The lights are on
Since the NES debuted in 1985, Nintendo’s had a notorious relationship –
or lack thereof – with third-party publishers. With each subsequent console,
Nintendo-published games have thrived while publishers have struggled to reach the
success they find on other consoles no matter how well the Nintendo hardware sells.
Former EA executive and current Kleiner Perkins Caufield & Byers partner Bing
Gordon chalks this up to the company’s fierce sense of independence. "My sense
is that companies have cultures, and Nintendo’s culture has always proudly
been ‘we’ll do it ourselves and if everybody else wants to jump on they
can,’" he says. "Nintendo’s been about margin and control rather than
No decision has reflected this go-it-alone philosophy more than the debut of the
Wii MotionPlus in 2008. When the company announced the controller enhancement at
E3, several third-party developers were as surprised as the press – Nintendo
never bothered to notify them of the new technology. As a result, the MotionPlus
received almost no software support at retail, making it less attractive to consumers.
Dealing with the company’s erratic support has tested the patience of some
partners. Speaking to IndustryGamers, Electronic Arts CEO John Riccitiello admitted,
"It’s a frustration for all third-party publishers when a platform holder
does less to promote third-party content." He also pointed to the company’s
less than convincing track record, saying Nintendo has never made a console that’s
been "a heavy third-party supporting system. It’s not lack of trying; they
start the morning thinking what’s best for their own intellectual property."
But Gordon understands why Nintendo makes the decisions it makes. "If you work with
third parties, you don’t have control of your own fate," Gordon says. "Microsoft
bought Bungie to do Halo. All it had was Halo and a bunch of crap. When Sony launched
the PlayStation it acquired Psygnosis in Liverpool. Commodore Amiga launched with
no first party. [Does] having enough first party guarantee success? Nintendo’s
got Miyamoto, and he could do a game that could single-handedly drive 10 percent
market share, so they got in the habit of retaining control. They never had that
awkward feeling of having to depend on other people for their success."
As long as Miyamoto is making games for Nintendo it doesn’t have to rely on
third-party publishers to find success, but the company is leaving low-hanging fruit
on the revenue tree. Good third-party games can increase consumer interest in the
hardware, which in turn sells more software. Console manufacturers also receive
licensing fees for every third-party game sold. "It really is pure profit," Reggie
Fils-Aime admitted to Fortune in 2007. "Third-party games can really determine
who wins." So what’s taking so long for Nintendo to develop a cohesive third-party
Recently Nintendo president Saturo Iwata acknowledged the problem during a press
conference and pledged to do a better job of supporting its partners going forward.
"It is true that the third-party software sales ratio on Nintendo platforms are
comparatively smaller," he said. Wii’s third-party software ratio is especially low.
"We need to decrease the concern that only Nintendo software can sell well on Nintendo
platforms and third-party software cannot sell in the same volume. We will not make
a trend similar to the one found for Wii in Japan now," he promised. "We feel a
need to have closer ties with our third-party developers from the beginning."
The company is trying to mend these relationships starting with the 3DS launch.
According to Nintendo of Europe’s Laurent Fischer, there are currently around
70 first- and third-party games in development for the emerging handheld.
Nintendo’s lack of third-party support hasn’t helped, but in the eyes
of 5th Cell executive director Joseph Tringali, it’s not the only reason publishers
rarely find success on its platforms.
"They set themselves up to fail because there’s this juggernaut Nintendo and
a lot of the publishers say, ‘We’ll never compete with Nintendo, we
can’t do it,’" he says. "It’s like they’re talking defeat
into their strategy before they even start, instead of asking ‘What is Nintendo
doing and why are they successful?’ Rather than their marketing advantages
and point of sale advantages, they make games for their platform and for their audience.
A lot of times they have a unique element to it."
When Tringali speaks, publishers and developers should listen. The 5th Cell is one
of the few third-party developers that has found repeated success on the Nintendo
DS, with Drawn to Life selling 3.5 million units and the Scribblenauts series reaching
Wedbush Morgan analyst Michael Pachter agrees with Tringali. “The Wii has
been a tough platform because most publishers have failed to understand the audience,”
he says. “Nintendo has had great success, as it clearly knows its customer.
Other games (let’s call them ‘mass market’), like Guitar Hero,
dance, and fitness games have thrived. I think that we’ll see more games like
these in the future.”
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