Final CS, putting this up for back up.

BA5. Platform and Distribution.

When I was younger, I was given a Nintendo Game Boy.  Everyone loved playing on them but I knew I wanted to design them. But, my career choice may be under threat: In recent years, traditional hand held gaming looks to be on the decline; with simpler phone games becoming the next big thing. Are hand held devices made solely for games a thing of the past? Will the Nintendo Game Boy and its evolutions go the way of the telegraph? And if this is true for handheld consoles, will the home based larger consoles also suffer the same fate in the future?

 Nintendo are the company at my 8-bit heart, even though other games on the Xbox and the PC do attract me, the small convenient hand held console is still my favourite. So, on hearing the news that in 2012 “the company reported a net loss of 43.2bn yen ($533m; £329m) for the year, compared with net income of 77.6bn yen the year before”, I was worried that this could mean the demise of my Nintendo DS stuffed into my back pocket. While this isn’t all down to the financial turmoil in Japan as “the Kyoto-based company had expected losses of 65bn yen as the strong yen made exports dearer”, responsibility may be from a new more serious threat; “increasing competition from casual gamers playing on their Smartphone’s instead.” (Kelion, 2012)  
So what of phones then? What has changed?  Peter Parmenter explains in a recent interview that “in the past, mobile devices used to have limited processing power and weren't able to emulate the same level of game play that our consumers were used to. The result was that the experience was disconnected. With the proliferation of screens and with constant advancement of technology, we are seeing consumers wanting – or better, demanding – more consistency in their experiences.” The power of these phones could be the undoing of the gaming console.  People carry their phones around to keep in contact with their friends so their phones are always with them.  The switch from texting to gaming is an easy one.  “Smartphone owners average 46 minutes a day playing games. By comparison, they spend an average of 15 minutes a day actually talking on the phone. Mobile is the fastest growing segment of the interactive game’s business right now” (Parmenter, 2012). Casual phone gamers are fast becoming the only type of gamers there are.

And it isn’t just limited to Nintendo’s game boy. PSP sales are also under threat:  "The games console market is declining altogether because mobile phone devices are allowing casual gamers to play much more easily wherever they happen to be," (Miles, 2012)








I have a friend who is glued to her games on her phone wherever she is and, unsurprisingly, the games she plays are all on an iphone, produced by Apple.  And she is not alone; nearly all my friends have iphones buried in the skinny jeans which are certainly not designed to hold the larger games console!  The graph above highlights how the increasing popularity of these iphones is affecting sales.  Apple is in fact taking over Nintendo’s dominance, and Nintendo are in no doubt of their competitor’s ascendancy: “It’s clear that Nintendo feels the specialized handheld gaming market may be on life support. And they weren’t coy about fingering Apple’s iphone as the main culprit”. This is not to say Apple isn’t the only company ringing the death toll of their products; “we imagine that Android users are wondering why they don’t get some share of the blame – and of course people who purchase games for Android devices probably only add to the problem. But game sales were long ahead on Apple’s mobile platform, where the ease of developing for a single hero device makes it easier on game development” (Scott, 2012)
The losses Nintendo experienced recently were the worst in three decades, exceeding their predictions.  This was a result of the drop in revenue due to competition rather than the blame lying solely with increasing cost production.  Following the tsunami tragedy in Japan, the yen has became very strong whilst worldwide consumer markets are either deep in recession or their economies are certainly under pressure.  Spending on games consumer goods is seen as a luxury so ultimately pays the price.  The States (one of Nintendo’s biggest markets) has not been immune to the consumer spending malady, exacerbating the problem.
Nintendo also cut the price of their hand held systems to compete with the competition from Sony’s PSP, believing that the huge losses suffered now will soon be recovered as the popularity of their more affordable games take off.  Despite marketing The Wii as an activity for the whole family to share (and as such a different gaming experience to the solitary mobile or console game) this has also suffered a similar fate.   The price cuts have not had a huge impact on the competition from Xbox and PlayStation as game innovations such as Kinect (motion sensor consoles) and Wonderbook (games based for younger audiences around a digital book) have kept them firmly on the leader board for consumer choice.

Price cutting, and advertising as a family game, does not answer the dilemma of people with disposable incoming wanting the latest gadget.  “The biggest problem seems to be that the type of customers Nintendo was able to win over with the DS and Wii are the very people who are now more likely to splash a few bucks on Smartphones and tablets rather than pay higher prices for console games, let alone buy new hardware.” (Almos, 2012) As this suggests, Nintendo needed to produce something new and innovative in order to keep a hold on its standing within the Gaming World.
Nintendo’s attempt to outsmart the smart phone and tablet with their own versions, such as The Wii-U, were a mixed bag of fortunes:  “the results, which came after the end of trading on the Tokyo Stock Exchange, provide mixed signals for stock analysts...” The Wii-U’s popularity in Japan has not been evident in the Western markets.  “The apparent failure so far of the Wii-U to take off versus competition from tablet and smart phone game applications may bode ill for the company's long-term growth prospects” (Flanders, 2012)
In terms of the competition with smart phones and tablets “software is another major issue for Nintendo. The company's Wii software unit sales dropped to 89 million worldwide last year, down from the 150 million units it sold in 2010.” Says Don Reisinger of Cnet.   “The single silver lining during the nine-month period was 3DS sales.  After getting off to a rough start, the portable was able to tally 11.4 million worldwide unit sales during the period. Nintendo said earlier this month that the 3DS' strong sales outpaced the Wii’s during its first nine months of American Store shelves.” (Reisinger, 2012)


So, could the 3D software be the beacon of hope for Nintendo?   It is true that when the original DS system came out, it utterly blew away all the competition because of the huge array of games it had to fit the new innovative duel screen system.  Back in the 2008 “It wasn't a question of whether or not Nintendo was going to sweep retail sales in December, it was a question of how commanding the win would be.” (Kuchera, 2009)

So 3D seems like it could be utilised (once it has a great selection of games) as the new winning formula for Nintendo.  Iphones and tablets have nothing in terms of 3D hand held gaming, while Nintendo are well ahead of the competition with new features and games for the 3DS coming on to the market as I write.  Already, with the new heralded Pokémon game coming out exclusively for the 3DS, sales have taken an upturn. (I can’t deny, the new Pokémon stories are a stroke of genius as they pull on the heartstrings of nostalgia – I know I can’t wait!)
I believe that one of the reasons Nintendo was so dominant was that there was a plethora of games to suit all tastes. It seemed like you were stuck for choice.  At the moment, the 3DS has a more limited choice.  Perhaps with the increase of more games being developed exclusively for the 3DS, consumers will be drawn back to the console experience.  By producing some high rise titles solely for the 3DS, Nintendo could make an extraordinary come back.  

However, there is still the danger of their larger consoles being overtaken by the new systems appearing on other company’s consoles. The new Immersive game created by Microsoft for the Xbox “envisages transforming the players' room into an immersive gaming environment.” (Barton, 2012)   Could it be that only the game companies who adopt and develop the new features will be capable of keeping their core gamer audience happy and buying?  Perhaps the risky cost of this development may be one reason Nintendo seem to be concentrating more on the handheld gaming than the large consoles.

But what can Nintendo do to keep a grip on its name and well known gaming titles like Mario and Zelda?  Scott from PhoneArena seems to have an answer for that; “When Sega lost in the gaming console market to Sony, they reinvented themselves as a software gaming company. Nintendo has lots of incredibly popular IP, so if they are unable to reinvigorate sales of their portable devices then sooner or later it will make sense to transfer all of that rich game-making experience to the mobile devices market, even if they don’t want to admit it right now.”(Scott, 2012)  So, could Nintendo become a sole Game designer and one that does not create its own consoles with which people can play their games on?  This, to me, seems like one of their best options.  So it may not be farewell to Pikachu, Mario and friends, just that we will be meeting them at a new venue.

Not everyone is of the same opinion: Craig Grannell of ReverttoSaved thinks not; “I’m not of the opinion Nintendo should throw in its lot with Apple and other third parties, effectively becoming another Sega—yet. This is because Nintendo still has the potential to out-Apple Apple in the gaming space, through making games and hardware”  Whereas “Apple proponents rightly say what sets Apple apart from much of the competition; it makes devices and operating systems, and so can mesh those things together far better than other companies. But Apple doesn’t do this in gaming,” Nintendo currently make all its own hardware and software components.

This gives hope to Nintendo continuing to develop its own brand’s exclusivity, taking advantage of the holes in the market Apple will leave behind in pursuit of an audience based around casual SmartPhone compatibly- not around the core gaming mechanics or features, like the 3D systems discussed earlier.  Nevertheless “what Apple does do in gaming, however, is to provide a number of lessons that I still believe Nintendo must learn from” (Grannell 2012).

I fully agree with this.  In my opinion, Nintendo’s failings to meet consumer demand are losing them prospective customers to Apple products. Like Apple, they must consider linking to the wider world through non-gaming apps or social media sites like facebook, video systems for Youtube and General Internet browsing with Google.  They would do well to look at a more cooperative system for working with Independent ‘Bedroom Coders’ who “are encouraged to bring further innovation to the platform.” (Granell, 2012) But most importantly, they need to develop a  firm hold on the digital downloads of games that can be done instantly, easily and for a better value for money than going out and buying a whole game cartridge.

My research has led me to conclude that, whilst Nintendo has owned up to the realisation that the market has changed; they are still not seeing the big picture.  It is about responding, and quickly, to this generation’s consumers. If they don’t act immediately, they will have to merge with a larger company like Apple and completely lose their identity. What a terrible blow for what were once leaders in the industry.  I for one, will mourn the demise of the gaming console however many 3D Pokemon games are rushed onto the market.  I don’t care how awesome the iPhone 17 G.HD Googletron is, there will always be a little piece of my heart that fondly remembers sitting on the bedroom floor with dead legs completing a level with Mum shouting to come down for my tea.

Peter Parmenter, (2012) EA Mobile, Interviewed by Chris Smith of the Gaurdian  http://www.guardian.co.uk/media-network/2012/nov/15/ea-mobile-gaming-peter-parmenter

Stuart Miles, (2012) Pocket-Lint, From BBC News

Leo Kelion, (2012) Technology reporter, from BBC News http://www.bbc.co.uk/news/business-17852137

Scott H, (2012) Tech’ Analyst, from Phone Arena http://www.phonearena.com/news/Nintendo-claims-the-iPhone-killed-the-handheld-game-console_id29533

Almos R, (2012) Financial reporter, from Interview with GeeksareSexy http://www.geeksaresexy.net/?s=Nintendo
Stephanie Flanders, (2012) Economics Editor, from BBC News http://www.bbc.co.uk/news/business-21257536

Don Reisigner, (2012) Technology Columnist, from Cnet http://news.cnet.com/8301-13506_3-57366544-17/nintendos-huge-losses-continue-when-will-the-bleeding-stop/

Ben Kuchera, (2009) Gaming Editor, from Ars Technia http://arstechnica.com/gaming/2009/01/king-of-the-hill-nintendo-dominates-final-2008-sales-charts/

Ed Barton (2012) Director Strategy Analytics, from BBC News http://www.bbc.co.uk/news/technology-19568451

Craig Granell, 2012) Games Editor TAP! Magazine, from Revert to Saved http://reverttosaved.com/2012/08/22/nintendo-versus-apple-for-the-future-of-handheld-gaming/