26
Jul
06

The History of Nintendo’s Stubborn Ways Could Spell Trouble for the Wii

fea_phil_hdrw.pngNever had I received as much “hate mail” as the time I went on a message board and talked negatively about the naming of the new Nintendo console — the Wii. Nintendo seems to be the one brand among gamers that brings out a rare kind of passion. And it should. After the crash of the video game market in the U.S. between 1984 and 1985, many thought that gaming was a passing phase that had run its course. Nintendo took the brave chance of releasing the Nintendo Entertainment system in 1985 and pretty much single-handedly rose gaming as a viable business back from the dead. Console gamers, regardless of their platform of choice, owe a lot to Nintendo for legitimizing gaming as a business.

One of the things we all love most about Nintendo is their ability to take chances where others play it safe. The release of the GameBoy as a portable cartridge-based device was a huge risk at the time — and one that is still paying dividends today. Even though the Virtual Boy was a commercial failure, you have to applaud Nintendo for having the courage to bring something different to gaming fans.

But at the same time I salute Nintendo, I just can’t help but think back on some of the somewhat stubborn business decisions they’ve made. Some may see my use of the word “stubborn” as a bit extreme in describing the company that has played such an influential role in shaping the landscape of gaming. But if you stay with me, I think you’ll agree that stubborn is a somewhat fitting description.

In the late 80s, Nintendo was working jointly with Sony to create a CD-based expansion that would work with the Super Nintendo. The partnership was scheduled to be announced at the 1991 CES (Consumer Electronics Show). At a behind the scenes meeting before the show, a disagreement between executives at both companies over how the profit from the sale of CD games would be shared led to a standoff. The details are somewhat sketchy, but the end result was that both companies walked away from the deal. Nintendo announced plans to work with Phillips and Sony was seemingly left out in the cold.

Phillips would go on to create the CD-I system, publishing some of the most forgettable games ever created, (including horrible Zelda games that Nintendo to this day will not acknowledge.) Sony would direct their frustration into the creation of their own video game platform four years later with the release of the PlayStation.

While Nintendo couldn’t exactly predict the success of the PlayStation, it does make you wonder what might have been had they swallowed their pride and found a way to compromise in the distribution of profits. It’s arguable that had they done this, they might very well be the market leader right now. (Who would defeat the union of Sony and Nintendo?) We can’t be absolutely certain about this. In retrospect, I’m a bit thankful for the disagreement. Competition makes the landscape better for consumers. But certainly Nintendo looks back upon this decision with a certain degree of regret. This would not be the only time that Nintendo’s stubborn ways would end up hurting them.

After the release of the PlayStation in 1995, much of the gaming world knew that Nintendo was developing a successor to the Super Nintendo. Code named the “Ultra 64”, the gaming system was rumored to have incredible next-gen graphics. The only problem was the fact that even though Sony and Sega had already established with their gaming systems, the Saturn and the PlayStation, that “CD was the way of the future”, Nintendo ignored the market and continued the development of the Ultra 64 as a cartridge based system. The company was completely turning a deaf ear to cries from developers that although CD load times were longer, the additional space that CDs provided would be a welcome benefit (700 megabytes vs. 32 Megabytes). The decision was also turning a deaf ear towards third-party game publishers, who felt the pinch at their wallets from developing expensive cartridges. CDs were much less expensive to produce — pennies per unit when reproduced en masse. Also, it would take only four to five weeks to take a CD from a final “gold” copy to consumer-ready shrink-wrapped boxes ready for sale. Cartridges took 2-3 months. And while gamers began to see the beauty of full motion video, Nintendo scoffed and said, “we know what’s best for you.”

The Nintendo 64 was, however, a commercial success. It saw revolutionary titles like Mario 64, Zelda – Ocarina of Time, Goldeneye and many other favorites. However, the business world saw the missed opportunity in not developing a CD system — and so did many long time Nintendo partners. Market leading developer Square, who produced the best selling role playing games and was a long time Nintendo loyalist, began making beautiful RPGs exclusively for the new Sony disc-based PlayStation. Nintendo lost other partners as well and more importantly, they lost market share as PlayStation became one of the most successful platforms ever developed.

In their lack of foresight, Nintendo developed for the past — not the future. Even if they weren’t quite ready for CDs yet, it’s hard to understand how they didn’t look towards the future. In a console market they created, I’m certain Nintendo understood that consoles are fixtures that game developers will work with for three to five years. I’m sure they saw the “CD train” coming. Why spend so much money with Silicon Graphics developing a high-performance system that was more powerful than any other system released at the time like the Nintendo 64, and then refuse to budge on something as simple as the medium that the system would read?

So after missing an opportunity with the Nintendo 64, you would think that in the next generation (2000 – 2005) Nintendo would come out swinging to reclaim their crown. Unfortunately not. While Microsoft was busy in development with a new next-gen console (Xbox) and while Sony was hard at work with the PlayStation 2, Nintendo was creating a purple cube with a handle. Yes it was cute. But the Gamecube was a console that was just begging to be third. Sony and Nintendo each saw an opportunity to increase their console’s appeal by adding a few dollars to hardware costs and included the ability to play commercial DVDs. (Many consumers did not have DVD players at that time). Nintendo instead elected to create a proprietary media. Neither CD nor DVD, the “Gamecube Optical Disc” was a small disc which most closely resembled a mini-DVD. Consumer sized DVDs wouldn’t even fit into the Gamecube. Nintendo alleged that the choice was to prevent any attempt at piracy, as they were the only group reproducing and selling the medium. Playing a bit of “Monday Morning Quarterback” again, it would appear that the money Nintendo saved in defeating piracy was grossly outweighed by the amount of money lost in not creating a console which appealed to a more mainstream consumer. It’s really a shame to think about just how close Nintendo could have come to being the market leader in this generation, but instead found themselves third again.

And now with less than three months before the release of the Nintendo Wii, many Nintendo loyalists are looking to the Wii as the savior of Nintendo’s legacy. And perhaps they will be redeemed. Certainly of the three most recent console releases, the Wii (despite the name) has the best chance of succeeding.

But there are some serious issues that keep me from fully believing in the Wii. Nintendo would have you to believe that this is the machine that is going to finally get Mom, Dad, Grandma, Cousin Charlie and Aunt Lucy to start playing games. It’s a nice thought. However, I’m not sure they’ve thought this strategy out thoroughly enough.

In my follow up to this story, I’ll outline what I believe Nintendo might not be considering with the Wii and what they need to focus on for a successful release. And while they may be enjoying success with the DS, they need a hit on the console side. Many analysts are saying that this could be the last chance for love for Nintendo (as far as large consoles are concerned.)

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4 Responses to “The History of Nintendo’s Stubborn Ways Could Spell Trouble for the Wii”


  1. 1 Jeff T
    August 2, 2006 at 12:21 am

    Great article I think someone at another site seems to have similar points, Me thinks they’ve read your article. http://www.nintendowiifanboy.com/2006/07/31/nintendo-their-own-worst-enemy/

  2. August 2, 2006 at 3:02 pm

    Thanks — That was actually really good — and perhaps even a bit more comprehensive than mine. He raised some additional points about the lack of 3rd party partnership and how Nintendo has sort of painted themselves in a corner now with the fact that they make first party software that is visibly miles ahead of the 3rd party stuff. So in the end, they end up hurting the folks that are trying to help them. They already had a low installed base with the GameCube. You would think that they wanted to help 3rd parties to make great stuff on the system? (I don’t know too much about the developer relationship side, but it’s evident that something was wrong when you look at the wall of Xbox/PS2 stuff at EB and then look at that half-a-back-wall they have for Gamecube boxes.

    For some reason, I’m not super hyped about getting a Wii. Zelda is not a huge draw for me… although I am really intrigued by the online component. I’d love to reach into the back catalog and play some old games I hear people rave about like Final Fantasy III, Mega Man series, Super Metroid, ActRaiser, etc.

  3. December 6, 2016 at 12:50 am

    You may have found a good deal that netting you free merchandise.


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