Topic: Forbes: Kaplan Interview

[BigJim]

PGC didn't report it... so I will.

Forbes Interview: Nintendo's New Look

Glad that Nintendo is getting mainstream coverage.

"Blue ocean" will be sink or swim for them, no pun intended. With all this buzzword hype, they better have some big plans. Nintendo talking about Sony and MS fighting over a finite marketshare ("Red Ocean") is ironic, though. Nintendo would love to have Sony's marketshare. And claiming to have the first wireless controllers... I can only HOPE revisionist history isn't Revolution's secret innovation.

It's sort of sad that in 15 years Nintendo hasn't been able to stop their own market from bleeding. To shun off games like FPS's and other edgy games just shows that Nintendo is still stubborn in some elementary ways and fixed in a pattern... making "their" types of games.

Might be smart, might not be. Maybe they're no longer interested in spending lots of money to make games suitable for matured genres. It's more cost effective to make new genres so that there's less to compare it to. (But then you alienate some players in the process.) Their successes have been hit and miss. With every interview that passes, Nintendo reads more like they're abandoning a ship they think is sinking, and hope they can hop on a new one... but it's only THEIR ship that's been sinking. They've yet to make the case that the pond is drying up.

Jeez, these metaphors are ridiculous.

On the other hand, Blue Ocean may be brilliant. Gamers are, afterall, only a segment of the population and Sony and MS own them hand over fist. The DS is doing well and even Atlus's Trauma Center is supposedly selling great. Can Nintendo's mindshare only go up from here, after this ho-hum generation?

Anyway, before the sarcastic "Nintendo am doomed" responses come along, their place in the market speaks for itself. I'm not saying they're doomed. I'm saying they clearly think something's wrong with the market when maybe, just maybe, they need to look in the mirror. Maybe Blue Ocean *is* the result of self-reflection. Time will tell. They talk the talk, a lot, but haven't made the case yet.

[Amazon snippet]

What is a BLUE OCEAN STRATEGY?
1. DO NOT compete in existing market space. INSTEAD you should create uncontested market space.
2. DO NOT beat the competition. INSTEAD you should make the competition irrelevant.
3. DO NOT exploit existing demand. INSTEAD you should create and capture new demand.
4. DO NOT make the value/cost trade-off. INSTEAD you should break the value/cost trade-off.
5. DO NOT align the whole system of a company's activities with its strategic choice of differentiation or low cost. INSTEAD you should align the whole system of a company's activities in pursuit of both differentiation and low cost.

Examples of strategic moves that created blue oceans of new, untapped demand:
- NetJets (fractional Jet ownership)
- Cirque du Soleil (the circus reinvented for the entertainment market)
- Starbucks (coffee as low-cost luxury for high-end consumers)
- Ebay (online auctioning)
- Sony (the Walkman - personal portable stereos)
- Cars: Japanese fuel-efficient autos (mid-70s) and Chrysler minivan (1984)
- Computers: Apple personal computer (1978) and Dell's built-to-order computers (mid-1990s).    

[thejeek]

I think it's good that thet actually have a strategy and they're telling people about it - and the coverage in Forbes seems positive enough, or at least not outright dismissive. I have my doubts though whether there is an ocean of potential customers out there for video games that currently don't buy them: everyone I know is either into video games and knows it or is pretty much uninterested.

As a bit of a social experiment, I've got non-gamer friends of mine to play party game stuff after the pub - mainly Super Monkey Ball mini games - and while they'll do it drunk and appear to enjoy it (if the screaming, shouting and fits of giggles are to be believed) but they'd never admit they enjoyed it when they sober up, and they'd certainly never buy a console so they could play off their own initiative - the situation has to be engineered so it just happens for them without them having to admit they want to do it :-(


EDIT: spelling  

[wandering]

well, whole industries have been built around products people wouldn't want to admit they enjoy using...porn

[thejeek]

Maybe, but the thing about my mates' casual gaming habits is that they're only inclined to do it socially - and only when someone else (i.e. me...) provides the equipment. I'm afraid if they used pr0n that way, I might run and hide...

Anyway, it's nice to think of Nintendo starting a craze for private video game fetishism but somehow I can't see that one materializing :-)

[Pale]

The interesting part of what thejeek is saying is that Sony and MS did exactly what he is saying impossible...  they made video games 'cool'.  Yeah, your friends may not admit to playing Monkey Ball, but I bet they would admit to playing GTA.  The differing factor between that and Nintendo's idea is that Nintendo isn't necessarily going after the cool image when they talk about untapped markets.  They are instead going after mom's, dad's, girlfriends, etc.

We all know how tough it is going to be for Nintendo to break into the cool market, and I think it's a good idea that they don't necessarily focus all of their efforts on that.  Convincing a GTA player that Nintendo isn't for kids is a lot harder than convincing your mom that she can have fun caring for a virtual puppy.

[couchmonkey]

Building on Pale's ideas, Microsoft and Sony are out to prove Nintendo isn't cool.  It's the easy way to keep Nintendo down.  Recent MS comments to the effect that old games might not be as fun as you remember them (on the concept of downloading classic Nintendo games for Revolution) are a good example.  "Don't pay attention to the games behind the curtain, look at HALO!"

Competing with Microsoft and Sony in a cool contest is a losing battle.  N64 had far more first-person shooters than PSX, Turok was one of the more violent games of the generation, and yet Nintendo was consistently seen as not having enough games for adults.  On GameCube Nintendo had three exclusive Resident Evil games, plus two Metroids, plus MGS: Twin Snakes, plus Eternal Darkness, plus for the first two years it had most of the major third-party "M" releases too (Mortal Kombat, Hitman 2, etc.)  There are more "adult" games on the other systems, but there are still a good number to choose from on GameCube, and Nintendo put quite a bit of money into getting most of those titles on the system.  It still wasn't enough to attract the cool gamers, so what's Nintendo supposed to do?  Pay for Grand Theft Auto, a game which goes to every other platform for free?

In spite of what I just said, I somewhat agree that Nintendo is closed-minded about mature games - it seems blind to the Western point of view that certain themes make many of Nintendo's products seem childish, and I think the company could improve on that.  But I think the company's new strategy to aim for unclaimed gamers fits Nintendo well.  It's a big gamble, but I think Nintendo would slowly suffocate in the existing game market even if it put all of it's resources into cooling-up it's image.

[Ian Sane]

"With every interview that passes, Nintendo reads more like they're abandoning a ship they think is sinking, and hope they can hop on a new one... but it's only THEIR ship that's been sinking. They've yet to make the case that the pond is drying up."

That's pretty much what I thought the second Iwata opened his mouth and talked about how people are losing interest in gaming.  My immediately reaction was "no they're getting bored with NINTENDO's games".  I think it's all do to Nintendo's delusional view of themselves.  They still think this is the NES days where "Nintendo" is synonymous with "videogames".  They think anything that applies to Nintendo applies to the whole industry.  They don't realize that it is merely them who is sinking.

I don't think Nintendo's problem is that they're uncool but basically just that they're screw-ups.  The mess up routine stuff that any idiot could figure out.  They didn't "get" that memory cards should, you know, be able to hold stuff.  They didn't get that promising online support and then not delivering is a bad thing.  They have NO IDEA how the concept of demo discs work.  They can't distinguish good third party support from bad and don't seem to have any real idea of how the whole third party concept really works.  They still think third parties are something to exploit and think that we want third parties working on Nintendo games.  They also don't realize how childish many of their games look in North America or how important it is to have a variety of styles but that's one issue of many.  And of course before they failed to realize that CDs were the way to go.  They were also the ONLY company to think that which makes their oversight more damaging to their credibility.  Basically people don't trust Nintendo because people don't trust companies that seem oblivious to how things work.  I've always felt their solution is to stop doing stupid sh!t.  Consistent competance would do wonders to their reputation.  They'll start regaining market share again when people think "hey Nintendo knows what they're doing again".

MS went from having nothing to beating Nintendo in North America because they were on the ball and came across as a company that knew what they were doing.  It's not just Halo or the endless spending.  It was largely the fact that they didn't screw up very much and Nintendo screwed up a lot.

[Bill Aurion]

My immediately reaction was "no they're getting bored with NINTENDO's games".

With Nintendo being the one developer with the greatest profit every year?  With Nintendo games taking up a majority of spots in the Top Ten in Japan every week?  Hahaha, no...

[Pryopizm]

Quote
Originally posted by: Ian Sane
"

Nintendo is doing fine.  Do they make fun games?  They make fun games.  Do they make super megadollar profit fun-time?  Yes!  Yes, they do!  Is DS owning Japan and making third parties think, "I must partake in gobs of Yen!" I bet they are!

Microsoft's XBox division are "cool."  They're "mature."  Yet, they also made a net loss in the billions last gen, and their attempt to storm Japan with Eurocentric videogames somehow failed.  Interesting strategy to say the least.  

I'm only worried that Nintendo may drown from their lungs being filled with cash.

[Bill Aurion]

Quote
Originally posted by: Pryopizm
I'm only worried that Nintendo may drown from their lungs being filled with cash.

"They don't realize that it is merely them who is sinking."

Sinking...into the ocean of cash!

[Ian Sane]

Oh yes the old profit arguement.  Nintendo is making a profit so you can't criticize them for anything.

No company that has their market share consistently shrinking by a significant margin is healthy.  Sure Nintendo profits now but how long will that last when less people buy their consoles every time and thus less people buy their games?  Nothing on the Cube sold as well as the top N64 games.  On the N64 practically every major game was a million seller.  On the Cube very few games are million sellers.  The sheer fact that Nintendo is doing something this drastic suggests that despite profits even they think something is wrong.  Otherwise they would just keep with the status quo.  They realize there's a problem and they're trying to fix it.  I just happen to think they don't have a very good plan for fixing this problem.

[Bill Aurion]

I like how the "profit argument" was pointed at you saying that Nintendo is sinking, which it's not, stop avoiding that point...

And it's this new plan that HAS been getting Ninty all this profit, try again, Ian...

Sup Brain Training, which probably took a 10K budget MAX, has sold more than a million already...

[Pryopizm]

So in Ianland failing = profit!  God I wish I was a failure who did nothing but stupid moves and made everyone in Ianland believe I have no credibility.  I'd be so rich.

[Ian Sane]

Looking through the interview in more detail there's a big misunderstanding of the industry by Forbes that screws the interview up.  They talk about people not spending as much money because they're waiting for the new consoles and then use that logic to justify the release of new consoles.  Kaplan then says it's because people are losing interest in the current types of games.  Has it ever occured to either Forbes or Kaplan that the reason people didn't spend as much money last year was because all three console makers have annouced new consoles?  Would this drop in sales have occured if there wasn't something else on the horizon?

I didn't buy many games last year because as a Cube owner there just wasn't much to buy.  The interest was there, I just didn't have much to pick from.

[ThePerm]

here lies in the point, alot pf  people are interested in the revolution, It seems alot o f people are playign it safe with  their o ld  consoles...but  are  higly  interested. They may  jump the fence come e3.

we on this  board are the hardcore Nintendo fan, but what happened to t he  casual Nintendo fan?

[BigJim]

Quote
With Nintendo being the one developer with the greatest profit every year? With Nintendo games taking up a majority of spots in the Top Ten in Japan every week? Hahaha, no...

Their pond of console customers is drying up regardless. Of course when you have fewer titles to choose from, more sales per game will occur. And referring specifically to Nintendo's own games ignores the other half of the issue. Most developers that don't make Nintendo-style games don't even bother to make GameCube games. How much profit have those developers made? Check out those blistering sales. They're way up at the top of the charts too, right? Right?

Quote
Microsoft's XBox division are "cool." They're "mature." Yet, they also made a net loss in the billions last gen, and their attempt to storm Japan with Eurocentric videogames somehow failed. Interesting strategy to say the least.

Come again? Is there a direct correlation between "cool" and red ink? This money-in-the-bank thing comes up constantly, but the picture isn't as rosey when you remove portable sales and look at console sales, which Nintendo tries not to do in their financials, IIRC. You don't have to lose a billion a year to be "cool." There's no direct correlation and that defense is pointless.

Nintendo's not cool. But NINTENDO IS RICH! Nintendo loses half their marketshare every generation. But NINTENDO IS RICH! Nintendo ignores mature gamers. But NINTENDO IS RICH!

Being an apologist accomplishes nothing for them if the market pattern of the last 15 years continues for the next 5. Would the "Nintendo am rich!" defenders be LOLLZOR'ing at Nintendo with their modest console profit and 10% marketshare? Not me. I want them to work their way back to the top.

There are lots of basic things Nintendo could do to improve their situation other than drop the rescue boat in the hope that there's a "blue ocean" to fall into to take them to a promise land. As someone else mentioned, at least they HAVE a strategy. But I'm not going to be an apologist and defend their errors of the past. There are still lots of GAMERS with certain tastes, and Nintendo's profits won't somehow make Nintendogs and Brain Training any more enjoyable to them.

[BiLdItUp1]

Thank you BigJim, for such a concise debunking of the tendopologits.

Nintendo is profitable only because of the portable market, the DS and the GBA. If we looked at profitability only of the Cube, I don't doubt that we'd see much smaller margins, if any at all. Not so long ago Iwata was blaming slow GC sales for lower profit.

So don't say that market share or image don't matter to the bottom line; when push comes to shove, they do.
Meanwhile, as fans, we should not have to care about profitability - if it doesn't bring in a diverse base of games than we love, than what of it? If we are stuck with Nintendo's games, and are missing out on a ton of other cool stuff that's only on other consoles, if Nintendo is going to continue to refuse to use their over $3bn. war chest to net exclusives, if they refuse to  than what reason is there for gamers (as opposed to non-gamers) to stick with them, or to pick them and not Microsoft and Sony? So that we'll be forced to buy a Memory Card 59, and then told that third party developers are lazy for not being economical with memory(just to point out one example of how Nintendo fills out the bottom line just a bit more by screwing over their fanbase)? Surely not.

That was cathartic. Let me say that I still love Nintendo, I'm willing to give their non-gamer strategy a chance, and alot of the complaints that I listed above don't really apply so much to myself as to Microsoft and Sony fans - who will *HAVE* to be attracted to the Rev in someway in order for third parties to give the Rev significant support, let alone exclusives (unless they use the money hat, which they will not). (And I'm talking about real games, not 'nongames'.) If they don't do this, they won't be doomed - they'll just keep on being 'Nintendo', living off the GBA/DS industry as long as they can. If there comes a serious competitor in the portable market...heaven help them. (Honestly though, I don't think this is gonna happen. Everyone who tries seems to be too stupid to get it right; they don't realize that gameplay is king.)

[attackslug]

Denying that there is a HUGE market for games like Nintendogs, Animal Crossing and other games that fall into the genere that Nintendo has devoted itself to is just as silly as denying the quality and/or market appeal for games like GTA and Halo.
Regardless of one's opinion of their games, it would be *foolish* for nintendo to not pursue securing a title or two from Rockstar this generation.

[mantidor]

I think is safe to say that Nintendo has never said to Rockstar "You can take your games elsewhere, we dont want them!" But they also wont go begging for them, simply because they dont need them.

[Ian Sane]

"Denying that there is a HUGE market for games like Nintendogs, Animal Crossing and other games that fall into the genere that Nintendo has devoted itself to is just as silly as denying the quality and/or market appeal for games like GTA and Halo."

I've always been more concerned over the market for games like Brain Training.  Animal Crossing sells with gamers.  We know this because it was well received on the Cube and this was well before Nintendo started talking about non-games or simple games or any of this stuff.  It was first released into a market of gamers and accepted by gamers as a game.  Nintendogs I feel has a lot of elements that attract gamers as well.  There's items and breeds to unlock and there's a lot of stuff to do.

Stuff like Brain Training and Electroplankton are the wishy-washy titles where it's debated how much appeal they have in North America.  These are the "non-games" where issues like depth and length become issues.  These are the sort of titles where a gamer would question if they're worth the same price as a "real" game.  For the first few months of the DS the games got creamed by reviewers.  There were complaints of the games being too short or lacking depth or being glorified mini-games.  Those reviewers, who are gamers, didn't "get" those early DS titles.

If you've played games for a length of time you establish a standard of quality and some titles if they seem too shallow are going to get dismissed.  Those are the titles where we're unsure if there is a huge market because they're the games that an experienced gamer doesn't feel is worth full price for.  To be a big seller that type of game has to be sold to non-gamers because gamers don't take it seriously.  That's the market we're unsure about.  Does that group of people who don't play games but would play games if they were more simplified to the point where existing gamers wouldn't be as interested exist?  

[BigJim]

I do believe the market can be expanded. "Will they" is still up in the air. Sony expanded the market big time. Even MS expanded it by bringing in people that were otherwise only PC gamers. So Nintendo is certainly capable of doing it. But the new customers they claim to be aiming for don't exactly jive with the current market they possess.

The first rule of Blue Ocean is not to compete. Wonderful.

I don't appreciate Nintendo's apparent "oh yeah and we'll make gamer games too" attitude because if their GameCube lineup for the second half of its life is any indication, many gamer-gamers will be disappointed. Or, if all they're going to do is make a console version of the DS, then why bother. They assume they'll keep their market of gamers as well as the new folks, when all they've actually done is lose gamers with every console refresh. Retention has not been a strong point. That's an understatement.

So what *of* traditional games? If 3rd parties are going to make them, then that hope is DOA. It's already painfully obvious that the 1st party sets the pace. Not much outside of that pattern sells.

And again it's difficult to really gauge their strategy because we have seen exactly squat. All we know is what we've been told. A focus on non-gamers. A nebulous strategy that tells them not to compete. Not to beat the competition. Not to exploit demand. etc. So what does that do for us? What does that do for someone that's been scratching their ass for a year while they wait for Zelda, and games *like* Zelda?

Those are concerns I have, which Nintendo hasn't answered yet. Sadly, I'm not sure why I am almost waiting for them to say "you're not our demographic anymore." Because they won't ever say that outright. But I would like to know so that I can make my decision for this generation. I guess I just have to wait for E3 for it to be official one way or the other.

Oh yeah... They're profitable, so loyal old-strategy customers since the NES be damned.  

[Deguello]

"Oh yeah... They're profitable, so loyal old-strategy customers since the NES be damned."

Are even even entertaining the possibility that there are huge masses 40-year-olds that got an NES and now have Playstation2s?  

[Hostile Creation]

Ian, Brain Training and Electroplankton were both also very low budget titles.  I'm willing to bet they both exceeded the cost it took to make them in their launch week, and their being out isn't hurting anyone.
I know Electroplankton was made by Toshio Iwai, who doesn't even work for Nintendo, and pretty much exclusively by him.  It cost a few thousand, from what I recall (I wrote a paper on him).  With games like this, they're not even cutting into their work force for other, big budget games.

[BigJim]

Quote
Originally posted by: Deguello
"Oh yeah... They're profitable, so loyal old-strategy customers since the NES be damned."

Are even even entertaining the possibility that there are huge masses 40-year-olds that got an NES and now have Playstation2s?

It was a tongue in cheek comment, but I don't get the point. Are you saying Nintendo's gamers just switch to PlayStations like the rest of the masses? Or what?

[IceCold]

Quote
we on this board are the hardcore Nintendo fan, but what happened to t he casual Nintendo fan?

Endangered. Almost extinct.. That's why Nintendo's going with this nongamer strategy; more effective than chasing after those gamers..