As Activision's Bobby Kotick is finding out, the games industry loves to pick on the big guy. For most of this decade the punching bags were EA and Sony, both of whom are now enjoying a surge in gamer goodwill due to their recent (and mostly self-inflicted) troubles. Into their places have stepped Activision and Nintendo, charged with the high crime of making money, despite - or more likely, because of - the fact that their respective Guitar Hero and Wii Sports/Fit lines have done more to bring new people into gaming than any other in the last decade.
No wonder then that the first bad news to hit Nintendo in the past five years was greeted with a certain smugness by the gaming elite. Triggered by a dramatic slowing of Wii sales, Nintendo reported a 52 percent drop in operating profits for the July - September period, and now expects to make a mere $4 billion for this fiscal year.
While the jitteriness of the market is to be expected, when viewed rationally, it's somewhat remarkable that the company is turning a profit at all. In this economy, practically every other Japanese giant is leaking red ink on the back of an unfavorably strong yen. In March, Toyota recorded their first loss since 1950, at a tidy $4.4 billion dollars; Sony, who are finally seeing an upswing in PlayStation 3 sales, last week reported a net loss of $292 million for the second quarter.
Nonetheless, such was the explosive rate at which it sold, the reality may well be that the Wii is starting to reach the upper limit for sales. The PlayStation 2 sold many more units, but that was on the back of a ridiculously broad catalog of third-party games, as well as its reputation as a cheap DVD player.
While in a dream world it would be nice to see Nintendo sit back and exploit this market with a succession of money-making titles that would keep profits ticking over at an unspectacular pace, the reality is that Nintendo is a hardware maker, and one that makes quite a substantial amount of money from their hardware sales. That means Nintendo must already be looking to the next big thing to bring in the customers.
And while many out there in the dark reaches of the interwebs reacted to last week's news by pleading for Nintendo to return to making games for the hardcore, a return to the godforsaken Gamecube days of yore is, thankfully, impossible. But what should Iwata and company be doing to steer the good ship Nintendo back on course?
Aggressively Target Third Parties
After a very shaky start, third parties have largely come around to the potential of the DS, but opposition to the Wii is ingrained into the minds of many publishers and developers, and getting them on side with the Wii is going to require something special.
For reasons best known to themselves, Nintendo has traditionally been reluctant to break out the moneyhats in the same manner that Microsoft, and to a lesser extent, Sony recently have. But with Rare's brilliance lost since long before they were sold to MS, and only sporadic moments of greatness from their other first- and second-party studios like Retro, Nintendo should consider swallow their pride and open their checkbook - particularly to studios in the West. Every Nintendo console from the N64 on has endured a mid-generation software drought, and it's time Nintendo realized they need to rely on others to soften the blow.