I meant to hit the "publish" button on this one while it was still news. Oops. Just pretend it's still January 30, when Nintendo held a press conference to discuss its strategic shifts.
Western media is largely unimpressed with Nintendo's strategic "changes" announced today by Iwata-san. Ars Technica, one of the more responsible gaming outlets, called it "a vague, confusing, unfocused vision." Geek's Russell Holly concluded that it is "a strange strategy."
As usual, the media gives The Big N short shrift, but if you put on your Japanese Company Goggles there's plenty of reason for optimism.
Observers in the echo chamber (who may or may not be shareholders) have demanded that Nintendo put its games on other platforms for two reasons:
1. Because iPhone (hundreds of millions of devices, compared to tens or just millions of devices). Never mind that one's a phone and one is just for people who play games.
2. Because Sega left the hardware business and that's the only precedent we have for a company with strong IP that launches some dud hardware (and "Will Nintendo do something it said it would never do?!" makes for a great teaser if you're in the media business).
These are awful reasons. Nintendo asserts that its core is integration of software and hardware. And for as long as Apple fans will draw parallels to Nintendo, there's something to that assertion, and it’s one that logically precludes the aforementioned bad ideas.
Iwata-san was right to call out as short-termist everyone demanding that Nintendo chase the smartphone industry. What, you thought they'd sell great games on a platform with no controllers, or worse, try to beat Apple at its own game by building a phone? Microsoft itself builds a great phone, has a huge head start in software, is a major force in the gaming business and still can't get a word in edgewise in the cell phone market. Suggesting Nintendo do it is ignorant of market realities.
Or you thought that Nintendo would publish games on the big-dog platforms and happily let its fate fall to Apple or Google, the opaque gatekeepers who ruin small developers overnight with unexplained decisions, rejections and bans, with zero accountability? What nonsense.
What is happening with Nintendo and smartphones? That one's easy. Polygon helpfully pulled out a quote from Reggie in December in which he said the company is "constantly thinking about how to leverage mobile as a marketing vehicle." Most observers miss that one of Nintendo's core strengths is actually marketing. Nintendo Power? Pure brilliance. Nintendo Direct? Same thing, new generation.
So the logical conclusion is: Nintendo's marketing machine will come to your smartphone. Think Nintendo Direct, think Club Nintendo, think Nintendo Network and Miiverse, think very small game experiences. Reggie himself came to Nintendo from P&G, the consumer products conglomerate. Increasing market share in shampoo or toothpaste is the work of a very well-oiled marketing machine, and Nintendo's own isn't that far off when you consider that the tone of their campaigns always speaks to the masses and never to the hardcore.
I admit, there are some places where the Iwata-san's remedies are just too weak. Better use of NFC, even the link-up with the pervasive Suica card in Japan, isn't of much interest when payments aren't that painful on a Wii U. Any reduction in that friction is welcome, of course, but you can tell it's too weak when the measures have no gameplay implications and won't make it over to non-Japan consoles.
Edit 11/9/14: Boy, did I get that one wrong. NFC powers Amiibo, aka their take on Skylanders, aka the thing that saved Activision's bacon once Guitar Hero and World of Warcraft faltered. Cash cow incoming. Moving on...
The other weak point in the armor is using health as the rallying point for areas where Nintendo is going to make your life better and more fun. Yes, wearables and fitness don't exactly have a dominant strategy yet. Yes, there are other possibilities in cooking, or education, or whatever else, like the DS did unbelievably well in Japan. Yet none of this really stirred the imagination. When Nintendo pitches a new console well it's like your brain starts pondering the possibilities based on the hardware combinations. No such pondering here, just vague products on the spectrum between shovelware and boring.
But there was one point that was actually revolutionary, and this'll be the one that rights the ship: Nintendo's going to get smart about analytics.
In typical Japanese fashion, the point was pretty well buried. Here's the money quote from the English transcript:
Based on our [newly integrated across systems] account system, if we can offer flexible price points to consumers who meet certain conditions, we can create a situation where these consumers can enjoy our software at cheaper price points when they purchase more. Here, we do not need to limit the condition to the number of software titles they purchase. Inviting friends to start playing a particular software title is also an example of a possible condition. If we can achieve such a sales mechanism, we can expect to increase the number of players per title, and the players will play our games with more friends. This can help maintain the high usage ratio of a platform. When one platform maintains a high active use ratio, the software titles which run on it have a higher potential to be noticed by many, which leads to more people playing with more titles.
This is huge. At once, Nintendo has decided to employ analytics, smarter customer segmentation, discriminatory pricing, and social game user acquisition tactics. We've collectively spent the last several years laughing at this company for its seeming inability to handle social features or run an online shop, and in one fell swoop they've decided to pick up the parts of the Internet business that can really affect the bottom line.
Let me qualify the last paragraph: for a large Japanese company, this is huge. As a former analytics director for another large Japanese company, I can see how this effort would have required Herculean efforts of consensus-building and shifting of mindset. That glacial pace also explains Iwata-san's exhortations about maintaining $30 DS game price points years ago in the face of the App Store's race to the bottom back in ’10.
I think that also explains why the other efforts - the "health" vertical, the low expectations surrounding smart devices, the NFC stuff, the silly quick boot feature - seem so tame to us. Japanese companies are naturally very risk-averse, so executives sticking their necks way out there on a drastic "pivot" would seem insane to an audience of Japanese investors. If you're wondering about Sega doing exactly that around 2000, know that Sega was facing bankruptcy at the time and Nintendo isn't now.
What the "transformed" Nintendo will look like several years on is still a little unclear, in my opinion. The tame measures may not bring back the windfall that the Wii and DS gave, but Nintendo has truly chosen to double down on one of its strongest suits: its marketing.
However that new Nintendo looks in ten years' time, know this: Nintendo will still be around.