July 30, 2021

Nintendo as a third party? Uhh… that may be a dumb idea.

With the Wii U in its dying days, let’s tackle a common misconception that has reared its head again; that Nintendo would be better off as a third-party developer…


With the success of Miitomo, Nintendo’s first foray into smartphone gaming, and the dying embers of the short and bittersweet lifespan of the Wii U (with Nikkei reporting that the Wii U’s production is to be phased out this year – an obvious situation, considering the NX could be out in the next year or two), the usual argument from gamers has been rising up once again. One which has been perniciously repeated to the point of inanity – that being, Nintendo would be financially and technically better off if it abandoned its hardware and went exclusively third-party.

But would it really?

Let us, for the moment, put aside the facts; Nintendo is a profitable company, a company which has to date only posted two years of losses at the end of its fiscal year (2011 and 2012). Let’s put aside that Nintendo has hugely successful gaming franchises that sell millions – Mario Kart 8, to date, has sold 7.25 million units, and on a console with an install base of just under 13 million, is a game attach rate that rival platforms would do horrible nasty things for. Let’s forget that Splatoon is, so far, one of this generations best-selling new IP with almost 4.5 million units sold – and it’s only just reaching its first birthday. We’ll gloss over that Nintendo wholly owns and dominates the handheld console market, with 55 million machines sold and having pushed out the PlayStation Vita entirely at this point – despite ‘respected’ analysts stating a few years ago such a situation would be impossible. And let us just not mention that the previous generation, with the Nintendo Wii, made Nintendo billions upon billions of dollars in pure undistilled profit, to the point Nintendo could lose millions every year and survive for a good 50-odd years as a result.

Let’s make all of this irrelevant. Let us, for a moment, pretend none of this has happened. In effect, let us pretend that Nintendo really is suffering financially. Suffering to the point that dropping its hardware division entirely and going for a pure third-party development and publishing model looks like a tempting prospect, perhaps even essential. Could Nintendo survive this?

For such a move to succeed, first you’d have to be sure of two interconnected situations happening. That being that your current customers would move to another console, and that the current owners of the console/s you’re proposing to support would buy your games. The first situation is perhaps the easiest to get through; Nintendo has, for years, been “the other console”; the one you buy as well as another, or something you have aside from your PC gaming diet. It wouldn’t be a push for me to pick up the likes of Splatoon on a PS4, seeing as I own one already, though why I would when I have it on the Wii U is certainly a valid point. The second situation is much thornier – Nintendo can rely on its current userbase, of course, but can it really rely on the theoretical scenario of Sony or Microsoft’s userbase wanting to buy its games? In some cases, maybe – I can see them buying Bayonetta 2, for example. But I don’t know if they’d buy the likes of Splatoon, or Mario Maker (or Mario in general).

The reason for this ties into another hurdle to overcome; the stigma that Nintendo has carried for years. Most “gamers” see Nintendo as a company that makes toys and games more suited for the young and/or the young-at-heart. Let’s not even address that fallacy, and let’s presume they are correct. You then have a new publisher on the market that carries a stigma that has been attached to it for almost twenty years now; and not only that, would also carry the stigma of having failed in its hardware commitments. That’s a crushing situation for any company to deal with, and it would dent consumer confidence in this newly-streamlined company as well as hurt its actual stock value, meaning that the company would be worth considerably less as a result. That’d make outside investment that much harder to find – a dangerous place for any publicly-traded company to find itself.

You’d then get to software itself; Nintendo would no longer be able to make what it wants at a whim – it would be constantly seeking whatever was the most profitable idea at the time. One of the most regular criticisms from old and lapsed Nintendo players is that the company makes poor use of its old IP. And I wouldn’t argue against that – in fact, I wholeheartedly agree (1080 Snowboarding, Wave Race, F-Zero, Eternal Darkness… I miss you all! *sad face*). Thing is, Nintendo isn’t ever likely to revive any of that if it goes third-party; these are small, largely forgotten franchises. A Nintendo focused on success stories would take a look at its biggest sellers the last few years and double-down on them; Mario Kart, for example, is Nintendo’s biggest seller by a considerable margin. Splatoon would be in line as well, being a hugely successful new IP ripe for franchise. And mini-game laden things like Nintendo Land, with an official retail tally of more than 5 million units, would be in line for more instalments. If you were expecting Nintendo to push a new Metroid in this scenario – consider that Metroid Prime 3, on the Wii and all its sales (this is an aside), sold 1.41 million units. Nintendo would either sell off such things to other companies, or more likely just pretend they never happened. Why take risks? Look at the state of the market right now – few third-parties do.

Following from that, you’d then need to be sure that your new platform owners would be comfortable with you on their platform and willing to give you the time and space in order to make something work. In recent weeks and months, many development studios have gone the way of the Dodo; including Lionhead Studios, Evolution Software, 5th Cell and Two Tribes. These are not flash in the pan studios – they’ve been around for a while now with their own success stories to tell. These are dangerous times for development studios, and the likes of Sony and Microsoft are (and should be) understandably nervous about the state of games being made for their machines in an era where rush-jobs have become the norm, and they have had to spend an inordinate amount to correct the damaging public relations problems that resulted from them. Even with a proven track record of technical excellence, and having made some of the best games the industry has ever seen, neither Sony nor Microsoft would – or indeed, should – be wholly comfortable just letting Nintendo “do its thing”. And companies that just loom over developmental studios can often, sometimes without knowing, influence the direction of what is being developed. Would we really feel better if Microsoft was telling Nintendo how to make Mario Kart 9 better? Or Sony?

On that note, I don’t believe Sony would like the idea of a Smash Bros. on its consoles. Sony has tried a rival franchise, and may attempt it again in future. Would it make sense for a company like Sony to have its main rival game on its platform? I’m not so sure…

And that’s not taking into consideration current third parties. EA and UbiSoft, more than most, conspired to stick the knife into the Wii U early on and both have very close working ties to Sony and Microsoft. Now, I’m not going to suggest that either publisher would be so unbelievably petty and small-minded to use such a situation to further twist the knife – but it’s certainly not a scenario you could completely discard, either. Current third parties could and might use their already established influence to make like difficult for Nintendo as an independent publishing outfit, and the only way to get around such a bitter market would be to wholly stick to the PC; which is kind of exclusivity in all but, isn’t it? You kill off Nintendo’s consoles, but they just end up doing PC-Only stuff because Sony and Microsoft would perhaps prioritise their current business relationships over any new one with a former hardware rival!

And if you can make sure ALL of these situations are walked through without incident – which I would consider unlikely – one then has to talk about quality of output. We actually have an example of a company that did make hardware and now doesn’t. Oh hey Mark… I mean, Sega. Ahem. *cough*

Thing is, Nintendo’s hardware situation is best described as a Sword of Damocles. Nintendo has ample reason to make damned sure it’s software is as good as it can be, because their hardware sales depend on it – without the support of third parties now, it has been even more imperative for Nintendo to ensure its games are top-drawer. Right now that is the motivation that, if we’re being blunt about this, has seen the Wii U have some of this generations finest games already, selling millions. Sega once had the same compulsion; but today? Yeah… Sega has been a bit seedy in the last few years, and that’s long before we get to talking about Colonial Marines *spit* *ten Hail Mary’s*. Once you don’t have to worry about selling hardware – you only have to worry about pushing software, and as we know, there’s one born every minute… or there was, but the industry is having to change right now, and that’s a good thing.

So, to summarise;
* Nintendo would need to be in real financial trouble.
* It would need users to transition to other consoles.
* It would need other console users to want to buy its games.
* It would need to see big spikes in sales to revive old IP.
* It would need Sony and Microsoft to leave it alone and do its thing.
* It would need Sony and Microsoft to be happy having competitive franchises on its hardware.
* It would need other third parties to keep their noses out.
* It would need to maintain its current quality of output without the primary motivation driving that situation.

… that’s a lot of hypothetical hurdles to overcome. And now, let’s slide one thing back into the frame; for all its home console failings, Nintendo dominates the handheld console market. It’s seen off dozens of competitors over the years – Nokia, Sega, Tiger Electronics, Atari, Sony, even more recent Android-based competitors. 55 million units in four years is a healthy market and its software market has been considerably more varied and interesting – that, and Pokémon prints money still, as we all know. Even if Nintendo were to leave the home console market entirely – would any company, with any common sense at all, really jettison its position in a market that it has dominated since 1989? A market that it no longer has a single competitor in?

Really? You’d try and argue that? I mean… sorry about the emphasis here, but: REALLY?!

Don’t misunderstand; I think Nintendo has a lot to prove with the Nintendo NX – especially as a home console unit, after the Wii U. For all its successes, the market does look at overall sales figures totals and that’s always going to be a black mark on Nintendo now. I’m waiting to see what the NX is; official screenshots and trailers, and we have just under three months to wait for those, as Nintendo is highly likely to dedicate its E3 streams entirely to the new NX platform. Nintendo is currently, I’d imagine at any rate, running around like someone has lit their underpants on fire – desperately and feverishly trying to make 100% sure that everything at E3 this year goes without a hitch, and that they have solid things to show an audience that has every right to (at the moment) be a little bit cynical of Nintendo as a home console manufacturer.

But to suggest that a profitable company, which predominantly now operates a monopoly on a huge chunk of the gaming market in terms of handhelds, would throw all that away for the risky and dangerous move into third-party development and publishing? It would be a highly risky and dangerous manoeuvre even if Nintendo was at a point where it literally had no other option. But it has options – real, viable ones. Even if it loses the home console market, would we really be sad about Nintendo doubling-down and making some of the best handheld consoles and games in the business? I can’t say I would.

I don’t think people who feel Nintendo should be third party are stupid – but it’s wishful thinking that skips a lot of the meat of the issue. But of course, let’s come back and discuss this in ten years time. I mean, everyone wrote the Nintendo Wii off – and I mean everyone – and we all know how unsuccessful THAT was. Hell, people thought the original DS was stupid because it had a touchscreen – I mean, really, why would we want touchscreens? They tried that with small-form PCs and it didn’t work, what is Nintendo thinking, eh? This was 2004 – before smartphones became a serious thing. Perhaps had the DS failed, technology today might be very different…

My point is this – Nintendo has problems, but so does everyone. That doesn’t mean it needs to stop everything it’s doing right now and change everything it is doing right now. The worst case scenario for Nintendo in the coming years will be deciding whether it doubles-down on handheld console gaming, or attempts to reassert itself as a viable home console contender. And that will be decided, arguably, by sales of the coming NX Home Unit.

This generation hasn’t been Nintendo’s best sales wise… but it’s certainly sold a ton of software, and as I said before – maybe the secret to success is pleasing the audience you have, rather than worrying about a hypothetical audience that may or may not exist…


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