Nintendo Thinks Free-To-Play Is Hurting Their Business

Nintendo Thinks Free-To-Play Is Hurting Their Business

The term "free-to-play" has become anathema to some gamers, and Nintendo doesn't seem to like it all that much either. In fact, Nintendo boss Satoru Iwata says he believes that this trend is actively hurting their hardware business.

Last week's Q&A between Iwata and Nintendo's investors was published in English today, and it's full of businessy nuggets about how the company plans to turn their fortunes around. The Q&A is dense, stuffed with promises of new strategies and hopes that the upcoming releases of Super Smash Bros. and Mario Kart 8 will help move Wii Us after Nintendo's rough 2013. Iwata also reiterates the company's strategies to develop more Wii U games that show off what the GamePad can do.

It's this quote that really stands out (bolded emphasis mine):

However, it has been 30 years since Nintendo started its business of dedicated video game systems, and if I want to maintain that size for the next 10, 20 or 30 years, leading a software-only business would only put us at a big disadvantage, which is another reason why we insist on our integrated hardware-software model. On the other hand, the integrated hardware-software model has a significant handicap today, as the traditional way of explicitly telling consumers the investment they need to put in to buy hardware and software now comes across as being relatively more expensive due to changes in our environment.

Although people may actually be spending more money (to play games on other devices not dedicated to video games), it is less visible, so the hurdle we have to clear in order to encourage them to purchase dedicated game systems has comparatively become higher. As with games that are free-to-play, or "free-to-start" as we like to call it, there is a tendency within the entertainment industry to make gaming as easy as possible to start playing. Because our hardware and software are integrated, we first need consumers to purchase our hardware to get our business off the ground, a challenge I outlined when I talked about changing the way we sell our products. Our mid-term goal would be to give an answer to this question in a way that had never been seen before.

I do not think that hardware-software integration is equivalent to making people smile, and I do not intend to say that making games on smart devices will not lead to putting smiles on people's faces. There are games on smart devices that are indeed making consumers smile, I think.

However, only two years ago, many people urged Nintendo to follow other companies into what was then a very lucrative area, but no one says so any longer. In a similar vein, those who now claim that we should make games for smart devices might or might not be saying so in three years. It is our determination for our mid-term future to make efforts to devise our own solutions different from others.

In other words, Nintendo plans to keep doing what has traditionally worked for them -- their own hardware coupled with great games. They're not interested in chasing trends, which is a philosophy that has led to some lucrative roads (the Wii) and some unacceptable mistakes (lack of online infrastructure). Perhaps Iwata and crew believe that the free-to-play craze is a trend that will plummet just like Facebook games did. And even if they're wrong, the logic makes sense.

Top image via deviantArt


Comments

    I have to be honest, around august September last year I was considering getting a Wii U if the price ever hit close to $200 for the pro unit again. I literally would not spend a cent more when i just purchased a brand new 360 E console with 320Gb HDD for well under $100.

    But ever since then my enthusiasm has dropped off a cliff, hell after playing both ps4 and Xb1 consoles even going back to my 360 hurts, it shows just how ancient that hardware is and yet here is Nintendo trying to sell me something about as powerful as a 360 where it counts. It has a worse online infrastructure than the original Xbox, no storage and still no new games, jesus even DLC on the system is getting cancelled.

    So the natural response from Nintendo is that of an ostrich, to stick its head in the sand and scream nah nah nah not listening. Doesn't that just fill you with confidence.

    Last edited 04/02/14 8:43 am

      The price needs to drop here. It's a case of spend $430 for the WiiU Pro, or throw in an extra $120 and get a PS4. The $400 Wii versus the $1000 PS3 made sense, it's not quite so different this time. I think they should drop the basic pack, reduce the Pro pack to $350 and release it in both black and white.

      On the plus side you can add a chunk of extra storage without much effort with USB drives and games like Mario wouldn't really benefit from extra grunt because they already look pretty nice just being in HD. It's just too bad that 3rd party titles will be relegated to ports of whatever dregs still make it to PS3/360.

      I'm confident. They have a great roster of games coming up and I'm pumped for them.

      I didn't know ostriches could talk... But seriously though I think what Nintendo are doing is wise, their playing to their strengths. They tried the free-to-start model and it didn't work out for them, and so they go back to what worked. I personally think they need more IPs on their Wii U team, where is a big Pokemon game for Wii U/Wii? That's one of their biggest and best IPs (I could be talking out of ignorance here, there could be a whole lot of legal stuff that I'm not taking into consideration) or a new Zelda game. I think they need more original content not reboots or crappy spin offs, but anyway that's my 2 cents.

        A genuine question: when did Nintendo actually try the free-to-play/start model?

          Last year in June, apparently:

          http://au.ign.com/articles/2013/10/10/can-nintendo-do-free-to-play-right

      "ostrich, to stick its head in the sand and scream nah nah nah"

      To be fair to the ostrich does not hide its head in the sand. Scientists have not worked out if they scream "nah nah nah" yet though.

      If you buy a Wii U, you would buy it for the first party titles like Mario and Zelda. If anybody is considering buying it for third party titles, they are making a mistake, and a silly one at that, as it's been that way with Nintendo for a few console generations now.

      At no time when playing Super Mario 3D World, New Super Mario Bros U, Zelda Wind Waker HD, Pikmin 3, plus I imagine any of the future first party titles that will come out, will you ever think: "I wish this console was more powerful". For the games that you buy a Wii U for, the Wii U is more than powerful enough.

      Sticking their head in the sand is not necessarily a bad strategy. As an investor, I know that the fastest way to lose all your money is to try to follow the trends. You might be lucky and catch the tail of a boom, but you're just as likely to go all in right before a bust. A much sounder investing strategy is to stick to what works over the long term (Warren Buffett misses out on the quick money so that he can make the safe money). In the fast moving world of technology, this doesn't always pan out, but it's still a better strategy that trying to belatedly following the current trend. Either innovate and start a trend, which Nintendo did with the Wii (yes I know motion controls suck. but it still made oodles of cash), or stand your ground and refine your product. By the time you get aboard the trend it's already too late to profit from it.

      I don't have confidence that Zynga, King and many of the other super successful mobile companies will still be here in ten years. I do have confidence that Nintendo will find a way to continue to entertain me in the future, and my children, and my children's children.

        I like the comment, but I am also reminded of the counter to that: Blackberry.

        You might not want to follow trends, but you can't stagnate, either.

          Yes, absolutely, with technology especially there's heaps of examples like Blackberry.

            But this isn't a "stay the course and well make it through the rough seas" Kind of situation.

            It's a Cap'n we have 4 man sized holes in the hull and we are only pumping out 50% of what's coming in. To stay the course means certain death at this point. Of course I'm talking about the wii U itself not Nintendo, they have too much money.

            Simply doing nothing, which is what they are doing isn't going to help. The thing needs a MONSTER price cut, like a 50% off the pro model, at least here in Australia.

        I bought the GC for third party exclusives (mainly Tales of Symphonia and Baiten Kaitos) and also the Wii (Xenoblade and The Last Story). Nintendo doesn't get a lot of exclusive third-party content, but they do get some good third party titles. The Wii U had Bayonetta 2 coming up. Monster Hunter was a big seller for the Wii as well I believe , and the Wii U has MH 3 Ultimate.

        The main advantage of third party for Nintendo is it expands their audience beyond the fans for their core franchises. If they stick with a single core audience, over time that group will wane and so will their profits. It's not as if the latest Mario title actually has any gameplay that the Wii or even the Camecube could not have handled.

        That's one problem with Nintendo's deemphasis on performance. Their games have looked pretty similar for the last 3 generations (since the Gamecube), so you wind up asking yourself why their new game needs new hardware at all.

      I'm probably the opposite. Sure I'm just as much of a tight arse as you and want it cheap, but last gen I had the PS3 and 360, and there's just not enough difference between the two to bother again this gen. If I get a second system, it'll definitely be a Wii-U to give me those first party Nintendo games like Mario and Zelda.

    They weren't chasing trends with the Wii. They were setting them.

    Does anyone else think the free-to-play or free-to-start model should just die? From a consumer standpoint it sucks. I recently downloaded Plants vs Zombies 2 and as I play I get this sense of foreboding like when am I going to hit the part where I'll be forced to spend money and that really sucks, I'd rather just spend money up front and have the full game. Maybe I'm just too used to the traditional model...

      Games powered by microtransactions suck hard, and get uninstalled by me pretty quickly. Adware games though don't bother me, I'm usually happy to pay to get rid of the ads and open up more levels if I enjoyed the game to start with.

      I completely agree, except there are Free-to-Play games with micro-transactions that really work well. Path of Exile is the best example of this. All In-Game-Purchases are purely cosmetic and can't in any way affect the GAME, only the look. Other games like League of Legends and War Thunder also get props from me because you can play those games basically forever and not feel like you need to spend money.

      But yeah, on mobile FTP sucks.

      PVZ2 actually isn't too bad. If you like playing with increased difficulty, you'll unlock everything free.

      That said, I prefer to drop a couple bucks on any F2P first just so I have a small pool to buy the essentials with, then no more. So it's kind of like I bought the game for five bucks. If it turns out not to be good value after that (which is frequently the case), I judge it harshly. There are a LOT of games out there which don't stack up.

      It really depends on the F2P-model used imo. Something like Star Wars: The Old Republic for example was a great MMO on release. Sure it was pretty much just WoW with a better storyline and some lightsabers but it was a lot of fun for a while. When it went F2P I tried it again and it's horrible...You need to pay for every-fucking-thing, it's a giant piece of crap now.

      On the other hand I just started playing Loadout last night, a F2P FPS. The F2P model in that actually works really well, all the guns, upgrades, mods, ect are unlocked through leveling up (like every FPS now-days). The only thing you need real money for is if you want to buy more slots then you already have (gun slots/loadouts - I think you can unlock about 4-5 of each normally) and cosmetic stuff.

      Last edited 04/02/14 11:59 am

      F2P on PC is getting better and better, especially with standards like Valve's two F2P titles. F2P on mobiles on the other hand... yeah free-to-start is probably a more apt description.

    Can we all adopt that "free-to-start" term? It better exposes the shady hidden real cost of those games than the always inherently appealing to reptilian parts of the brain, "free-to-play".

    Free to play is absolutely throwing everything upside down. I'm not complaining because its good for consumers but I'm noticing how everyone's additude is changing. My mates on steam now 95% of the time playing dota 2. I say during the steam sale "hey let's get chivalry and all play sometime" in 2012 we were playing orcs must die 2, borderlands 2, payday, left 4 dead and many more. In 2014 a $5 price tag makes people pause and say err...

    I was on a train a month or so ago and some guy I was sitting behind had the latest iPad which probably cost him $600+ he is playing some endless runner game died and ran out of lives and a message pops up pay 99c to unlock the full version and he says aloud "SCREW THAT". So even people who are annually purchasing expensive hardware are not interested in paying a few dollars for some games.

    I think $99 for a basic sidescroller is hurting their business.

    First Point: Nintendo only have themselves to blame for their current position. The Wii U was a bad idea and they paid for it.

    Second Point: I am still confident in Nintendo, because they've come back in the past. It looked like they might get left behind with the advent of the Playstation and the XBOX, but they hit it big with the Wii. Unlike SEGA, Nintendo has shown an ability to reinvent itself as a hardware company. They just need to make sure their next console is a biggie.

    Here is the problem.
    Nintendo aimed themselves at families and younger gamers. (you can argue this but believe me parents I know believe this)

    This huge market for Nintendo from only 3 yrs ago now look at $30 - $50 3DS titles and say screw that here have my old iPod, iPad or iPhone and the games are free and they can play Minecraft.
    This is what is has become of family gaming.

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