Nintendo Mobile Gamble Might Kill 3DS, Save The Company - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
IT Life
News
3/17/2015
04:53 PM
Connect Directly
Twitter
RSS
E-Mail
0%
100%

Nintendo Mobile Gamble Might Kill 3DS, Save The Company

Nintendo is moving full speed into gaming on smartphones and tablets. It's a great move, but it comes with big risk to its existing hardware products.

Nintendo launched a new hand-held game console, the Nintendo 3DS XL, just last month, and today the maker of Super Mario and Zelda announced a move that will probably kill that brand-new console. It is a daring lesson for CIOs on the importance of not making anything sacred.

Today, Nintendo and DeNA announced a new mobile gaming partnership that includes the creation of smartphone- and tablet-based games featuring the large stable of well-known characters at Nintendo's disposal. It also includes a new mobile gaming platform that will connect to existing Nintendo hardware, and a stock purchase agreement.

In many eyes, (including mine) this move is long overdue. Nintendo is not only one of the "big three" gaming hardware makers out there, but it is also one of the top game developers in the world. No game developer can afford anymore to ignore mobile gaming. The revenue in mobile gaming was forecast to double from 2013 to 2017, going from $17.5 billion to over $35 billion, according to NewZoo and Applift. NewZoo also expects mobile gaming to pass console games this year, with more than $30 billion in revenue.

Nintendo's choice to favor its handheld console over phone and tablet gaming was costing the company. Despite successful launches of games like Mario Kart 8, Nintendo still posted a loss of $456 million last year (its third straight losing year). The 3DS XL had an extremely successful launch in February and sold over 300,000 units. The company has sold nearly 50 million units in the 3DS series, and it sold 153 million in the original DS series. That sounds like a lot until you compare it to the nearly 2 billion smartphones on the planet. By 2018, one third of the people on the planet will have one of those. Asking people to buy a different device to play games is no longer feasible.

We're likely seeing the last generation of separate console games. Console gaming is fast becoming a cloud-based industry, with both the PS4 and Xbox One relying partially on the cloud for some of the heavy lifting. The need for discs and big boxes is going away. The next generation of consoles may very well consist of a joystick, a smart TV, and a small streaming stick. That's why the DeNA platform is extremely important to this agreement. Nintendo needs to reach gamers across platforms regardless of what they're playing on. While it has struggled in the console industry lately (excluding handhelds), Nintendo still makes some of the best games around. So Nintendo might be most uniquely suited for the next generation of console-less gaming.

(Source: Nintendo)

(Source: Nintendo)

Of course, the leap to mobile gaming still marks a major risk for Nintendo. The 3DS is essentially what is keeping Nintendo going right now. As of last year, the Wii U had sold around 6 million units compared to over 100 million of the previous generation console, the Wii. All of the combined software sales for the Wii U are less than some of the most popular titles for the original Wii. The newest Zelda game for the 3DS, however, was the number one selling game in February.

Nintendo describes this move as "complementing" the 3DS platform, and the company notes it will only create new games for mobile -- using any of Nintendo's character lineup -- rather than port existing 3DS or Wii U games to the phone. But eventually its leaders face a choice: They can try to get people to buy a 3DS and play different games on mobile, then hope people find both worth their time and money, or they can eventually admit that the phone is an equally good gaming platform and abandon the 3DS family. But you would assume that eventually Nintendo has to count on those 2 billion smartphone owners liking their games more than their consoles. We reached out to Nintendo for comment but have not yet heard back.

It is a tough, but great, call for Nintendo leaders to risk their best-selling system to grab gold in mobile gaming. It is a lesson to any business leader that sometimes the writing is on the business wall, and you need to kill your business darlings. Essentially, the future of Nintendo might be as software developer and game designer (and platform host) rather than hardware maker. That is just fine assuming it can make the leap.

To explore how the company might make the leap, we'll post an article soon on mobile games Nintendo should start with. In the meantime, what do you think of Nintendo's risk? Does it seem sound, and as a business leader, would you be willing to take such a huge risk with your best product? Comment here.

David has been writing on business and technology for over 10 years and was most recently Managing Editor at Enterpriseefficiency.com. Before that he was an Assistant Editor at MIT Sloan Management Review, where he covered a wide range of business topics including IT, ... View Full Bio

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Page 1 / 3   >   >>
impactnow
50%
50%
impactnow,
User Rank: Author
3/24/2015 | 1:15:25 PM
Re: I am not afraid
Don't you think that game controllers used in concert with cloud based gaming would fulfill that need? The benefits are many for virtual gaming with a controller option.
impactnow
50%
50%
impactnow,
User Rank: Author
3/23/2015 | 1:33:46 PM
Move quickly for market share

I absolutely think it's the right decision. We are all mobile and being tethered to a console with a game cartridge seems completely archaic. Amazon is already experimenting with this with a game controller that is used with their fire TV box or fire stick. It's more robust with the fire box right now but I am sure the stick will catch up eventually. My young gamer likes to play games on the bug screen from anywhere and it does not require a large investment just the $39 game controller. Games are purchased through the Amazon account and it's simple and easy. This type of model would bring Nintendo to so many more who don't want to make the investment in the cartridges and console. It will also make impulse purchasing a reality on phones and tablets. This could be a way for them to turn over the red if they move fast enough.

SaneIT
50%
50%
SaneIT,
User Rank: Ninja
3/23/2015 | 7:49:36 AM
Re: The death of single use hardware
I really hadn't given much thought to the portable game consoles they have all but died out and Nintendo is really the only one hanging in there.  It was always a tougher market and as you noted getting into a portable anything market with Android sitting there ready to develop software for it doesn't make a whole lot of sense to get into that market.  I'd be interested to see the numbers surrounding mobile gaming on Android and iOS devices and which consoles they into most.  There will always be people more into gaming that won't be happy with a 5" screen and less powerful hardware but many of us who play a game 5 minutes at a time when we've got not much else to do aren't going to think twice about what we're missing by settling for games on a phone.
Angelfuego
50%
50%
Angelfuego,
User Rank: Ninja
3/22/2015 | 9:00:09 PM
Re: The death of single use hardware
I have a preference for the easy, old school type games like Paper Boy, Mr. Do, Donkey Kong, Mario Carts, NBA Jams, Ready to Rumble, Street Fighter, Grand Theft Auto, Ping Pong, and Pac Man. A lot of the newer games that I see kids playing now, seem too complicated for my preference and comfortability. I also love playing the Wheel of Fortune and Family Feud on my iTouch. There aren't any handbooks, manuals, or code breaking required.
Angelfuego
50%
50%
Angelfuego,
User Rank: Ninja
3/22/2015 | 8:52:58 PM
Re: The death of single use hardware
I think the mobile gaming console is risky in this era of gaming on your Android. However, I am a little old school. I think there is something nostalgic about playing on portable consoles that separate from gaming on a cell phone. As a teen and 20 something year old, I used to love the handheld consoles like Game Boy. I would be interested in gaming on my Android, but I am still not opposed to gaming on a separate, portable console.
SaneIT
50%
50%
SaneIT,
User Rank: Ninja
3/20/2015 | 8:17:53 AM
Re: The death of single use hardware
@David, exactly.  What is happening though is that consumers are getting more tech savvy every hardware generation.  Sure your friend went with an iOS device because she had heavily invested in iOS apps but we're already seeing things like Microsoft saying they will run Android apps so that shake things up a little in the near future.  I don't know if I want to say that the term cross platform isn't good enough but in my mind it really isn't.  Cross platform indicates that something special has to happen for it to work everywhere, in the coming years this will be expected as the norm.  I think what we should start to see is a concerted effort to bring software to all of the leading platforms in a single package/offering.  A license for Angry Birds on your iPhone will be valid on your Android tablet and your Windows desktop, it will be one product not three because people are no longer tied to a single device to do their computing.  The hardware landscape has changed dramatically and the software landscape is going to have to catch up.
David Wagner
50%
50%
David Wagner,
User Rank: Strategist
3/19/2015 | 1:02:43 PM
Re: I am not afraid
@brian.dean- And you raise a good point as well. Every hardcore gamer has a different idea of what makes a game interface work. I like PC gaming the most except I feel like PC gaming got to into massive multiplayer. I like immersive turn-based games for the PC.

So the idea of trying to pick a platform because of hardcore gamers is tough since we all have a different idea.
David Wagner
50%
50%
David Wagner,
User Rank: Strategist
3/19/2015 | 1:00:03 PM
Re: Exciting Times for the Gaming Industry
@Brian.dean- What is interesting is that the mobile gaming industry is full of indie and startup games. There aren't many really high budget games. Would love to see someone make a $500 million mobile game. Well, that's probably excessive. But you know what i mean. Maybe Nintendo can finally claim high budget games for the mobile market.
David Wagner
50%
50%
David Wagner,
User Rank: Strategist
3/19/2015 | 12:11:45 PM
Re: The death of single use hardware
@SaneIT- Good point. It isn't just the money tax, but the tax of time consumption of not moving easily across platforms. There are games that are put out for PC and XBox and PS4 and Nintendo. Yet, with the exception of some Microsoft compatible games, they don't work across platforms.

I just talked with a friend who bought a new iPad. I commented that I knew she loved her Windows 8 PC, and I thought it was odd she didn't buy the Surface. She said she had invested in too many games on iOS so she didn't want to buy them all over again.

I get why all of this serve the copmanies. But it sure doesn't serve the consumer.
Brian.Dean
50%
50%
Brian.Dean,
User Rank: Ninja
3/19/2015 | 8:08:49 AM
Re: The key to the hardware side of Nintendo
@Pobblebonk that is a great idea. I am imagining a controller that doubles as a 20,000mAh power bank and maybe, some additional computational power should be packed into the controller to give a few games the extra horsepower. 

The Lumia 1020 had a reasonably alright time in the market as a hybrid camera phone with its 41MP camera. A hybrid add-on approach might very well be the requirement of the mobile gamer's market.
Page 1 / 3   >   >>
Slideshows
What Digital Transformation Is (And Isn't)
Cynthia Harvey, Freelance Journalist, InformationWeek,  12/4/2019
Commentary
Watch Out for New Barriers to Faster Software Development
Lisa Morgan, Freelance Writer,  12/3/2019
Commentary
If DevOps Is So Awesome, Why Is Your Initiative Failing?
Guest Commentary, Guest Commentary,  12/2/2019
White Papers
Register for InformationWeek Newsletters
State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
Video
Current Issue
Getting Started With Emerging Technologies
Looking to help your enterprise IT team ease the stress of putting new/emerging technologies such as AI, machine learning and IoT to work for their organizations? There are a few ways to get off on the right foot. In this report we share some expert advice on how to approach some of these seemingly daunting tech challenges.
Slideshows
Flash Poll