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Nintendo to focus on making games

During an analyst meeting, newly appointed Nintendo president Satoru Iwata explained the company's new direction.

In a meeting with analysts on Thursday, newly appointed Nintendo president Satoru Iwata revealed the company's new direction. Nintendo plans to expand its share of the video game market by focusing on making better games rather than on building increasingly powerful consoles, its new president said Thursday.
"We can't be optimistic about the game market," he said, referring to consoles at a meeting with analysts at a Tokyo hotel. "No matter what great product you come up with, people get bored. I feel like a chef cooking for a king who's full." Iwata also revealed Nintendo's intent to sell 50 million GameCube consoles by March 2005. Nintendo has already shipped 4 million GameCubes since the system's launch in September of 2002.

Iwata reiterated Nintendo's strategy of appealing to consumers with innovative games, rather than trying to build ambitious, all-encompassing entertainment platforms like Sony's PlayStation 2 and Microsoft's Xbox. "We're reaching the limits of how far we can appeal to consumers by boosting the machine's performance or providing more compelling graphics and sound," Iwata said during the meeting. "For the past few years we've been looking for new ways to surprise people, new ways for them to have fun."

Iwata also defended the company's policy of maintaining a stockpile of cash rather than investing it in new businesses. "We have 900 billion yen ($7.25 billion), but one of our rivals, Microsoft, has 5 trillion yen," he said. "This is a high-risk business. There may come a time when we would have to make intensive investments."

This meeting comes shortly after the company posted a profit of 106 billion yen ($849 million), up 10 percent from the previous year, on a 20 percent rise in sales. Nintendo has also met other console manufacturers Microsoft and Sony in a price-slashing war, dropping the price of its GameCube from $199 to $149. Iwata expressed concern, however, that the price-cutting fever in hardware may spread to software, where it could do severe damage to game makers' bottom lines.

"We have a sense of crisis, that price cuts in software could destroy the game industry," he said. "The effort to produce machines with better technology has reached its limit," Iwata said. "If things continue, they may lead to the decline of the entire game industry."

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Originally posted by Megaman:
Yeah, I can't wait to play Mario on Xbox 2!

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A refreshing change away from the graphics based improvements of games. Plus nintendo do not have the cash to create ever more powerful consoles.

Obviously Nintendo aren't saying that they are going to do a Sega. Somewhere else I saw Iwata also mentioning more integration between the GC and GBA, the obligatory talk of innovation™ in software, and that sort of stuff. So it sounds more like consolidation at this point than any attempt to back out. But it seems particularly stupid to say that "We're reaching the limits of how far we can appeal to consumers by boosting the machine's performance or providing more compelling graphics and sound". Clearly we haven't, and I don't think Nintendo can afford to make this assumption if they intend have a competitive base in the longer term future. With that attitude, their long term position may as well be the same as Sega's - they're just delaying the inevitable. The console market is not the same as the hand-held.

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Originally posted by Faraday:
Rawnski is right. Nintendo are comiting themselves to the current hardware and developing the best games they can instead of how they can top the next crop of consoles. Good on them.

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Nintendo plans to expand its share of the video game market by focusing on making better games rather than on building increasingly powerful consoles,

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coupled with

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Iwata also revealed Nintendo's intent to sell 50 million GameCube consoles by March 2005.

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Originally posted by Twit:
So they'll push the GC and then what? That will only take them so far...

You can't neglect the hardware - you can't avoid sinking masses of money into it if you want to remain competitive with the other players. Software alone might get you to the end of this generation, but not much further.

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But I think that is exactly their point. They invested so much money into the Gamecube, that they are not going to let it go in a year or two, they are going to keep putting out quality software for it until this generation is well and truly over and then worry about a new console. They dont want to neglect the hardware they have NOW.

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Nintendo are saying that they've reached the limit of pushing hardware wise, then we're witnessing their last console?

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I think he means we have reached the limit for now, not forever. They kinda have reached a barrier hardware wise. Graphics are becoming more polished and advanced but we havent seen a huge leap this generation like we did for the snes/Playstation or Playstation/Dreamcast.

You also have to think about the audience Nintendo are targeting - the younger crowd (or poor) can't afford to rush out and lay down $600+ every four or so years for a new system like Sony/Microsoft expect their customers to do.

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Originally posted by Megaman:
Well I'm not suggesting that they're starting work on Super Mario Xbox 2 [b]now, but if they're not making a GameCube 2, then they're obviously eventually going to make software for either PS3 or Xbox 2, right?[/B]

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There's going to be an Xbox 2? Where did you hear this news?

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Originally posted by lestat:
Looks like Nintendo is pulling a sega, I kinda saw this comming especially since sega are now making much more money than hey did in the hardware game. I think Nintendo has huge potential to make billions becoming software only and not having to spend all the money on hardware R&D and loosing money on hardware.

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They really don't have a choice do they?

Yes lestat I agree, the cost of producing the sort of hardware the public wants and expects is just too costly now for a company as 'small' as Nintendo to sustain. (I know they aren't small in real terms but compared to their main competitors they are.)

These days only an IBM, a Microsoft or a Sony have the sort of resources to go beyond what the XBOX and GC already offer.

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Originally posted by Megaman:
Captain Obvious told me.

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And exactly how is it obvious?

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Originally posted by lestat:
Looks like Nintendo is pulling a sega, I kinda saw this comming especially since sega are now making much more money than hey did in the hardware game. I think Nintendo has huge potential to make billions becoming software only and not having to spend all the money on hardware R&D and loosing money on hardware.

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