The NX Is A Brave New Concept In Troubled Times.

With the market suffering its worst results in years, the Nintendo NX looks to be very different from what we know – but that may be no bad thing.


 

To understand why the NX is a necessary move for Nintendo – a move I was talking about back in February (yes, the information we had even then suggested this was going to happen) – we need to take a moment to pause and reflect on the rise and freefall of Gen-8 Home Consoles.

Because if one were to just take the marketing spiel at face value; sure, the PlayStation 4 has been killing it and sure, the XBox One is a healthy second place, with the Wii U bringing up the rear – though it may be a noble failure. But for all the bravado and bluster, the overall figures are painting a sorry story of an industry in decline. During the last three consoles generations, the market leaders of the PlayStation, PlayStation 2 and Nintendo Wii had each surpassed fifty million unit sales by their third fiscal report – about two and a half years. Sony’s PlayStation 4 had, by May of 2016 – a month after its third fiscal report – only shifted about forty million, now believed to be closer to 43 million units. But let’s take the figures from May, because it’s simpler mathematics – compared to the last three console generations, dating back to 1995, the Sony PlayStation 4 is seeing a roughly 20% drop compared to the previous three historical successes. That’s certainly not a figure the industry wants you to know about – but it’s an important one.

Similarly the market as a whole has seen declines – software sales have slowed down dramatically, seeing this year a 22% drop in sales, and at a time when growth should be happening – that it isn’t is a serious issue. Hardware as a whole has seen similar issues – within the same timeframe, the accumulated console sales of Gen-7 (the PS3, Wii and XBox 360 – the latter of which released earlier in 2005) had exceeded 100 million units, and within the next four years or so went on to shift another 150 million hardware units, with a total hardware count as of 2013 of 260 million units. At this point of Gen-8, using figures from across April and May of 2016, the market sits at around 73 million – a 27% decline (I do love easy math!), with the XBox One estimated to have sold 20 million and the Wii U a mere 13 million units.

It’s when you sit and reflect on these numbers you realise how much of a disaster Gen-8 has been so far. At a time when you’d expect growth, we’re seeing decline. The numbers are not even close to what they were during previous generations, and even if you count the Scorpio and Neo as current-gen consoles (which, given the hardware, they’re clearly not), it would still take several more years to come close to matching the success or growth the industry has enjoyed across many years.

So why has this happened?

On the one hand, the Japanese market even a generation ago was in rude health; the PlayStation 3 and Nintendo Wii were hugely successful in their home country. However, the market in the last decade has shifted as Japan’s societal makeup has changed – and the market continues to decline. With a dwindling youth population, more older people have to spend more time working and, ultimately, commuting. This has meant the desire for home consoles has diminished as the market simply doesn’t have the time to enjoy a strong home console in the way it used to. Hence why the mobile and handheld markets have been performing strongly in the country – the desire for video games did not disappear, it simply migrated out of societal necessity.

On the other, the Western market has also seen decline as the low and high ends of the market have been swallowed up by strong competition – the smartphone has taken large bites out of the more casual, bit-part gamer, whilst for the high-end gamers the now streamlined and polished PC Market is offering them the kind of power and performance that allows them to crank the latest games all the way up to eleven, and both are reaping the rewards. Both markets serve their respective customers far more than consoles have been able to – and perhaps more importantly, both markets offer cheaper software and hardware for the most part, meaning that specialising into what you prefer has proven not only far easier, but far cheaper than consoles could compete with.

This would not have been so bad had the much anticipated explosion of growth happened in China to offset these lower numbers. As the Chinese Government moved to legalise the home console market at last, the industry was buzzing with excitement over a market with such raw and untapped potential. Unfortunately for the industry, that never happened. The gaming scene had been consumed years prior with PC Gaming and Online RPGs, and the explosion of growth of the Smartphone – as consumers worked longer hours and often commuted further afield – had itself capitalised on the countries expedient charge in technological advancement. There was simply very little market left for the home console to consume when it eventually did arrive in the country, and censorship along with higher taxation rates on the hardware simply made it impossible for the home console as we know it to take with any real momentum. For all the talk and hype, it was a market that had transitioned before the home console even arrived on its shores, leaving home consoles as a luxurious but niche offering.

Then there are other problems which have been coming to the fore.

Gamergate happened, and it’s time to admit that it did and not feel embarrassed about it. Modern day gender politics was dragged in and made a bit of a mess, if we’re being honest about it – in both good and bad ways – but it certainly came at a time when the console industry did not need nor want to be caught in a sociopolitical quagmire, and its impact on the gaming landscape is undeniable. Before Gamergate happened in 2014, the ESA annual report showcased that 48% of game buyers were female. The 2016 report shows now that figure has dropped to 41% – correlation may not equal causation, but let’s not be foolish to dismiss the notion that the controversy may have had the opposite effect intended and effectively scared away a portion of the market, which to me is hardly a net positive. Plus I know many good, talented ladies who play video games, and I think anything that turns them away from gaming for whatever reason is a bad thing.

There’s also the issue of high-profile disasters that have been plaguing the console market. From Assassin’s Creed: Unity through to Street Fighter 5 and a myriad of issues in the crowdfunding scene, exemplified with the recent Mighty No. 9, consumer faith in the market is a long way from what it was back during Gen-7. Consumers are growing restless, and are making their feelings known by vote-bombing games that the press wants to assure us are perfectly fine in every way except where it matters for the end user. Then there was the release of Metal Gear Solid V, where reviewers were sent to a review “boot camp”, to schmooze with the games creators and be effectively wined and dined for several days. Can we really trust that those scores were not “bought” in some capacity, or that only playing a game with a cheat system turned on gave them anything resembling the same experience your average gamer would get by parting with actual money? It was certainly something which drew a dark cloud over the games release, and even if you were to take the reasons for this as gospel – to avoid leaks, spoilers and torrenting – the fact all of this happened even despite these restrictions just made the whole thing unintentionally hilarious.

Gamers also find themselves nickel-and-dimed at every turn today, with expensive season passes and the slow but unavoidable creep of microtransactions in their software. Historically, software sales relied on all the content being available on the disc, meaning that it was cost-effective for the consumer. Now, if a game costs $60 and an additional season pass can cost between $30 and $80, you’re effectively taking money out of the consumers pocket that they could and otherwise would have spent on other games. By requiring more financial investment in each individual big-budget release, there is less money in the average consumers wallet to spend on other video games on the market – which goes some way to explaining why we’ve seen a downturn in software sales. This is simple logic, and it’s surprising to no-one but the industry at large. Money is a finite resource, and you can’t expect consumers to pay more than they can realistically afford – a lesson Sony should have learned tenfold with the poor publicity that they endured with the PlayStation 3 and the insistence that gamers would simply “work more hours” to buy one.

Whichever way you turn for Gen-8, there’s the inescapable conclusion that things aren’t what they once were, and the market has suffered a downturn as a result.

The reason I have spent 1,400 words explaining this and backing it up with sources is because there’s a serious case of denial within the console space – both from the industry and from gamers themselves, neither of whom seem to be willing or able to accept the facts with any conviction. This, for me, is more evident with the PS Neo and Microsoft Scorpio. The same tired cliché, the same old formula. Let’s do this again. Even though the market has changed, irreversibly so in many regions, let’s not deviate from the chosen course. The reasoning isn’t merely because Sony and Microsoft are bad at innovation – they’re absolutely not, but that the console market is abnormally conservative and often utterly disgusted by anything that could be construed as different – despite strong evidence that different is ultimately what grows the market. They daren’t risk upsetting the ‘core audience’ they have – an issue Nintendo, performing its worst sales figures in three decades in the market, has no issue with.

The console space often deems Nintendo as “old-fashioned” or “conservative” – how ironic, then, that the Nintendo NX leaks detail something more of the times than it seems Sony or Microsoft are capable of. Nintendo appears to be pitching its NX hybrid to the consumer of the day; the broader market, and to a Japanese and arguably Chinese market which have long since moved away from the traditional home console setup. With enough room with its modular concept that high-end power can be offered to those who are happy to pay the extra, without negatively impacting on the overall hardware ecosystem. It’s an engineering challenge, but one the leaks suggest Nintendo has tackled with its usual vigour and quirky eye.

It isn’t to say home consoles are ‘over’; far from it, the industry has known for years that home consoles have to do and be more than just mere home consoles. They just didn’t seem to know how to get to that destination, largely because the goal was so intrinsically vague. How does a home console become more than a home console? Sony and Microsoft concluded it must mean being an all-in-one entertainment suite – Movies, Music and Video Games. Nintendo is simply taking it a step further, making the NX an all-in-one hardware solution that can also cover all the bases, and perhaps it’s only now the hardware has been able to match the engineering required to do so. It’s still got the ability to be a home console… but it can be other things, depending on what is needed at any given moment.

It’s a brave move however. The markets have divided up sufficiently that Nintendo may be spreading itself too thin again, and there’s every possibility that despite solid engineering ideas behind it that the technology, as ever, will need a generational cycle before it truly takes hold and the hardware plateaus sufficiently for a more even hardware solution. The NX could simply be a concept arriving a little earlier than it needs to.

But someone has to try it first, of course. Nothing changes doing the same old thing over and over again. Sony and Microsoft fans will never buy a basic high-powered Nintendo console, after all. It’s easy to say they would… but they wouldn’t. Not really. And third parties wouldn’t migrate even then – they already have close ties with Sony and Microsoft, so they’d always get preferential treatment over Nintendo. Standing toe to toe with these two companies would be corporate suicide.

The NX has no other option but to be a radical reinvention. What a stroke of luck, then, that that is exactly what the market seems to need and want right now.

So much for leaving luck to heaven, eh Nintendo?

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