Author Topic: The Long Tail and Nintendo's Future  (Read 13121 times)

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Offline BlackGriffen

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RE:The Long Tail and Nintendo's Future
« Reply #25 on: April 15, 2005, 11:19:55 PM »
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Originally posted by: zakkiel
But people generally expect flash games to be free (except for the hits, which exist in flash as well). Also, there has to be a fairly significant return for Nintendo to recoup the cost of setting up the system.

Flash is just an example of a 2D API that would be dirt cheap to implement and easy for developers to take advantage of. Dirt cheap to implement because Nintendo can just partner with Macromedia to deliver the players, and Macromedia will do it to sell more of its dev kits. Easy to take advantage of because it's already familiar to so many coders. Nintendo could, of course, choose another API, but the API details are irrelevant to the points I'm making.

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Depends on where you draw the line on "second tier." Perhaps we should just use a loose generation system. Make Gen 1 2d games, Gen 2 roughly N64, Gen 3 Gamecube, cutting edge... well, self-explanatory.

The cost of making games of a given generation isn't falling very much. On the other hand, gamers expect graphics in a 3d game. As a result, the they place Gen 2 games much closer to Gen 1 in terms of value than to Gen 3. Gen 2 games, as a result, have a plummeting value and almost no capacity to generate market hype but still fairly high production costs. The equation doesn't look good for them.

On the other hand, Gen 1 games present challenges of their own. First, I think you simply can't make them work with home consoles. They're time-wasters now, things you do when you're taking a break from a paper for a few minutes or whatnot. I think most people simply don't see them as something you fire up a console for. As well, in order to make money off them you would have to rely on mass appeal, and it's true, these games reach people that wouldn't touch a hit game, but these aren't the people who buy consoles.

I also think controlling distribution and avoiding piracy on games that size would be a nightmare. And, as I said, gamers know how low-cost these games are to produce and therefore tend to expect them to be not merely cheap but free.

Actually, the tier concept didn't refer to any specific quality of game, but the distribution method and licensing fees involved. The way I look at it, the quality and cost of the game is a variable under the control of the developer that any sane dev will set in such a way to maximize profit from a given distribution channel. Thus, the quality of the games likely to come out of such second tier channels is the relevant question, not whether any particular game would be profitable in it. If I had to hazard a guess at the answer, my guess would be games of a similar quality as shareware game companies make now - and they're not all just time killers. Check out Ambrosia Software's Escape Velocity series, for starters. Then check out the results of their collaborations:  Coldstone (RPG making software that I believe they used to make Pillars of Garendal), Uplink, etc. Certainly, there will be money losers, people making low budget games in their spare time hoping to make a few bucks, and the whole gamut. As long the gamers have a decent referral system to help navigate the mess, it'll be fine.

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You're right. I should have said Netflix. But note: he doesn't give any numbers at all about how documentaries do on Netflix in comparison to current and past hits. In fact, he spends enough time working around the omission that it becomes highly suspicious (thus, he talks about a particular documentary doing really well - in the documentary category).

I don't see it as an omission. You have an obsession with having all the concrete numbers. To me, these are the salient points: first, the non-hits, documentaries included, are doing better on NetFlix than in the wider market; second, the non-hits amount to a significant source of revenue for NetFlix. So, what I did was apply that lesson to Nintendo: using a similar distribution model, Nintendo could make the non-hits sell better (please note that sales of the non must-have titles [Nintendo hits and a select few others] on the GC is one of the main things third parties complained about publicly), and thus greatly increase and diversify it's own revenue.

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This is why I excepted movies from the bandwidth issue. You have a point about game distribution, though, which would actually appeal more to the less tech-savvy. I concede the bandwidth point, but point out again that this system will require a lot of investment to start up and market.

I doubt it. Certainly it would require investment, but I don't think it would take enough to be called a lot compared to the potential gains in revenue. This is especially true if Nintendo doesn't open up the ordering system to the public but requires them to go through a retailer of some kind.

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What is the second tier here? And what is the revenue involved for these companies?

Second tier is just any distribution channel that is less than the all or nothing proposition of today that has lower costs, lower fees, and hopefully lower prices. *looks up at the top of zakkiel's post, shakes head* Do you not remember what you just wrote at the beginning of this post? I can give you reasonable upper and lower bounds, but that's about it: fewer sales than the biggest hits get now, but more than 5,000, probably. Of course a game can be unexpectedly good and break the upper bound or dismally bad and not break a few hundred curious buyers with money to spend. The rest depends on marketing, game price, licensing fees, etc. Supply your own reasonable guesstimates for those.

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My comment was specifically about rereleasing games. There are obvious limits to what you can do with that, and I think Nintendo has done what it can. It uses these games as promotional material, it puts them in handhelds, it sends 'em out to China, and it's now entering the backwards-compatibility phase.

I would love nothing more than to go to a gamestore and have them burn me a CD of my choice five or six great Gen 2 games for $30. But I wouldn't be willing to pay too much more, and I have a suspicion that developers can't afford to go near that low.

What obvious limits? I'll grant that Nintendo may not make a fortune or a marketing bonanza off of it, but the sheer profitability of even modest sales would compel Nintendo to act on it, I think. Just put the things up for sale for cheap and let the profits trickle in. I've already described a fairly secure way of handling your Gen 1 games using electronic distribution - and by selling for $1 or $2 getting around the system to pirate the ROMs just isn't worth it. N64 games would actually be the most difficult to manage - I don't know of any good PowerPC emulators to build off of in the wild, so Nintendo would probably just omit those - at least for a while. Gamecube games will already be compatible, so it's a question of making them available through online retailers. No active promotion, no nothing - just let users buy the software as they stumble across it for various reasons. I felt it worth noting that in my vision of a burn on demand system, you're just buying the disc - no pretty packaging, no manual - just a labeled disc in a generic case of some kind. That way Nintendo keeps the costs managable.

Galford, thanks for the info. I'm almost totally clueless about the details of what MS and Sony are doing aside from likely tech specs for their next consoles. It's interesting to hear that MS is headed at least roughly in the direction I describe already.

It looks like Nintendo may already be headed in the same general direction, too (from IGN's Nintendo Minute):
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This week's question: With recent games like WarioWare: Touched! and Nintendogs, the Big N seems to be focused on making intuitive, easily accessible software. Will this trend continue in the future? And what does that mean for big-budget, complex games like The Legend of Zelda?

George Harrison, senior vice President of marketing, Nintendo of America: As the video game industry continues to grow, the demographic of its audience is also expanding. In the past, nearly all gamers were young males -- guys like you who are very enthusiastic about playing games, driven to master them, and passionate about keeping up with the latest products.

Today, the video game industry's annual revenue surpasses even other traditionally monstrous entertainment fields such as movies and music. Gaming has now clearly reached the mainstream tipping point, and entirely new markets of gamers are becoming receptive to the idea of purchasing a game for themselves. As such, Nintendo is doing its best to service the loyal and hardcore fans who've made video games their number one entertainment choice but also to expand the industry past it's traditional boundaries.
[...]

BlackGriffen

Offline zakkiel

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RE: The Long Tail and Nintendo's Future
« Reply #26 on: April 16, 2005, 10:48:20 AM »
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The way I look at it, the quality and cost of the game is a variable under the control of the developer that any sane dev will set in such a way to maximize profit from a given distribution channel. Thus, the quality of the games likely to come out of such second tier channels is the relevant question, not whether any particular game would be profitable in it.
I'll rephrase my point to make it a bit clearer: you cannot make a profit off of new 2G games now. The discepancy between value and cost is too big. Game companies trying to locate a favorable cost/return will be forced to one of the two ends of the spectrum. That means that you get Gen 1 and Gen 3 or better. The middle is untenable for companies.

Not familiar with Escape Velocity, but didn't it come out in the era of garage gaming companies, when you could make cutting edge for cheap? And thus EV was way closer to the top of the curve than similar games today.

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Do you not remember what you just wrote at the beginning of this post?
Um, yes. I adopted a different system forbetter differentiating games. It's a distinction with clear relevance to the market. You can't pretend it doesn't exist. And now I'm asking you to define what you mean by tier-2 in terms of that system, because it makes a difference in whether it can succeed or not, for the reasons I've put up three times now.

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I don't see it as an omission. You have an obsession with having all the concrete numbers. To me, these are the salient points: first, the non-hits, documentaries included, are doing better on NetFlix than in the wider market; second, the non-hits amount to a significant source of revenue for NetFlix. So, what I did was apply that lesson to Nintendo: using a similar distribution model, Nintendo could make the non-hits sell better (please note that sales of the non must-have titles [Nintendo hits and a select few others] on the GC is one of the main things third parties complained about publicly), and thus greatly increase and diversify it's own revenue.
I have an obsesssion with grounding quantitative arguments in quantitative facts. Unless you can do that - unless you can demonstrate that the costs of creating and marketing a pay-per-burn or massive download system and creating piracy protection would be outweighed by what you admit is a marginal source of revenue - then your argument is useless. Netflix doesn't have to invest anything to distribute the nonhits, because it already has an appropriate distribution system for the hits. Nintendo does not. You can't tell me we can ignore the cost of building and especially marketing this system, nor that we can blithely skip over any question of who, if anyone, would use it.

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What obvious limits? I'll grant that Nintendo may not make a fortune or a marketing bonanza off of it, but the sheer profitability of even modest sales would compel Nintendo to act on it, I think. Just put the things up for sale for cheap and let the profits trickle in. I've already described a fairly secure way of handling your Gen 1 games using electronic distribution - and by selling for $1 or $2 getting around the system to pirate the ROMs just isn't worth it. N64 games would actually be the most difficult to manage - I don't know of any good PowerPC emulators to build off of in the wild, so Nintendo would probably just omit those - at least for a while. Gamecube games will already be compatible, so it's a question of making them available through online retailers.
I missed your security system. Can you point me to it?

In terms of old games, the limit is first the terrible press that rereleases tend to generate. It makes Nintendo look desperate, cheap, and staid, committed to gathering the low-hanging fruit rather than making something new. Second, the viability of multi-platform rereleases; if it's on gameboy, why would people bother with a home console version? Third, the size of the game libraries themselves. If you have a navigation system, that system will by nature punish bad games so what would be the point of releasing them? And Nintendo has already rereleased a lot of its classics in a form that will be playable this gen and next. Which brings me to the fourth limitation: backwards compatibility makes rereleases rather pointless. If everything after N64 is already playable, and old games are going to plummet to rock-bottom prices, what's the point of rereleasing them? The success of things like the OoT pack-in lies in the impossibility of playing them on the Cube. Backwards compatability isn't a terribly useful feature from a business perspective (Microsoft wasn't going to have it but feared the press backlash), but I think that shows the general lack of interest in having lots of old games available. No one's demonstrated that there is any market interest in rereleases except among old fans or on handhelds.

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As such, Nintendo is doing its best to service the loyal and hardcore fans who've made video games their number one entertainment choice but also to expand the industry past its traditional boundaries
Nintendo is trying to architect hit games with broad appeal. I see no evidence that they're thinking in any terms but hits.
Defenestration - the only humane method of execution.

Offline Galford

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RE:The Long Tail and Nintendo's Future
« Reply #27 on: April 16, 2005, 04:15:33 PM »
Back in March the GDC had a round table discussion of subject similar to this...
It's kinda interesting...

http://crystaltips.typepad.com/wonderland/2005/03/burn_the_house_.html

Also Black Griffen, your welcome...
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Offline BlackGriffen

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RE:The Long Tail and Nintendo's Future
« Reply #28 on: April 16, 2005, 06:06:40 PM »
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Originally posted by: zakkiel
I'll rephrase my point to make it a bit clearer: you cannot make a profit off of new 2G games now. The discepancy between value and cost is too big. Game companies trying to locate a favorable cost/return will be forced to one of the two ends of the spectrum. That means that you get Gen 1 and Gen 3 or better. The middle is untenable for companies.

Not familiar with Escape Velocity, but didn't it come out in the era of garage gaming companies, when you could make cutting edge for cheap? And thus EV was way closer to the top of the curve than similar games today.

Which am I supposed to believe - you, or my own eyes? The newest addition to the EV series came out 3/18/2002 and wasn't anywhere near cutting edge on release. Neither were Pillard of Garendall nor Deimo Rising in 2001. Uplink, released 5/27/2003, could have been considered cutting edge if it were released in 1995, but it's still a fun game.

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Um, yes. I adopted a different system for better differentiating games. It's a distinction with clear relevance to the market. You can't pretend it doesn't exist. And now I'm asking you to define what you mean by tier-2 in terms of that system, because it makes a difference in whether it can succeed or not, for the reasons I've put up three times now.

Sorry for being vague - what I was referring to was your admission that it was ludicrous to expect someone in a PGC forum to have solid numbers. Then, just a few paragraphs later, you ask for numbers again. You're right that your naming system better classifies the types of games available, but it is divorced from the realities that developers would face. They would face, essentially, first tier and second tier distribution channels, and would make their games appropriately for making profits in those channels. If I claimed that devs would make a profit making games of all quality levels, I was mistaken. Having multiple channels would increase the range of qualities for which new games are being made, but it would not guarantee that new games of all ranges would be made.

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I have an obsesssion with grounding quantitative arguments in quantitative facts. Unless you can do that - unless you can demonstrate that the costs of creating and marketing a pay-per-burn or massive download system and creating piracy protection would be outweighed by what you admit is a marginal source of revenue - then your argument is useless. Netflix doesn't have to invest anything to distribute the nonhits, because it already has an appropriate distribution system for the hits. Nintendo does not. You can't tell me we can ignore the cost of building and especially marketing this system, nor that we can blithely skip over any question of who, if anyone, would use it.

You make the mistake of assuming it would need to be advertised. You also make the mistake of thinking that you're worth the effort on my part to get some concrete numbers. I also only admitted that the revenue would be marginal for the game makers - Nintendo gets to amortize the costs across lots of different marginal revenue streams. It is by combining lots of marginal revenue streams that you get a significant one. After all, even the tier one channel is comprised of nothing but the revenue from millions of individual sales.

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I missed your security system. Can you point me to it?

For the really small games - NES - encrypt them in transit and don't permit the gamer to save them to a memory card. For the slightly larger ones, let the player save most of the game, encrypted, to a memory card. I say most because a small but crucial portion of the ROM will be excised from the saved version. That portion, a few KB, is to be supplied by Nintendo servers whenever the gamer wants to play.

It is more important, however, to sell the games for cheap enough that the effort to find a free ROM and get it into the N5 for playing or getting around the copy protection systems just isn't worth the hassle. Pirated games are only free, after all, if your time is worthless.

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In terms of old games, the limit is first the terrible press that rereleases tend to generate. It makes Nintendo look desperate, cheap, and staid, committed to gathering the low-hanging fruit rather than making something new.
It all depends on how you spin it. If you spin it like a rerelease, yeah it'll be problematic. If you spin it as an opening up of the old library all at once, it makes it harder to complain. The sheer number of titles would also insulate them from criticism. Most importantly, just make it a low key release - if Ninty doesn't try to brag about it, but just lets the word get around, then there's less reason for anyone to criticize.

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Second, the viability of multi-platform rereleases; if it's on gameboy, why would people bother with a home console version?
Because games fore the original GB and GBC are harder to come by now because it's all after-market.

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Third, the size of the game libraries themselves. If you have a navigation system, that system will by nature punish bad games so what would be the point of releasing them?
Because it would cost Nintendo more to figure out which games are bad than the miniscule server space they would take up.

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And Nintendo has already rereleased a lot of its classics in a form that will be playable this gen and next. Which brings me to the fourth limitation: backwards compatibility makes rereleases rather pointless. If everything after N64 is already playable, and old games are going to plummet to rock-bottom prices, what's the point of rereleasing them?
The point is that the cost is virutally nil - no need for development, marketing, or even manufacturing beyond what Nintendo has to have anyway. Also, as I mentioned, the cost of making the backward compatibility is measured in, at most, quadruple digits because the emulators already exist.
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The success of things like the OoT pack-in lies in the impossibility of playing them on the Cube. Backwards compatability isn't a terribly useful feature from a business perspective (Microsoft wasn't going to have it but feared the press backlash), but I think that shows the general lack of interest in having lots of old games available. No one's demonstrated that there is any market interest in rereleases except among old fans or on handhelds.
I never claimed it was more than a niche market. The profit margins are still absurdly high, though.

I also completely disagree about the usefulness of backward compatibility. In fact, for Nintendo, Rev backward compatibility with GC was critical for the GC. By extension, the perception of Nintendo in the market, and thus the Revolution as well. I actually started another thread on that very topic a few months back ("The Case for Rev Backward Compatibility" IIRC). For Sony and MS, it's less critical, but still useful. If nothing else, it reassures potential customers who don't already own the old system to have access to a large library from the beginning.

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Nintendo is trying to architect hit games with broad appeal. I see no evidence that they're thinking in any terms but hits.
It certainly seems to me like they're talking about niche games which are, by definition, not hits. Nintendo needs to make hits, but not every game needs to be a hit. The truely important measure of whether to make and distribute a game should be profitability, not whether it will be a hit or not.

BlackGriffen

Offline BlackGriffen

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RE:The Long Tail and Nintendo's Future
« Reply #29 on: April 16, 2005, 06:41:28 PM »
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Originally posted by: Galford
Back in March the GDC had a round table discussion of subject similar to this...
It's kinda interesting...

http://crystaltips.typepad.com/wonderland/2005/03/burn_the_house_.html

Also Black Griffen, your welcome...

Again, thank you! That's an excellent read, and I'm glad that I'm not alone. Hell, I'm glad that I'm Johnny Come Lately on this because it means that it actually has a chance of happening.

BG

Offline zakkiel

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RE: The Long Tail and Nintendo's Future
« Reply #30 on: April 17, 2005, 07:47:54 AM »
Well, this is going nowhere.

On the other hand, while I may disagree about the usefulness of the long tail in home consoles, it would definitely be a brilliant move for the DS. DS games tend to be small enough to download, it has the wireless connection, and many of the games are just designed for that style of distribution. Take Electroplankton, for example. Apparently it's not selling to well as a $45 compilation. But if each mode were sold as a $5 downloadable, my suspicion is it would do a whole lot better. Two questions though: can you make the wireless connection secure enough, and can the DS write fast enough to make it worthwhile?
Defenestration - the only humane method of execution.

Offline Galford

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RE:The Long Tail and Nintendo's Future
« Reply #31 on: April 17, 2005, 04:09:35 PM »
I understand where you're coming from Zakkiel, the cost of having to distribute machines to burn discs on demand would be very hard in the US.  It would take a very long time to make a profit on a coast-to-coast venture.

On the other hand, if Nintendo did what MS is doing with Live Arcade, and did it properly, it could make some money.

The question is, would Nintendo sit out short term loss for long term gain???
My guess is no.
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Offline BlackGriffen

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RE:The Long Tail and Nintendo's Future
« Reply #32 on: April 17, 2005, 08:11:32 PM »
There's the cost, and the fact that distributing burning machines would be suicide. I apologize if I've been less than clear in my descriptions, but when I envision burn on demand, I see one of two possibilities:
One: the public places orders with retailers (online and otherwise) who then pass the order on to Nintendo to fill.
Two: the public submits their orders directly to Nintendo (online, using the N5 or PC).

Under no circumstance should any outside party be permitted to burn games for a console. That's just begging for large scale commercial piracy - the kind where the pirates make money and Nintendo doesn't.

That makes the system somewhat less on demand than many would like, I'm sure, but it's far more secure for Nintendo that way.

BG

Offline BlackGriffen

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RE: The Long Tail and Nintendo's Future
« Reply #33 on: May 17, 2005, 01:49:33 PM »
I'm not batting a thousand (as far as I know), but I'm pleasantly surprised:
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[...]
The secret weapon: The console also will have downloadable access to 20 years of fan-favorite titles originally released for Nintendo 64, the Super Nintendo Entertainment System (SNES) and even the Nintendo Entertainment System (NES).
[...]
Freedom of design: A dynamic development architecture equally accommodates both big-budget, high-profile game “masterpieces” as well as indie games conceived by individual developers equipped with only a big idea.

Let's hope Nintendo can capitalize on this. Microsoft looks to have something similar in the works, but has only mentioned the sale of "extras" in a game using "micropayments" (essentially the same "pay in advance, here's your tokens" idea as arcades used) and I haven't heard of Sony planning anything similar.

The 512 MB internal flash is an excellent idea. That's big enough to fit several of even the biggest N64 games. The SD expansion slot opens up a potential piracy avenue, but I think I know how Nintendo will manage it. First, and foremost, encryption of the files. Next, at least a small (say 256 KB to 1 MB) but essential portion of every game will reside in the built in flash memory. This has many of the benefits of the chunk on the server scheme, without torquing people over having to contact Nintendo servers on every launch.

Nintendo's business plan looks sound going in. Now we just have to wait and see if Nintendo can get the rest of the pieces in place: tech specs, marketing, third parties, and the games.

BlackGriffen

Edit: fix quote tags

Offline Ian Sane

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RE: The Long Tail and Nintendo's Future
« Reply #34 on: May 17, 2005, 02:12:05 PM »
If Nintendo is really smart they'll allow people to make brand new games on NES, SNES, and N64 hardware to sell through the downloadable service.  Making a modern game is pretty complex but a small dev could easily make a great SNES game which could earn them a couple bucks and get them more exposure as a developer.

Offline Galford

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RE:The Long Tail and Nintendo's Future
« Reply #35 on: May 17, 2005, 03:22:37 PM »
I guess I have to eat some foot on this...

Wow, I glad Nintendo is finally doing something with these old games.

Ian, your right, a lot of fan-games could get a chance on this system.
Xbox Live already has game you can download any play exclusively for that
service.
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Offline trip1eX

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RE: The Long Tail and Nintendo's Future
« Reply #36 on: May 17, 2005, 03:23:55 PM »
Nintendo is one of the biggest publishers so by themselves they could probably keep their console alive.  And given that EA usually discriminates against no one you'll get games on the REvolution.

But as Nintendo said they are a content company.  To me they said it as if almost giving everyone a hint that perhaps that is what they will become in the console space eventually.  If they don't find console hardware profitable they could always make games for the ps3 or 360 and exit the console business.  Hell they could still even keep making bongos and develop new controllers to package with their games for other systems.  I don't think anything is stopping them from that.  

And given their clout they could demand a pretty penny to be exclusive to one or the other console.  OR publish for them all.  

They could do that and still keep their handheld business.  I think handhelds are  made more for easier and simpler games and that is aligned more with Nintendo's philosophy.  Perhaps the fact that Nintendo even started working on the Gameboy and such distracted them from the console market.  Maybe they spread themselves too thin.  

The obvious comparison to Sega and what happened to them after they quit are inevitable but Nintendo is still strong financially and has way more valuable intellectual  properties than Sega does.

And like I said Nintendo could still develop peripherals for consoles.  That's where most of their innovation is anyway.  The cube didn't have a lot of innovation.  Except it had some good load times cause of the discs.  

And their whole download their back catalog philosophy could work with any console.  NIntendo seems pretty conservative fiscally so if the REvolution doesn't make them a decent profit they'll abandon the console hardware market.    

Offline BlackGriffen

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RE:The Long Tail and Nintendo's Future
« Reply #37 on: May 17, 2005, 03:34:44 PM »
Agreed, Ian, though I think that it looks like Nintendo will be going the "more than one API" route that I advocated. Devs will be more likely to go that route, IMHO, than coding for an obsolete console API.

I should point out at least one thing that I'm almost certain I missed on: it doesn't look like Nintendo will make any of the Gameboy libraries available on the N5. I'm unsure why, but they may have other plans for them *shrug*.

BlackGriffen