There's No Doubt Anymore. Apple Has Spooked Nintendo.

Nintendo's top people don't use the word Apple. They don't say iPhone or iTunes, not voluntarily, not if they can avoid it. And maybe that's because when they've been lamenting the problems with the "value" of games lately - they like that word better than "price" - they don't just mean Apple.

They might also mean Facebook, Android or any of the other places where people can play games without spending $US30 on a Nintendo DS cartridge or $US50 on a Wii disc.

Nintendo is concerned about how people value video games, a concern that sounds like code for being quite anxious that more and more people are enjoying really cheap games, some of which might be as fun as a Mario.

"I feel our business is dividing in a way that will threaten the continued employment of those of us who create games for a living," Nintendo's president Satoru Iwata said last week while speaking to thousands of game creators for the keynote of the 2011 Game Developers Conference.

"The value of video game software does not matter to them."

He drew a contrast between the creators of dedicated hardware, the companies like Nintendo (and Sony and Microsoft) that build a games machine in order to get games in people's hands and those who build machines that just happen to play free and 99-cent games.

"The value of video game software does not matter to them."

Iwata made his speech in San Francisco's Moscone Center. Across Howard Street, right out the front door from Iwata, on the other side of crosswalk, just off the curb where TV news vans were parked, Steve Jobs was showing an audience of his own the iPad 2.

Everyone knew who Iwata was talking about.

Nintendo people, including Reggie Fils-Aime, president of the company's American division, discouraged me from making too much out of the keynote speech face-off. Nintendo was invited and, if Apple was counter-programming, that was a question for Apple.

But it sure seemed like Nintendo was counter-arguing the vision of cheap gaming popular on Facebook and on the kind of machines Steve Jobs holds high on stage.

"I would not single out any particular company or any particular application store," Fils-Aime told me during an interview following Iwata's remarks, after I asked if iTunes was the source of Nintendo's complaint. "But certainly it seems like, when content is being created and made available for free, that it is devaluing content, and is potentially devaluing the expectation of consumers for what content should be."

It wasn't too long ago that Brain Age and Nintendogs were the rage. And then there was Wii Sports. Those were Nintendo games on Nintendo machines and Nintendo was the company the news vans had started to drive toward. The hottest explosion in gaming now, though, is on iTunes and on Facebook. There's the biggest buzz, in places that don't carry the Nintendo logo, where FarmVille and Doodle Jump are a joy. Nintendo's got something to say about all that, and that something, not surprisingly, is that these new markets that they're not really a part of, are trouble.

"As an industry that creates this content, it's in our interest to keep the value of the content high and not allow it to be devalued over time."

Nintendo has sounded alarm bells before, most recently while it was struggling against the PlayStation 2 with its Nintendo GameCube. Back then, Iwata warned that a slump in Japanese gaming would spread to America and that change was needed. Whether his worry was self-serving or not, his prediction that a dramatic change in gaming hardware was needed proved correct and the Wii became the unlikeliest hit in gaming history.

Outside of Iwata's speech and prior to my conversation with Fils-Aime, the buzz I heard on Howard street was that Nintendo sounded threatened by Apple and Facebook. I heard it from reporters and game developers who flow through Howard Street's sidewalks like so much salmon during Game Developers' Conference.

Nintendo's position was that free and cheap games are hard to sell, hard to profit on and can hurt game developers. Hurt game developers can't make games which is bad for gamers. But maybe, I proposed to Fils-Aime, all that was really going on was that Nintendo's businessmen didn't like that their customers could find cheaper games elsewhere. Why would that be a wrong interpretation? "I've heard from a lot of developers who say, you know what, these people are right," he told me. "We do need to keep the value of our content at an appropriate level. Otherwise what we risk as an industry is investing time, money and energy to create something that no one has value for."

Fils-Aime and Iwata make exceptions. They don't dismiss all free or cheap games. Both have lavished praise on Angry Birds, for example, Iwata labelling it in the same "must have" category he puts Grand Theft Auto, Sonic The Hedgehog, Tetris and Zelda. Fils-Aime has called that game, which sells for 99 cents ($A1.19), "under-priced".

"What's important is that the value of the content be high and be maintained," said Fils-Aime, telling me a "high-value" game could cost $US1, $US5 or $US50. "As an industry that creates this content, it's in our interest to keep the value of the content high and not allow it to be devalued over time."

Nintendo sounds like a company that doesn't want an iTunes.

It sounds like a company that doesn't want a flood of cheap games, though I noted to Fils-Aime that the Wii also suffered the perception of being flooded with low-quality games from a broad array of developers.

"Nintendo cannot play a role of limiting in any way the content that's available for our platform," he said, as our conversation turned into one about the defunct Nintendo Seal of Quality which Fils-Aime implied wasn't enforceable anymore due to legal challenges. I'm not sure it's as simple as that. The company does limit who can make games for it platforms and does not allow adults-only-rated games on its machine. But Fils-Aime emphasises that his company wants the best games on its machine. The implication is that makers of certain other machines on which people play cheap and free games, don't.

What to make of Nintendo's complaint them? There does seem to be merit to the idea that it's hard for game creators to turn profits if their games are sold inexpensively on iTunes, but it's not clear that the current way games are sold on machines like the Wii and DS are void of hazards that could keep a talented game creator from profiting.

One conclusion, though, is that Nintendo, which will launch its 3DS in North America at the end of the month with games that cost about $US40, is not against free games. They sold a downloadable one called Photo Dojo last year for their DSi. "We were convinced that as soon as consumers had that game and had that experience, that they'd share it and talk about it and it would be something that consumers would want," Fils-Aime said. "That strategy has worked. From the day that we stopped making it available for free, we've actually sold more than what we had initially made available for free. So, strategically, it's looking at each piece of content and deciding what's the best way to have consumers experience the content and maintain its value over time."

It's not that Nintendo is against free games, but it sure seems like it's against the way gaming works in the world of Facebook and the world of Apple.


Comments

    well u still have my support Nintendo. Been playing alot of these cheap games on my phone lately, but the controls suck. All I kept thinking while playing was that the 3ds cant get here soon enough! I think that ds and 3ds game prices should go down a little though, they are up to $70 here in aus!

    I think an important point about these "cheap" games is the business model around them. These games aren't made with the traditional constraints you'd normally find making a DS game. It can be done with a couple of people, you don't need to have a business relationship with Nintendo, you don't need to find a major publisher to distribute and sell you games to retailers, you don't need to worry about retailers giving it shelf space. You can handle all these back-office business functions yourself without actually having to hire experts in the field. To publish to iTunes it's as simple as filling out a questionnaire and clicking upload (ok, over simplified, but it's a lot simpler then getting a DS game published). When you strip out these overheads, cut out every link in the chain demanding their cut of the profit, you can operate at a much lower price, where before you'd have to sell a game for $50 to make $5 now you only have to sell it for $7.15.

    there's always a huge difference between a device thats made specifically for games, and devices that aren't.

    gaming devices simply have better controls, bigger games, and generally draw in gamers who actually want story lines, content, replayability, multiplayer, + all the other perks devices such as the 3DS provide
    (vs casual/app gamers who just want a 5 min game and obviously dont care about content (angry birds for instance))

    the phone games are cheap for a reason. I don't think N. needs to worry about iphones/icrap/ipads/ipods...if anything its android (more androids out there than iphones) and windows phone 7(far superior to apple's handhelds in terms of games/graphics) devices that would pose a prob.

      Agreed, there is really such a big divide between traditional game and gaming machines and casual gaming that they don't really intersect - they are not stopping each other. I'm not going to not buy GTA5 because I bought Tiny Wings. Disagree about the threat that android/windows pose though, the hardware is basically irrelevant in this era its the store browsing and purchasing experience that the big N needs to learn from.

    Yea... 3DS game prices are a tad high in my opinion...

    Well yes, Apple is threatening all gaming handhelds. But maybe Nintendo needs to learn than you can't continue to sell your five year old games as new. When do Nintendo games come down in price? I'll tell you: never. Super Mario Galaxy (the first one), Twilight Princess they're both still going for over $90 in Oz. Nobody else does this, nobody.

    So here's a tip for Nintendo: Yes we know your games are worth more than $1.19, and we will be willing to pay for them as long as you price them reasonably like your competitors do.

      The retailer controls the price of games. Usually the only cases where prices are set by the maker are when they are sold digitally or when it's Apple, who does fix their prices.

      For now there's nothing to worry about though, Games are still selling like hotcakes and these apps are used by people who wouldn't have bought a game beforehand so there's no lost revenue.

        The retailers must work on top of Nintendo's wholesale price. Your argument does not explain why game prices for games on other consoles go down about a year after release, whilst Nintendo's don't

        I agree that in the short term Nintendo will keep selling their games at their prices. But the public perception of a game's worth is changing, and that's what scaring them. Rightly so I say.

      not true, I've seen Twilight Princess for $70, and SMG for $50.

      But what about Mario Kart DS? I can't find it for under $50 ANYwhere.

    Rather play my "cheap" games than pay $50-70 for a game of equal or lesser quality.

    The argument reminds me of one I have faced in my professional life. Free Pitching. In the world of Graphic Design the practice refers to creating Design Content for free, ether at the request of the client or as initiated by the designer with the hope of future payment. It varies in severity and forms - it can be as innocuous as making the client privy to brainstorming sketches, hidden in the guise of a competition or all encompassing as completing a job without a contractual agreement.

    It amounts to working for free, whether its the time of an individual or worse: the work of many all competing for the same brief. The practice IS a form of self marketing - but even if it is successful it devalues design and the industry. 99designs.com is essentially a free pitching marketplace - where a client can get a raft of design to sift through, often produced by individuals without investment in the project. It is the bane of existence for many designers: clients cant resist the allure of a free lunch and fledgeling designers are drawn in with the hope of getting lucky and carving their own niche. If 99 designers provide 99 designs and you pay 99 dollars for one, you actually pay $1 each, and throw 98 away.

    I see the app store in a similar way. The content is priced to be throwaway. You can download something for the price of a carton of milk - if it sucks - no spilled milk. If its gooD though you begin to expect quality for the price of trash.

    Very good an interesting points, I remember a similar story being posted on Kotaku a few weeks ago, that compared Itawa's words to the video game crash of the 80's... and it sounded scarily similar.

    In the long run, all of this cheap, disposable, ripped off gaming is just going to hurt. It might feel better on your wallet to pay $40 for forty ten minute games instead of one eight hour game, but you're going to feel quite silly if all the big developers shut down, and all you can play is WoW and farmville.

    Maybe Nintendo could do something like -not- remake the same franchises over and over?

    "the Wii became the unlikeliest hit in gaming history"

    It was only unlikely to analysts that were thinking inside the box of the current games industry.

    Nintendo is still onto a winner with the DS products ... my son (11yrs) upgraded from a DS to an iPod Touch last xmas but he's already bored with it! the gameplay and titles such as Pokemon/mario cart etc. just aren't available on iPod/iPhone and its on-screen touch (or tilt) controls really suck for some games. In comparison he had his DS Lite for some 3 years without getting bored.

      TOTALLY!

    I hate those cheap, shoddy games that apple flog out. You get two good ones every year.

    I admit i had many cheap games on my iphone. we may be seen all over the world stuck to these devices. But these games are not even near the commitment i have to my NDS. When u play a game on the bus, and felt "we're here already?" that's when Nintendo's games do their magic, and what tap tap cannot achieve of me.

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