Reader Request Week 2006 #4: The Nintendo Revolution

Mmmm… let’s talk video games! Greg Lescoe asks:

Having been a videogame journalist for some time, I would assume you’re keeping tabs to at least some degree on the industry itself. That said, what do you think about Nintendo’s potentially risky gamble to eschew better visuals (at this point not as significant an upgrade as in previous generations) in favor of other, non-graphics-related upgrades? And do you think that their refusal to do the "let’s put everything imaginable into a silver box and charge half a grand for it even though nobody will use it for anything but videogames and maybe movies early on" thing will help or hurt them in the end? 

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I think Nintendo is going to come out of it just fine, as long as they can manage to get the Revolution in at the $200 price point.

I think it’s important to note that Nintendo is not actually playing the same long-term game as Sony and Microsoft. Sony and Microsoft are in a battle to the death for control of your widescreen HDTV in the living room, not just for the purposes of game playing but for the rather more nebulous purpose of being your front-line "media center." There are rather more levels to it, of course (I just wrote an OPM column about this so I won’t get into it here, but if you think Sony’s dropping Blu-Ray into PS3 just to have a more convenient game storage medium for its games, you are wrong wrong wrong wrong), but essentially those two are in a war for your living room.

Nintendo, I think, doesn’t want to be in your living room; it wants to be in your ten-year-old’s bedroom, hooked up to the little TV in there. Or if it is in your living room, it doesn’t necessarily want to be there first, it just wants to be there too.

And I think that’s wise, actually. Speaking for myself as a parent, I know that the video games Athena likes are the video games Nintendo excels at (and excels marketing itself as a platform for), the silly and mildly-but-not-too-challenging sidescrollers and jumpers. These games need not be super-intensive graphically, they just need to be fun. When Athena goes over to her grandparents, they haul out their Super NES and Athena goes to town on the Mario Brothers games for that. Does she care that the graphics are from four console generations ago? Not a bit. Heck, right now one of her favorite games is Demon Attack, which was was originally for the Atari 2600, and which she has emulated on her PC (also, in case anyone asks, why yes, I do own in on cartridge, as well as owning an Atari 2600). If she can groove on Demon Attack, she’s not going to give a crap whether the Revolution is going to have the same level vertex shading as the PS3. She just wants a fun game. As, I suspect, would most folks.

Again, the key here is price point. $200 is key. At $200 — and especially compared to the Xbox 360 and the PS3 — the Revolution comes in looking like a nicely affordable toy, something that you can get for the kids or that you can get for yourself without busting the bank (in fact $200 is not trivial. It just looks good in comparison). If Nintendo can hit $200 with the Revolution, they’re going to be golden. I mean, I would buy one just to give to Athena. If they come in higher than $200, well, now you’re talking real money, aren’t you? And it becomes less attractive.

You ask: What value is there in being the second game console in a house? Well, think about it: How many second TVs do Americans have? How many second computers? How many second cars? How many second everythings do we have? Americans (and I suspect others) like having second things, which typically are of lesser capabilities (or at least lesser dimension). You have the big screen TV in the living room and the 19-incher in the bedroom. You have the desktop and the laptop. You have the new car and the auxiliary car. You have the big dog and the little dog you got to keep it company. And so on and so on.

The folks making those 19-inch TVs are not laboring under the impression that TV is going to be the primary TV in the house; they just know you want another TV. Similarly, it’s not really a stretch to conceive of a console marketing itself as the second console, especially when so many gamers already own some combination of PS2, Xbox or GameCube, all of which will die a death when the next-gen consoles are all out. Gamers are already tuned into the idea of having two consoles, and having a $400 and a $200 one is a heck of a lot cheaper than having two $400 ones.

If Nintendo can manage to pull off the "second console" thing, they’re going to end up looking really smart, and their success will be in addition to, rather than at the expense of, the PS3 and the XBox 360.

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(Have a question for Reader Request Week? Submit it here

25 thoughts on “Reader Request Week 2006 #4: The Nintendo Revolution

  1. I agree that Nintendo can succeed with the Revolution as a second console for the kids. However, it sounds like Nintendo’s is claiming more. With the new controller and other ideas, Nintendo claims that they will draw in new gamers that wouldn’t normally be into playing video games. Do you think that they will succeed in broadening the gaming demographic or will they remain primarily a console for kids?

  2. John, you’ve apparently still got some connections in this regard. About two weeks ago, I think, the geeks were all up in arms that the PS3 might well come in at closer to $800 than $400. Any news from your sources?

  3. Karl:

    Unless the games are really truly insanely fun in a “the first time you played Pac-Man” sense, no, I think it won’t bring in new people. However, if the games are in fact unspeakably fun and with a low, low learning curve, than $200 a unit is the way to go, and I could see the Revolution picking up people who haven’t played a console game since the Atari era.

    Between these two scenarios, however, I find the first one more likely.

    Jas:

    The $800 figure is what some analysts thought the PS3 is going to cost Sony to make. I find it deeply unlikely they will try to sell it for that price. Consoles are always initially sold at a loss to gain marketshare; the back end is where the money is made.

    I’m not entirely sure where the analysts got the $800 estimate, but it seems slightly high to me (but not egregiously so). My expectation is that the PS3 will come in in the $400 – $500 range. I think people will really balk at more than $500 a unit.

  4. … people who haven’t played a console game since the Atari era.

    That’s me to a tee. I find the new games and controllers excessive complicated–one stick and one button beats circle-square-triangle-X-directionals-buttons every time. Here at the office (a feature/lifestyle section of a big newspaper), we have a couple of consoles and a surround-sound projection TV for testing purposes (and goofing-off purposes, though there’s cursedly little time for that), and I watched my boss laboriously make his way through the early levels of Halo the other night. Didn’t seem like much fun. Anyway, as you say, the Revolution would have to be amazingly fun and amazingly simple to make a dent in my budget and my leisure-time allocation. I’ll probably just wait until that Atari 2600-style joystick loaded with games reappears at Costco.

  5. I agree completely with the post. The other thing to consider is that Nintendo makes so much money off of the handheld market, that it gives them a lot more leeway in the console market. The DS freakin’ prints money for them, as witnessed by the recent launch of the DS Lite in Japan. Yes, it’s a redesign, and it adds a bunch of nice touches, but not enough to warrant a new purchase. Yet, they’re all gone in Japan.

    Speaking from experience, whenever I have my mom and sister over, neither of whom play video games, they’re always content to watch the games on the Xbox, but they want to play the games on the GameCube. Nothing quite closes the generation gap like Super Monkey Ball.

    I think that with the DS, Nintendo has shown that they can make games with “new” control schemes that are geniuinely good games. Nintendogs, Meteos and Kirby Canvas Curse are all good games that need the touchscreen. Granted you’ll get some gimmicky games, but no more than any of the crappy, uninspired games you get on more traditional platforms.

    My take on the big 3 are that Sony wants people to go the Blu-ray route. MSFT wants to beat Sony and get people to buy Media Extender PC’s. Nintendo wants to get people who don’t play games to play games. Of the three, I like the last idea the best.

  6. >> “Nintendo, I think, doesn’t want to be in your living room; it wants to be in your ten-year-old’s bedroom, hooked up to the little TV in there.”

    Bang on, and you’re right that it’s where the money (partly) is too. I think they’re wise to avoid becoming third wheel, and they’ll get their own little market for it.

    Also, Athena’s *grandparents* have a SNES? Man, way to make a twenty-two year old feel old… I remember when they were launched! Geez…

  7. Speaking as only the most casual of gamers here: I understand that most gamers have gotten used to taking anything they hear from Sony with a big chunk of rock salt. First the PS3 is coming out in the spring, then Christmas, then no one knows. First it’s $500, then $800. Now I hear the Blu-Ray is what’s giving them the manufacturing headaches and driving the unit price into orbit. Gamers seem to be responding to this flurry of non-events with a “we’ll see it when we see it” shrug.

    I agree that Nintendo can only remain relevant if they focus on their niche. In fact I think they’d be smartest to give up consoles entirely and remain kings of the hand-held market, especially as the PSP is proving a disappointment. But then, they have enough viable franchises (Mario, Zelda) that they can always justify a console. But yeah, low priced is the way to go for them. They’re nowhere near fighting the console war on the level that Sony and Microsoft are, so they shouldn’t even try.

    Then again, they could pull off a surprise or two. I hear the Revolution’s controller is amazing.

  8. The $200 price point is incredibly important. When decent digital cameras crossed that margin, they went from being nerd-toys to household objects.

  9. Nintendo has done its own thing for about the last hundred years or so. Despite coming in a close third in the current generation home console group, they are still a very healthy company. As stated, the various iterations of the Gameboy basically print money for the company, but even the Gamecube has been profitable.

    I trust that Nintendo’s strategy will be good for the company. I just hope that it is equally good for my home videogaming.

    K

  10. “I know that the video games Athena likes are the video games Nintendo excels at”

    Yeah, but that was true in the previous generation, too, and in the generation before that. Nintendo certainly has the elementary-school-age girl market sewn up, and it’s helped them be mildly profitable, but still in a trailing position.

    (Don’t mind me, I’m just cranky about their not supporting HD. I owned an N64 and a Gamecube, and they have some great games on them — but once you get used to HD resolution, looking at regular NTSC crap is like sticking a marshmallow in your eye.)

  11. There are plenty of us out here in the world who aren’t so blind as to instantly decry the Gamecube as a console for kids. I’ve had more fun on it than I have or ever will have on the Xbox and PS2.

  12. FWIW, a friend of mine did some tricky (probably illegal) things to his (old) X-Box so it is a universal livingroom widget. Networked to the PC in his bedroom with its Lord-Humungus RAID where he keeps his tricky (probably illegal) videos, and music… and the X-Box’s hard drive has all of his tricky (definitely illegal) games.

    He also has us over to hang out a lot. We turn the X-Box off every now and then…. pretty much when we’re watching a DVD that somebody brought over. I have to say that it’s very compelling. This guy also owns an Xbox 360, Gamecube and PS2, but you really wouldn’t notice by watching us.

    But part of that is that we don’t have to stand up to start a new episode of south-park playing off of his hard-drive, or stand up to switch from GTA:San-Andreas to Burnout Revenge, which will be functionality NOT reproduced on the PS3/360 living-room widget… unless you count the XBox 360 Live Arcade (Geometry wars!).

    So, yeah… for the Revolution to earn its keep (regardless of who buys it, or why) it’ll need to be in a different room, or attached to a different TV

  13. You didn’t even mention the part of the Revolution that has me drooling the most-legal ROMs. No more worries about pulling out Dragon Warrior and finally finding the 15 year old battery dead. No more scouring eBay trying to find that game you remember fondly for a decent price when everyone else is apparently trying to do the same.

    Heck, seeing how little Final Fantasy Anthology and Final Fantasy Chronicles affected the worth of my collection, I might even be able to make some decent money if I can bear to sell my actual carts.

  14. You ask: What value is there in being the second game console in a house?

    I nearly laughed myself to death. Since the SNES came out there has ALWAYS been at least 2 gaming consoles in my house. When I was married to another gamer we had 5 ACTIVELY played consoles (SNES, N64, NGC, PS2, X-Box) and a NES that we hooked up sometimes.

    The ‘current’ generation of gamers who raised on NES/Sega Genesis are used to having more than one console system. And so, Nintendo shooting to be the common second as versus the Primo First makes sense.

  15. Brandon, I don’t think people are necessarily “so blind as to instantly decry the Gamecube as a console for kids”. I think it’s more that if you look at the percentage of titles appropriate for younger players, that percentage is much, much higher on the GameCube than on the PS2 or on the Xbox. Granted, the ‘Cube has titles that aren’t appropriate for children (Eternal Darkness, any of the Splinter Cell games) and the PS2/Xbox have games for kids (Kingdom Hearts for the PS2, Barbie Horse Adventures for the Xbox) but I think if you were to make a recommendation to a parent who wants a kid friendly console, the Cube is it.

    Also, just because something is labeled for kids doesn’t mean it’s not fun. I mean, look at bubbles. It’s fun in a can! I agree with you that I’ve had the most fun on my Cube, actually all the Nintendo products I’ve owned, when compared to my other consoles, despite the fact that of late, I’ve played my MSFT consoles more than my Nintendo ones. Nothing on the Xbox/360 compares to Ocarina of Time or Wind Waker.

    As for multiple consoles, I’m rocking 4 of them right now (Cube, DS, Xbox and 360) and will definitely be trading the Cube in for a Revolution and probably be trading in the Xbox for a PS2 once the PS3 drops so that I can play Guitar Hero. For me, it’s a question of the games. I buy new consoles to play the games that I want to play, within reason of course. Then again, once we got to 4 consoles, I think reason was long abandoned.

  16. Have you read this article at Lost Garden?
    http://lostgarden.com/2005/09/nintendos-genre-innovation-strategy.html

    It’s a pretty insightful analysis of Nintendo’s strategy over the past 20 years, and their general approach to the market in general. One thing often lost in the shuffle is that Nintendo has always managed to maintain profitability, even when they’ve lost market share.

    Take a look at the trailer they released for the Revolution; the emphasis there was on ‘non-games’ and interaction with a diverse set of players…not just 18-34 year old males. My children love Mario Party…and it’s one of the fe games we can play as a family, for example.

    Take a good look at the Nintendo DS; a year ago, it was still considered a gimmick. Today, it’s the hottest gaming device on the market….and that’s based on the strength of ‘non-games’ like Nintendogs or Animal Crossing. I expect to see another burst of popularity with the release of Brain-Training in a month or so.

    Take a look at the most popular game on the Xbox-360. Perfect Dark? No. Kameo? Uh-uh. Call of Duty? Nope. Geometry Wars. That speaks volumes, I think, about the question of gameplay over graphics. Which doesn’t mean I think either the PS/3 or 360 will be a failure, by any measure…just that Nintendo is playing a different game than Sony or Microsoft, who have different motives (Sony wanting to integrate all their devices in synergy, Microsoft trying to cross-sell into the online presence).

    It’s going to be weird console generation for a while.

  17. I still think all the best games were made before the rise of the consoles. I feel massive pangs of nostalgia for the old commodore C16+4 and it’s brethern. Nostalgia song

    I must admit I haven’t really followed console gaming at all, I do have an old PS1 lying around gathering dust, but I think it’s telling that last year I actually asked someone what console sega had out. whatever happened to Sega anyway?

  18. I’ve followed the progression of game consoles from a distance, and it seems that as processor speeds increased and the graphics got better, the less interested I’ve become in these systems. XBox360 games are stunning to look at, but I’d rather not have to spend three days reading the manual and a week practicing just to play at a beginners level. To me they strip out the fun of these games by making them too damn hard to control.

    The reason I think it will be tougher for Nintendo is that most people interested in XBox360 and PS3 probably already have an XBox or PS2 with plenty of titles. After dropping so much money on the XBox360 or PS3, I doubt very many will want to spend even more to get a Nintendo that’s marginally better than the XBox/PS2 they already have.

  19. I must admit I haven’t really followed console gaming at all, I do have an old PS1 lying around gathering dust, but I think it’s telling that last year I actually asked someone what console sega had out. whatever happened to Sega anyway?

    The Dreamcast was a powerful machine… unfortunately, game piracy was so rampant that they never saw the “tail end” of anything. Everybody stopped developing for it because they knew they’d sell 18 copies of the game before it was on #IRC for download and burn to CD.

    And don’t give me that “it requires technical sophistication” stuff, because people who weren’t technophiles didn’t buy the Dreamcast anyway.

    Now they’re doing what they do best (making games). And leaving the other chumps to break each others noses on hardware.

  20. Poppycock. The Dreamcast died for several reasons, rampant piracy was not one of them. Initial poor marketing (vague ads that didn’t show game footage…”It’s Thinking”?) was the start. Many people knew Dreamcast was coming…but didn’t know what it was. Sega sold the Dreamcast exceptionally well in the first couple of weeks…and then was sold out for many weeks after, damaging sales. Further, Sony stole a lot of Sega’s thunder with the annoucement of the PS/2, which featured both an inexpensive DVD player (which for 1999 was a nice bonus) and backwards compatability…which increased it’s library significantly. Lots of hardware problems riddled the platform, too; frequent GD-ROM failures were a common problem in early models.

    Don’t get me wrong: some of my favorite games of all time were on the DC, like Soul Calibur and the Shenmue series. But there were also some terrible games and a lack of good 3rd party support, some of which was owed to Sony’s aggressive deals with some game makers. But Sony had far more rampant piracy than Dreamcast in terms of raw numbers; Piracy certainly didn’t help…but only selling 10 million consoles over the life of the DC was more significant.

  21. Sony had more piracy because it had more games to pirate.

    Admittedly, I’m not a statistically significant sample… but for every Dreamcast owner (probably 5) I know, there are about 3-4 legitimately purchased games, and big binder of pirated games. Which adds up to Sega still being in the red on the console.

    Remember they, like everybody else, are playing a razor & blades game. First week sales are marketing & share-holder flak, they don’t spell the life or death of a machine (see also: X-Box in the USA). Having an extensive library of good games that console owners won’t buy spells death. Dreamcasts, more or less, eventually moved. Dreamcast games did not.

  22. “Consoles are always initially sold at a loss to gain marketshare; the back end is where the money is made.”

    I don’t think so. I think the only console manufacturer that bought this argument was Microsoft –Nintendo and Sony both understood that consoles must pay for themselves, and software sales are for profits, not subsidizing hardware. The Gillette business model is functional only if your console costs essentially less than a penny to produce, ship, and market (like a plastic razor).

    This is why Nintendo, which came in third, made millions off the GC, and Microsoft, which came in 2nd, lost more than $1.7 billion “getting into the market.”

    MS designed the Xbox stupidly. It should have made them money, not become a money sink for the company. As they were losing money off the Xbox, Sony managed to make the PSOne into a moneymaker by skrinking the entire PSX onto a single chip and selling units at fifty bucks.

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