During his recent investor Q & A, Satoru Iwata faced some questions about the delays and lacking Wii U games line-up, with no first-party relief due until the Summer months. The questioning appears to have been polite, but nevertheless touched on a current weak point for Nintendo as the Wii U endures poor momentum.
After explaining that his role overseeing operations in regions such as North America would enable better, quicker communication, Satoru Iwata addressed the downturn in game sales in the West. The following lengthy explanation explains why Nintendo has taken time to ensure the quality of upcoming Wii U games, and why Iwata believes that the current market is particularly challenging.
As there has been a downturn in the video game industry for the past two years, some, specifically in the U.S., say that video games themselves have entered a difficult phase. This is probably due to two elements.
One is that consumers have a higher psychological hurdle to paying a certain sum of money for software. Many people attribute this to smart devices, but I don’t think it is the only reason. We try to offer various kinds of software for a video game platform, and the games are improving steadily each year, but these improvements are becoming less noticeable. In short, what one platform can offer will eventually become saturated. Every consumer will inevitably become tired of and get less excitement from the same type of entertainment. It has become more difficult for a game which developers in this industry, including us, created with the same or greater amount of energy, to move or amaze consumers. Lowering software prices and a rise in the number of devices you can play games on without a dedicated gaming machine are gradually setting the bar higher for us to encourage our consumers to pay a certain sum of money for software.
The other element is the lowered sales level of the entire video game market as the current non-Nintendo home consoles are nearing the end of their product cycles. These factors combined have caused the current situation. I believe the future of the video game industry depends on the number of games developers release that consumers consider to be fresh and worth paying for.
We originally planned to release a few first-party titles for Wii U during the first half of this year, but no big titles are scheduled for release before "Pikmin 3" in July because we decided to take time to add the final touches to ensure that consumers fully feel that they are valuable titles. The brand of a franchise would be completely degraded without customer satisfaction. This is why we delayed the release schedule of such games.
We have recently reaffirmed the fact that a delicately crafted game will never fail to appeal to consumers. A good example is "Animal Crossing: New Leaf" we released at the end of last year. "Tomodachi Collection" has also made a good start in its first week, probably because many people have felt that it contains new types of fun and excitement even if the basic structure of the game is similar to its prequel for Nintendo DS. In this way, what is happening cannot be accounted for by the idea that casual users playing games with smartphones will not buy games targeted at them for dedicated gaming systems. The reason why "Fire Emblem Awakening" and "Luigi’s Mansion: Dark Moon" have been well received by consumers in the U.S. and European markets is that they still respect the value of games that have been carefully developed to take advantage of dedicated gaming machines. It is true that the overseas video game market has been in a downturn for the last two years, but we believe that there is a way to buck the trend.
A lot to digest there, but it does seem — when reading some gamer reactions to blockbuster titles — that it can be harder to excite consumers with so many options at their fingertips. Time will tell whether the upcoming Wii U releases will show the benefits of the extended development time, but it's clear that Nintendo's conscious of trying to offer good value for full-priced retail games.
What do you think of Iwata's comments and reasonings, as well as his assessment of the demands of satisfying modern gamers? Let us know your thoughts in the comments below.