn't want to make exclusives the way they used to and b.) were discouraged by the sales of those exclusives that did get made.

    2. In September 2006, PlayStation 2 had shipped 111,250,000 units of hardware and 1,127,000,000 units of software. The pace is slightly faster than Wii, but the attach rate is very similar. Meanwhile, PlayStation 1 sold a total of 962 million games during its entire lifetime, which the Wii is approaching.

      As far as quality exclusives on the Wii, it's a matter of subjective taste. Wikipedia lists 369 exclusives for Wii, and 478 for PlayStation 2, and the PS2 of course has the age and sales advantage. PS1 has 261 exclusives listed at Wikipedia. I would say that the Wii is quite similar in this regard to the PS2 and PS1 - it "has the massive, extensive library of high quality titles that aren't on any other platform", even if the games are different. As for showelware - those usually aren't exclusives, they are ported cheaply to a number of platforms. Case in point, the infamous Wii game Ninjabread Man was also a PS2 and PC game.

      If the success of the Wii had been seen in 2005 or even early 2006, big software houses would have had more time to prepare. Despite this, the Wii got a wide variety of quality games, though a lot of them were from smaller studios. Sure, some bad games sold on Wii and some good games didn't, but it was the same on the PlayStation 2, and on other consoles. I still have a great number of worthwhile and interesting games to play on the Wii, even though the release schedule has already dwindled down in the transition to the Wii U.