Nintendo: Free-to-play is hurting our hardware business

President Satoru Iwata says it's now more difficult to convince gamers to buy hardware.

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The free-to-play genre is growing and growing, with shining examples like League of Legends and DOTA 2, but the business model is not adored by all. Nintendo president Satoru Iwata recently commented that free-to-play is actually hurting the company's hardware business because it means the Japanese game giant must work even harder to convince gamers to buy a 3DS or Wii U.

"It has been 30 years since Nintendo started its business of dedicated video game systems, and if I want to maintain that size for the next 10, 20, or 30 years, leading a software-only business would only put us at a big disadvantage, which is another reason why we insist on our integrated hardware-software model," Iwata said during last week's Q&A with investors. The English translation of the briefing was published today.

Iwata further explained that Nintendo's longstanding hardware-software model is suffering through a "significant handicap" today because it is increasingly difficult to communicate the value of its hardware when free-to-play offerings have become so commonplace.

"Although people may actually be spending more money (to play games on other devices not dedicated to video games), it is less visible, so the hurdle we have to clear in order to encourage them to purchase dedicated game systems has comparatively become higher," Iwata said.

"As with games that are free-to-play, or 'free-to-start' as we like to call it, there is a tendency within the entertainment industry to make gaming as easy as possible to start playing," he added. "Because our hardware and software are integrated, we first need consumers to purchase our hardware to get our business off the ground, a challenge I outlined when I talked about changing the way we sell our products."

Overall, Iwata said Nintendo is not interested in trying to replicate a business strategy employed by other companies.

"Only two years ago, many people urged Nintendo to follow other companies into what was then a very lucrative area, but no one says so any longer," Iwata said. "In a similar vein, those who now claim that we should make games for smart devices might or might not be saying so in three years. It is our determination for our mid-term future to make efforts to devise our own solutions different from others."

Nintendo might be in the minority by thinking this way, but blazing its own trail has proven fruitful for the company before. You need only look at the industry-shaking original Wii for evidence of that. The console introduced motion controls and had sold over 100 million units to date, millions more than the Xbox 360 or PlayStation 3.

Also during the investor Q&A, Iwata and other senior management addressed the shortcomings of the Wii U so far. Iwata said it is "not realistic" to hope that the Wii U will sell 100 million units during the same product cycle as the Wii. However, he also said it is "never too late" to achieve a "certain level of sales volume" with the platform if it can execute its strategy to turn things around.

Shigeru Miyamoto, creator of Mario and Zelda and senior managing director at Nintendo, did not hold back when discussing the Wii U's poor sales performance so far.

"Our biggest downfall last year was that we failed to communicate the true value of Wii U, failed to make children persuade their parents to buy our products for them, and failed to offer products that parents could not resist," he said.

Miyamoto said Nintendo can right the ship by making more games that better utilize the Wii U GamePad and by improving the user experience overall by speeding up the amount of time it takes to load a game. Nintendo is currently working on a patch that will do this, he said.

Finally, Miyamoto suggested that more remakes of older games might be on the way for Wii U. He also said that speeding up and streamlining the development process across the board will help Nintendo avoid the "huge bottleneck" it's been facing of late.

"Although we have recreated some of our past games for Wii U, we are actually trying to use many outside developers to help us do so, while we focus our internal resources on making new games," Miyamoto said. "I feel confident that we have made a significant improvement in this regard. Moreover, we are trying to cut down the time it takes to create a suitable development environment as it has proven to be a huge bottleneck, and we are continuing to make improvements in this area across the whole company, too. I think that we will be able to smoothly carry out the process of upgrading Nintendo franchises and offering them to our consumers in a stable fashion on future systems."

Discussion

369 comments
tightwad34
tightwad34

While I don't think F2P has had that big of an impact on gaming in general yet, it certainly seems like it will take a big shit on us someday soon. Whether it's a shit of flowers or a shit of shit remains to be seen. I will hold out hope, though it's small hope. We all know that money always wins out.

yearssomuch
yearssomuch

You know what? Good. Don't turn into a company that makes mediocre games that encourages improves mechanics for real money, stick to making GOOD games.
That being said, start making some SOFTWARE for your HARDWARE. Talking about F2P as though it's the reason your console isn't selling doesn't make sense, at all, when there are so many other reasons. Mainly a total lack of games.

Reuwsaat
Reuwsaat

What hurts hardware sales is lack of software. /thread

LauriAJ
LauriAJ

Again, treat Nintendo's consoles as being in it's own generation with it's own set of rules.

Dieknochenblume
Dieknochenblume

Ok, in defense of Iwata... he is being consistent, and.... umm...


Damn it, this is harder than I thought!


Seriously, though, there's a part of me that admires this guy's (and Miyamoto's) stubbornness because they're really trying to stick to certain way of doing things with honor (no F2P, quality over quantity) even if it's really hurting them. They might even crash and still won't abandon ship. That's very admirable, even if it means terrible business. Glad to have players like them in the industry.

lostn
lostn

Nintendo needs to adapt instead of complaining about the new market. They can either embrace it or be left behind.

deathblow3
deathblow3

wow this is why nintendo is failing. i have respect for iwata but this is some stupid shit to say. really over 4 milliion in sales of x1 and ps4. plus the fact that the 3ds sales 700k a week and iwata says this crap. last i checked you have to have a pc to play league of legends and dota. hardware is involved in all games played just own up to the fact that gamers want prettier not innovation. and not overly expensive either one of the ps3 biggest pit falls was it was 600 bucks once the price came within reason they started selling more. no one wants the wii u at the price it is if at all stop blaming everything but the real reason you made a bad choice banking on the next gen to come out later and sony and ms  f'd you by announcing a next gen releases the following year.

ofunknown0rigin
ofunknown0rigin

Free to play is hurting hardware business? Pretty sure the PS4 and the XBO have sold more than 7 million units combined in the past few months. Nintendo is the only one hurting their hardware sales.

daikkenaurora12
daikkenaurora12

You have no games and no one is willing to put there games on your system right now.

macca366
macca366

Free-to-play doesn't seem to be stopping Microsoft and Sony's success Mr Iwata...


Its like they're rolling over. They released the 'Wii 2' with no noticeable different to the layman apart from an oddly gigantic controller with a screen, and with a drought of games worth buying it for. And then when they needed to be boasting about software for the WiiU and convincing consumers of its worth the most they duck out of e3 all together! Which just smelt like a necessity because they didn't really HAVE anything worthwhile to show! Not a good message to be sending.


I hope they wake up. I haven't owned a Nintendo console since the N64. At least that was a serious competitor against its rival the PSX. The Wii was a great move and innovative niche the first time around, but as a lot of people predicted it wouldn't happen again.


I want Nintendo to make a serious console that has all the brilliant Nintendo IP's and kid friendly software that comes along with Nintendo, as well as the graphical and technical prowess of its competitors, and a push to include serious hardcore gaming as well. I want a true next-gen, real sequel to Starfox 64!

Sargoroth
Sargoroth

The only thing hurting Nintendo's hardware business is Nintendo's hardware business...

Before I always have felt the need to have every console there is (besides Microsoft's) but today, having more games than money to buy or time to play them (thank you steam, with your naughty sales), I just don't see, why I would spend so much money for 2-3 decent jump'n'runs, a Zelda game and other games that are more or less the same as their predecessors (Mario Kart, Mario Party, Smash Bros. ect.).

Nintendo is so proud with its Wii-success, but the Wii kinda destroyed the "Nintendo-magic" for me...


ewjiml
ewjiml

Once again, Nintendo is obsessing over their own woes and pointing the fingers at other business models that are a success.   People aren't going to buy a "next-gen" console with weak hardware, a very unintuitive controller, and lack of games.  You had one year to come out with a groundbreaking game and you didn't.  Free-to-play had nothing to do with it. 

XxXDarkness0XxX
XxXDarkness0XxX

thats right Nintendo blame everyone else.... you guys ever think maybe its cuz ur shit has a bunch of lame barney pony adventure games.. only thing u guys have good is Monster Hunter

jessie82
jessie82

how? last i checked nintendo didnt have any free games

mr_nee
mr_nee

"Because our hardware and software are integrated, we first need consumers to purchase our hardware to get our business off the ground" - yes, because you don't need a PC, console or smartphone, to play free-to-play... excuses, excuses, excuses.


Nintendo, your real problem is that you went too far away from your original Wii's "weak HW, but motion fun" concept. Console comes with one and expensive controller. You can't even buy another. But your HW is still weak.


Instead of listening to community yelling at you, you reply that we don't understand you and once we will you'll win. Well we get you, but your idea is crap! And by now most of community doesn't give a damn if you survive or not, because to you are already dead to us

Arcturuss
Arcturuss

Free to play is hurting my fucking sanity.

Nepti
Nepti

The timing of this message is terrible. When Sony and MS just released next-gen consoles selling in the millions since last November. I think Nintendo's troubles are less to do with 'free-to-start' gaming and more to do with obsessing over everything except getting good games out and plenty of them. I've owned every single Nintendo console since the NES but I haven't bought a Wii U. When there is a reasonable selection of quality titles for that machine, I'll probably buy it. Until then, no thank you.

toffifee
toffifee

"Miyamoto said Nintendo can right the ship by making more games that better utilize the Wii U GamePad..."


NO! The gamepad is not the reason why we buy your damn machines. It's because of the games, which are sorely lacking.

DantheMan9856
DantheMan9856

their inferior machine hardware is hurting nintendo's hardware business.

drknessfeeds
drknessfeeds

I don't like free to play games, there more like pay-to-win as others have said. Still fail to see how this is hurting wii u sales that bad as good as PS4 an the X1 are doing. The wii u just does not have any games that I just have to have or want to play. Even my 7 year old prefers playing my ps3 to his original wii.

bobpgid
bobpgid

I'm calling BS on Iwata.  I want to buy Nintendo hardware... in fact I've bought all the latest Nintendo hardware except for the Wii U.  That is a piece of hardware I don't want (there are not enough good games for the Wii U system, etc.).  The Free to Play excuse is just Iwata's way of justifying his hardware product(s) not selling.  There are so many Gamespot members also expressing my feelings in the comments below so there is no need for me to go on and on about Iwata's idiotic reasoning about Nintendo's hardware sales. 

Toysoldier34
Toysoldier34

Nothing stops them from making a free to play game on their system. The other consoles have some. This is a very strange excuse that makes me feel they are out of touch with the industry.

bogard17
bogard17

the problem is that all Nintendo's 3rd party support is with the 3DS and due to them not sharing the wealth as far as AAA titles are concerned they're suffering with poor Wii U sales and a massive increase in 3DS sales because when u look at it okay both systems reached out to fighting game community's 3ds - Super Street Fighter 4/DOA Diminsions/Blazblue CS2, Wii u - Tekken TT. so just by taking that info the 3ds had alot of things going for it with advertising it and promoting. but right now if u ask me the Wii u is fine as is they just didn't follow the same thing as the 3ds but with a different community but free to play is nothing more but a complete game with everything blocked off due to DLC or on disk DLC (Major slap at you Capcom and EA). so if anything this should be looked at not F2P.

crunchb3rry
crunchb3rry

Iwata, people are buying hardware at the same rate. Just not yours.

Jinzo_111887
Jinzo_111887

Star Fox, Metroid, and Earthbound could use a little more respect. Also, try bringing back Eternal Darkness in HD on Wii U just to ask trolls how it is kiddie when it's a pretty clever horror game.

SpicaAntares
SpicaAntares

@tightwad34

Of course F2P has no impact whatsoever on Nintendo business: the CEO is just in denials. Nintendo always went for cheap to produce consoles and kids games. Families might've spend money on the WII but you can't pull the same trick on the same people twice. Although many bought the WII to dance in front of their TV, families who goes for cheap stuff don't spend money on games, period.

One way or the other Nintendo will be restricted to the Japanese market, were the public is well trained to buy anything with Mario Bros in the title. They don't have any future elsewhere.

deathblow3
deathblow3

@mr_nee what nintendo failed to realize is that niche market they captured dont play games long. wii's go to the children who then turn to handhelds as it can go with them. this is why the ipad is so usefull it can travel. the reason an adult uses a tablet is different than why a kid uses one. a gamer may use the tablet for games but not as much as the big 3 sony, ms  pc.

toffifee
toffifee

@Nepti  I have bought everyone except 3DS and Wii U. I agree with you whole-heartedly. For me, the Wii U is not going to happen. Even when Zelda comes out. Maybe if they release a Metroid, Kid Icarus that is actually any good and majorly change Zelda.

WolfGrey
WolfGrey

@drknessfeeds  

Anyone who says the majority of f2p games are pay to win live under a rock.

svaubel
svaubel

@Jinzo_111887  I would go preorder a new SF, Metroid, F-Zero or Earthbound game in a heartbeat. Make it happen Nintendo! Stop milking Mario and Zelda for a couple years and make new games in series that have not seen a new release in a very long time.

toffifee
toffifee

@Shadow_Fax @ewjiml  Because it had something the other consoles didn't. The Wii-mote. Wii U has nothing new, was promoted as a next-gen console but was more like PS3/360 than PS4/Xbone and has almost no games people want to play.

Nepti
Nepti

@toffifee @Nepti Assuming that a good number of quality titles are released during the lifetime of the Wii U, it's likely I'll buy one at some point. But my delayed purchase (and likely at a heavily discounted price if I wait a few more years) that doesn't help Nintendo out today.


With the Wii U, Nintendo focused on so many wrong things in my humble opinion. First, the name of the console is confusing for people who don't closely follow videogames. A lot of parents out there thought Wii U was some kind of expansion or accessory to the Wii. Next, they obsessed about the controller and seemingly prioritized it above and beyond creating great games and properly integrating 3rd party developers into their plans to get them on board with the console and controller. And now, lately, everything out of Nintendo is starting to sound like a scared politician, pointing fingers and blaming everything under the sun as to why the Wii U is failing.


I think the Wii U is plenty good from a hardware standpoint. It is more than capable of playing the kinds of games Nintendo is known for. So why Nintendo hasn't pushed much harder to get their software library up to speed is beyond me. Then they send out press release after press release of boo boo face excuses. The idea that Nintendo's hardware efforts suffers because of mobile technology is laughable. The two can easily co-exist with profits. Nintendo - for God's sake already, IT'S ABOUT THE GAMES. WHERE ARE THEY? WAKE UP! STOP WHINING ABOUT MOBILE TECHNOLOGY.


Whew. Got that off my chest (again).

deathblow3
deathblow3

@chev7758 @DantheMan9856 lol free pass on what? those systems are selling and are way more powerful than wii u. plus most of their non game features like online is better mapped out.

DantheMan9856
DantheMan9856

@chev7758 @DantheMan9856  because Nintendo has been inferior since the GameCube. Even then their hardware was lacking in the name of affordability.  I think most people think they need to up their "game," pun definitely intended and get back into business with their consumers, producing stellar hardware like the SNES in its day and stop backtracking and blaming other entities such as free to play, mobile gaming, overpriced consoles and expensive hardware.  If Nintendo put out a good machine for $400-$500, people will buy it.  I don't understand why Nintendo doesn't understand that.

bobpgid
bobpgid

@Chev7758

While I agree that the F2P model was not very good on Forza 5 and Killer instinct, my comment was based on what Iwata said about F2P ruining hardware sales. The F2P model is not hurting the sales of the PS4 or the XBOX One, but Iwata says it's hurting their hardware like the Wii U... I don't think so. The fact is Nintendo hardware sales are down for several reasons but none of them are because of F2P games.

toffifee
toffifee

@chev7758 @bobpgid  Assassin's Creed 4 is good, Contrast was interesting, Flower. If you like FPS there are like four out. Tomb Raider is out.

Toysoldier34
Toysoldier34

@chev7758 @Toysoldier34  Free to Play is a great model, the issue is that most don't use it correctly and we get very over priced and short on content games because of it.

izy521
izy521

@chev7758 @crunchb3rry  What an achievement. After launching a whole year before the competition, it manages to squeeze out less than 1 million more consoles than the PS4.

toffifee
toffifee

@chev7758 @crunchb3rry  You really just have to defend Nintendo everytime there is some negativity about them. You know what that is called, don't you?

deathblow3
deathblow3

@jrsion @DantheMan9856 @chev7758 yeah and no one plays those things it was a fad that did not repeat itself. the gaming community pretty muched shunned the wii and none of those grand mom & dads played a lot of games on it so games sells where in the toilet for almost any game that wasnt a party game.

toffifee
toffifee

@jrsion @DantheMan9856 @chev7758  That is true, but I think that was because of people thinking the Wii-mote was gonna be amazingly fun. The family games draw in a lot of people.

Karlinel
Karlinel

@DantheMan9856 @chev7758  I think Nintendo has a niche as family friendly producer that doesn't really get along with higher priced machines. SInce most of their 1st party production is aimed to youth, it makes sense it wouldnt ask a price tag as high as consoles targetting young-adult users.

Saying it crudely: I did buy a ps4 in launch day for me, yet i wouldn't pay a similar tag for a mario games machine for my 8years old child.

jrsion
jrsion

@DantheMan9856 @chev7758  Well, the classic Wii was technically inferior and it still outsold more "powerful" hardware by millions. So your statement is not based on actual fact or history my friend.

jellyman68
jellyman68

@toffifee They are. My PC will probably outperform the PS5 and whatever the next Xbox is called. They are seriously inferior, underpowered machines, yet extremely successful.