Category Archives: Business

Bloomberg Businessweek: The Legend of Nintendo

Felix Gillette:

More symptoms emerged in November, when the company released the NES Classic Edition, a miniaturized, rebooted version of the Nintendo Entertainment System, the console that had made the company a household name in Europe and America in the ’80s. The updated version was carefully calibrated to rekindle the latent passion of lapsed fans, with 30 of the most popular NES games built in. (Unlike the original, there were no cartridges.) From the start, supplies were scarce. Stores were constantly sold out, so customers lined up for hours to await shipments of even a few units. But what seemed to some like a supply-chain disaster looked to others like a calculated strategy. At $59.99 per unit with no additional games, NES Classics were a low-margin item; much more important for the company was to whet the world’s appetite for Nintendo games in preparation for the Switch. To that end, Nintendo and DeNA also released Super Mario Run for iOS and Android, giving hundreds of millions of people an opportunity to help Mario scamper across their smartphones or tablets.

The strategy worked. By the time the Switch arrived in the spring of 2017, legions of people had been enticed to reconnect with their favorite childhood game characters on a proper Nintendo device. Over the next fiscal year, the Switch accounted for $6.8 billion of revenue. Nintendo’s existing handheld platform, the 3DS, kicked in an additional $1.7 billion, and sales of smartphone games rose 62 percent, generating $354.9 million.

This is a fun write-up on the current state of Nintendo — from its headquarters to the injection of young talent to its now iconic business ebbs and flows. To toot my own horn, I think it works as a macro companion piece to my micro view in Big-N’s Big Year.

Needless to say, I’ll forever be tickled by major news outlets covering Nintendo and video games at large. It’s a no-brainer considering the size of the industry, but for someone who grew up in a time where video games were a niche, nerdy hobby, it’s extraordinary to watch a company like Nintendo become as culturally significant and observed as Disney.

(Link via MacStories)

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Nintendo Tops E3 Tweets

Rishi Chadha, Twitter:

A look at the most Tweeted about topics during the annual event offers a fascinating glimpse at what got gaming fans most excited.

  1. Nintendo (@Nintendo)
  2. Xbox (@Xbox)
  3. Super Smash Bros. (#SuperSmashBros)
  4. Fallout (@Fallout)
  5. Playstation (@PlayStation)
  6. Kingdom Hearts (@KINGDOMHEARTS)
  7. Ubisoft (@Ubisoft)
  8. Elder Scrolls (@ElderScrolls)
  9. Death Stranding (#DEATHSTRANDING)
  10. Fortnite (@FortniteGame)

These were the most Tweeted about newly-announced games:

  1. Super Smash Bros. Ultimate
  2. Kingdom Hearts 3
  3. Fallout 76
  4. The Last of Us 2
  5. Death Stranding

These were the moments that generated the most conversation on Twitter:

  1. Super Smash Bros. Ultimate release date is announced
  2. Ridley announced as newest character added to Super Smash Bros. Ultimate
  3. Elder Scrolls VI trailer is revealed at @Bethesda press conference

I felt Microsoft’s conference was the most compelling, but this is pretty neat.

I’m curious to see how Nintendo handles social for Smash Bros. Ultimate. Social is Nintendo’s Achilles heel. I’m not sure how great Twitter is as a global barometer, but I think this is good motivation for Nintendo to double-down on it as a focus.

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Sometimes Failure Leads to Opportunity

Ben Thompson, Stratechery:

I’ve been pretty critical of the Xbox over the years, arguing that it failed at its strategic goal (winning the living room not just for gamers but for everyone) and didn’t make sense for Microsoft in the long run. Microsoft, though, has continued to insist that it was committed to gaming, and it backed that up at the ongoing E3 game conference.

First and foremost, if you’re not paying for Ben’s Daily Update, you’re missing out on the best business x tech analysis out there.

Ben’s latest regarding Xbox is a great snapshot of Microsoft’s motives for the future. Here are some choice quotes to summarize.

On Microsoft’s big acquisitions announcement of studios Ninja Theory (DmC: Devil May Cry, Hellblade: Senua’s Sacrifice), Playground Games (Forza Horizon), Undead Labs (State of Decay), and Compulsion Games (We Happy Few):

The Xbox One originally lagged behind the PS4 this generation due to its misguided focus on the living room (including charging $100 more at launch because of the now-discontinued Kinect that was at the center of that effort), but the bigger problem has been a lack of exclusive titles relative to the PS4. One way to counter that is to simply produce them yourself, and these purchases augment Microsoft’s ability to do just that.

On Microsoft’s announcement of a game streaming service, “dedicated to perfecting your experience everywhere you want to play — your Xbox, your PC and your phone”:

Still, PlayStation Now requires a PS4: what EA and Microsoft are talking about is a service that works on any device, from a phone to a smart TV to a PC to a console, because all of the computation is done in the cloud, and that right there is where the Xbox suddenly starts to make a lot more strategic sense: Microsoft has a massive advantage in a future where games are predominantly cloud-based.

Ultimately, I think Ben summarized the Microsoft showcase perfectly. I do hope you read it. To end:

Indeed, I find this idea so compelling that I must formally withdraw my recommendation that Microsoft get out of gaming; I still believe that the Xbox was a failure in terms of its original goals, but sometimes failure leads to opportunity, and streaming seems to be a significant one, for both Xbox specifically and Azure generally.

I have to say, the Xbox event was my favorite of E3, with Nintendo in a close second. With that, I truly think Microsoft has turned a storytelling corner.

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Switch 2nd Unit Set

Sam Byford, The Verge:

Nintendo is now selling a cheaper Switch package in Japan that doesn’t include the TV dock. The “Switch 2nd Unit Set” is ostensibly aimed at households that already have a Switch hooked up to the family TV and therefore don’t need a second dock, but it could also be an option for players who only plan to use the system as a handheld device.

Home console?

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Virtual Console kinda sucked

Chris Kohler, Kotaku:

Virtual Console is no more, but that doesn’t mean that Switch won’t become the best place to play classic games. It’ll just be done in a different way than what Nintendo’s tried in the past. And that’s a good thing, because Virtual Console kinda sucked.

Now, by “Virtual Console kinda sucked” I do not mean “Nintendo’s old games are bad,” or even that Virtual Console’s game selection was bad, or anything like that. In case you are wholly unfamiliar with my work, I love old games and think that as many of them as possible should be kept in print on modern-day hardware. I just think that Virtual Console, the feature, was an inefficient way of implementing this idea, and that there is a better way. Virtual Console died so that retro gaming on Switch could live.

My knee-jerk response to Nintendo Switch Online was disappointment. 20 8-bit games, while great, seemed paltry.

However, heeding my own words, Nintendo doesn’t need to release any more than this for the new service. The games are the lure. The online play and cloud saves are the lock-in. Nintendo will trickle classic titles out over time when needed. Additions of consoles (SNES, N64,… GameCube) will be tentpole announcements — when needed.

That said, I agree with Kohler. And Adult Swim Games’ Chris Johnson. Truth is, as much as I loved playing NES, SNES, and N64 games on my Wii and Wii U, I hated not knowing what releases to expect and when to expect them. Likewise, as Kohler mentions in his piece, the pricing structure seemed bananas. Virtual Console kinda sucked.

I do wish Nintendo was offering up more than NES titles, but I get why they aren’t. I’ll take this handful for now with the excitement that lots more classics will arrive at the low fee of $20 per year.

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Some Numbers That Illustrate Nintendo Switch’s Massive Success

Jason Schreier reporting for Kotaku:

Nintendo today reported its earnings for the 2017 fiscal year, which means a whole bunch of interesting new sales numbers to look at. They’re all impressive, and they all show the massive appeal of Nintendo Switch.

Here are a few numbers that, taken together, make for some good perspective on just how successful Nintendo’s latest console has been throughout its first year on the market.

Wild numbers to the Switch’s set-top predecessor, the Wii U.

The Switch is more or less tracking the same sales pace as PS4. It took a little over one year for the PS4 to reach 18.5 worldwide hardware sell-through units — November 22, 2013 – January 4, 2015.

Microsoft has been mum on sales figures, but in 2016 slipped that the Xbox One had sold “around 18 to 19 million” units, two years after launch.


Update: Here’s a sales trajectory visual. Data source: Wikipedia.

Update 7/30/18: Nintendo announces 19.67 million Switch unit sales since launch. Updated sales chart below.

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The Verge: ‘My Xbox One S is now a meaningfully different console to my PS4’

Sam Byford, The Verge:

It’s also something that Sony simply isn’t able to offer, given the complexity of the PlayStation 3 hardware and consequent difficulty of emulating its software. And to be clear, Sony doesn’t really need to do it — the PS4 library is more than strong enough to make the console worth buying. If I only owned an Xbox and had the choice of being able to play the likes of Nier Automata, Uncharted, and Horizon Zero Dawn instead of a bunch of games from the last decade, I’d take it. It’s the paucity of Xbox One-exclusive content that is forcing Microsoft to find other ways to get people to use the platform.

That’s actually fine with me. I like that my Xbox One S is now a meaningfully different console to my PS4 Pro, with different use cases and functionality. It’s the box I go to for 4K Blu-rays, Forza Horizon 3 in HDR, or Ninja Gaiden Black with a usable controller. It’s the box I switch on to browse through when I’m not sure what I feel like doing, or when I’d rather play Cuphead on the couch than at my desk.

As I said, I think Microsoft has turned a story-telling corner.

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More Original Xbox Games Coming to Xbox One Backward Compatibility

Xbox Wire: The official Xbox blog:

Starting today, fans can play Sonic Generations for the first time on the Xbox One family of devices alongside other Xbox 360 favorites that will receive Xbox One X Enhanced updates such as Darksiders, Gears of War 2, Portal 2, Red Dead Redemption, and Star Wars: The Force Unleashed.

Later this month, we’ll release two batches of Original Xbox games – the first on April 17 and the second on April 26. All of these Original Xbox games will take advantage of the power of Xbox One with up to 4X the pixel count on Xbox One and Xbox One S, and up to 16X the pixel count on Xbox One X. See below for the full list of titles that will be available later this month, and don’t forget to visit https://majornelson.com/blog/xbox-one-backward-compatibility/ for the full list of backward compatible titles available on Xbox One.

This is an impressive list of titles.

Microsoft’s continued focus on backward compatibility is a smart move. It certainly won’t be enough to sell the tens of millions of units necessary to catch up to PlayStation 4’s sales figures, but in conjunction with increasing cross-network compatibility and the impressive power in the Xbox One X (vs. the PS4 Pro), I think Microsoft has turned a story-telling corner.

That said, for the same reasons I think backwards compatibility is a winning strategy for Xbox One, I think the Nintendo Switch will hold the lead on the conversation for a long while. After only 1 year on store shelves, the Switch’s sales trajectory (14 million units) will likely surpass Xbox One’s total 25-30 million units in 2018. PlayStation 4 has a much greater lead at 76.5 million units sold over 4.5 years. However, 14 million units in one year is without Nintendo breaking the seal on their back-catalog. And unless Microsoft or Sony glom on to exclusive licenses for third-party back-catalog — they won’t — there’s no telling who else may hop aboard the Switch train. (Come on, Final Fantasy X and Kingdom Hearts!)

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Cross-Network Play is “the Next Logical Step”

Matthew Handrahan, GamesIndustry.biz:

Epic believes that the same process is starting to happen in markets like the US and Europe, thanks in no small part to refinements and improvements made to the Unreal Engine. During State of Unreal, Studio Wildcard’s co-founders Doug Kennedy and Jesse Rapczak came onstage to talk about Ark: Survival Evolved on mobile, and announced that it was being ported for Nintendo Switch. Sweeney also mentioned the mobile version of PlayerUnknown’s Battlegrounds, which was first announced in November last year.

Another example is, of course, Epic’s own Fortnite, which Sweeney believes is “unique” even within the context of the larger trend; principally because the work Epic has done to make it possible will benefit anyone that uses the Unreal Engine.

“So that they can do the same thing,” Sweeney adds. “And that is build one unified game that runs on all platforms, that is the same experience everywhere, and is a social experience that you can play with friends across all of the different platforms.

“What we have is this one engine that’s supporting AAA production values and game sizes and content bases that runs everywhere. This is going to be a great setup for the games industry, because it means that now you don’t have a divide between casual mobile games and high-end PC and console games.”

For Epic, this all makes complete sense and will give Unreal Engine a massive leg up as a development tool.

I wrote about the need for cross-network play in my piece Sold on Cross-Network Play. Much of the piece — albeit not transparently — stemmed from my frustration of having to hook up my Xbox One to play Overwatch with my friends. It was extremely encouraging to learn that players of Minecraft and Rocket League would be able to share experiences between Switch, Xbox One, and Steam.

Sony claims that their reluctance of opening cross-network play is out of protection of their community. I think that is a fair stance, but is the Sony community any less toxic than others? I think the real fear is losing an amount of ability to lock in players to PlayStation 4. It’s the same case made for exclusive games and content, the latter I vehemently oppose.

Maybe it’s just the era I grew up in, but I believe in exclusive first-party experiences. Beyond the console wars which were somewhat steeped in technology battles as much as publishing and political ones, there is something to be said for the marriage of first-party hardware and software. Nintendo and Apple are prime examples this, creating unique and often stellar experiences by leveraging both sides of the stack.

Sony can hold their own when it comes to exclusives. It’s time to open the network.

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