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Opinion: With The 3DS and Wii U, Nintendo Has Aimed Its Sights Directly At Apple

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In October of 2010, Nintendo of America's President famously said that Apple posed a bigger threat to Nintendo than Microsoft. At the time, the comment was mildly curious. Was this sabre rattling now that the Wii's fortunes were descending and the 360's were holding steady? Typical corporate posturing? Or was Nintendo seriously worried about the wee little iPhone and its big sister the iPad? After 2011's E3, that comment makes much, much more sense.

Follow along, after the jump.

There have been rumblings for some time now about whether and how Apple, and its kinda-sorta gaming platforms iPad and iPhone, should be slotted in to the video game industry. While they can run satisfying and lengthy games, the App Store is chock full of quick, buck-apiece confections. Nothing like the expansive, expensive offerings available on home consoles or computers. Right? This is, perhaps, the biggest knock against the iPad and iPhone as gaming machines. Portability isn't a factor - there are lots of portable consoles. The fact that they do anything other than games isn't a factor; after all, home computers and laptops don't just do games, and we are reminded quite often that the PS3 only does everything. That iPad and iPhone don't have controllers can't be seriously considered an issue either; I think it's safe to say at this point that traditional stick-and-button controllers are no longer essential to "true" gaming, regardless of how useful and comfortable they may be.

So that leaves Apple's detractors (at least when it comes to gaming) with having to take shots at the App Store's library. And as for its fans, well...given Apple's enormous App Store revenues and rosy forecasts, it is clear that some people are taking iPad and iPhone seriously as gaming devices. But we need not look only at that one criterion to do so. Developers, among which Nintendo has counted itself, are also starting to take them seriously too.

Nintendo Calls Out Apple

Nintendo of America's President Reggie Fils-Aime, in a remark that was curious at the time but is quite telling now, was quoted in October of last year as saying: "Do I think that in the near term [Apple] can hurt us more than Microsoft? Absolutely." Huh. Was Nintendo seriously worried about Steve Jobs' little phone and expensive tablet? Sure, their sales numbers are huge, but what's there really to worry about?

Fast forward to this year's E3 and Nintendo has unmistakably trained its guns not just at Microsoft and Sony's grip on the "hardcore" market, as we have heard all along, but at Apple and, by association, at smart-phone and tablet gaming. One only needs to look at the Wii U's controller to see this is true.

Posturing

Of course Nintendo will protest that it wasn't thinking of the iPad when it created the touchscreen controller and, thinking in hindsight, after the explosion of the DS into the marketplace how could Nintendo not have asked "how can we bring this success into the home console division?" Nevertheless, the similarities between the iPad and the Wii U remote are uncanny. But, again, why should Nintendo be so worried about Apple? After all, it has made no declaration of entering the gaming market. The first part of the answer is that it doesn't matter what Apple has or hasn't said about entering the gaming market. Apple already has two handheld gaming platforms, and they're selling like hotcakes.

But looking deeper than that, part of the answer comes down to a shared philosophy between the two corporations: One of anticipating and indeed creating market trends according to what, for better or worse, they believe consumers want. This is not to say that either company's competitors are merely market followers, rather that it is an integral element of both Apple and Nintendo's corporate strategies, part of their ethos, to innovate in order to shake the competition and shape the market. After all, what would modern controllers look like if the NES, Super NES, N64, or Wii had never happened, and what would games look like if Mario 64 never happened? What would computer OSes look like if MacOS hadn't introduced windows? How would smart phones be laid out, and what about that tablet boom that's gone on for the past couple of years? Both companies have certainly produced duds and taken seriously wrong turns (coincidentally, Nintendo's and Apple's fortunes have risen (the 80s), fallen (the 90s), and risen again in near lock-step), but their influence on the markets they enter cannot be denied. ...And the likelihood that Nintendo would welcome a company that moves the way it does moving in on its own territory is very, very low. But until recently, Apple and Nintendo have not competed with each other. That is rapidly changing.

Long-Term Thinking

Money, after all, is the primary force behind any company's long-term strategy. Apple has been making an enormous amount of revenue off the App Store. People may not buy an iPad or an iPhone for the games, but they're buying the phones and then buying the games. In droves. Despite the world being gripped by the convulsions of a recession, Apple's products - like Nintendo's, Sony's and Microsoft's - are selling. After all, Apple is now one of America's most profitable companies, within striking distance of its traditional competitor Microsoft. How long does the mountain of cash from those little App Store games cent games stare Apple in the face before it decides to make a more aggressive move in to the market? To varying success, Sony, Philips, Ericsson (via Sony Ericsson), Nokia, and Microsoft have all done it. Those who did it wrong retreated, licking their wounds, but those who did it right have reaped enormous dividends.

Pressure from Apple, from the "casual" end of the spectrum, would perhaps put the greatest stress on Nintendo. Nintendo only does video games. Microsoft, Apple, and Sony can afford to lose money (in the short term) in the gaming market as long as they're profitable elsewhere. In fact, both Microsoft and Sony famously lost money on the sale of each console when they launched the 360 and PS3 in the attempt to put the best console on the market at the best time. But Nintendo doesn't have another major source of revenue. With the Wii, Nintendo found blue waters without competitors, but that's changed. It's being squeezed by Sony and Microsoft, and having Apple muscle its way in would be an unwelcome turn of events. After all, in the modern gaming market Nintendo is fighting way above its weight. While Nintendo's profitability remains fairly high despite being at the end of the Wii's lifecycle, the company is nowhere near as enormous as Sony, Microsoft or Apple.

So it makes sense that Nintendo would be positioning itself against both current and potential threats from Apple. As has been pointed out before, the 3DS very clearly does what the iPhone and iPad cannot. And now, the Wii U comes capable of playing Wii games, HD games, and - check the controller - the kind of games you'd find in the App Store. Nintendo is clear that the controller will not be a game system unto itself, but in its E3 2011 introduction of the Wii U the company plainly showed the controller behaving like an iPad - accessing the internet, displaying content on a TV, playing games that would be at home on an iPad, happy people video chatting. Nintendo has, essentially, strapped a controller to either side of Apple's tablet. According to some, Nintendo is trying to out-Apple Apple; Nintendo, taking cues from iPad and iTV, is trying to alter the way household living rooms function with the Wii U. Combine that with Nintendo's declaration that it is trying to take back the traditional gaming market, and we're left with the realization that Nintendo is preparing for a fight on all fronts: against Microsoft and Sony on its "hardcore" flank, and against Apple on its "casual" flank.

Looking Forward

Many of Nintendo's cards are on the table after this year's E3, but certainly not all. We have yet to see many of the games coming down the line. We have yet to hear details of Nintendo's online strategy - though the insinuation is that it will be an integral part of the Wii U. Question marks remain, but lines have nonetheless been drawn in the sand. Microsoft and Sony's next moves will be eagerly awaited, but make no mistake: One or both will tip its hand before the release of the Wii U in an attempt to kill the buzz over Nintendo's new console the way that Sony helped torpedo the Dreamcast by opening the floodgates of information on the PS2 and thereby dampening interest in Sega's final console. But does Sony or Microsoft see the same threat in Apple that Nintendo does, given that both companies have ensconced themselves in the traditional end of the gaming spectrum? Doesn't Nintendo fit neatly between them and the potential threat from Apple? If Apple did push its way further in to gaming, could Microsoft and Sony not let Apple and Nintendo duke it out over casual gaming, and sweep in to clean up the mess after? Or would they just be losing casual gamers to two companies instead of one? Or will Apple go after them, too?

This begs the question: What is the extent of the threat from Apple? Unless the big three console manufacturers know something we don't, it's largely speculative. Nintendo appears to be positioning itself against losing relevancy in the face of the iPhone and iPad to the new gamers it has attracted to the market, while creating a device that will likely tap in to the inexpensive App Store-type game market. It does all this while keeping an eye on Microsoft and Sony in the hopes of luring some of their audience away. But, as has been pointed out before, Apple is ideally positioned to enter the gaming market with its own version of a home console - it has enormous cachet, deep pockets, technical know-how, the element of surprise, and a superb marketing machine - and has seriously beefed up the gaming performance of its tablets with the iPad 2. By the end of the Wii U's and 3DS' lifespans, we may be up to the iPad 7, or more. What of Apple then?

And this brings us back to Mr. Fils-Aime's comments from last fall. Why could Apple be a bigger threat?

Think of it from Nintendo's perspective: Who are Sony and Microsoft? Tech giants who went from relatively soft involvement in the gaming sector to threatening to push Nintendo out of its own market. They have to be thinking about who's next on the list of heavyweights eyeing the cash-cow gaming industry.

Given some room for surprises, Sony and Microsoft's video game strategies are already known. They'll definitely try to throw some curve balls, but Nintendo at least knows where they are on the field. Apple, on the other hand, thinks like Nintendo, already has a loyal audience, snuck in to the portable market through the back door, is in a position to strike the greater gaming market on a large scale...and it hasn't said a word about it.

That would worry me too.

6 Comments

Admirer said:

i love this post..its great and i actually agree with wut u said about Apple thinking like Nintendo.
its exciting :) and up until now i have not seen Nintendo competing with Microsoft or Sony head to head, wut with Nintendo mainly sticking to casual gaming and hardly trying to get into the hard-core-gamer field.

MattMyx said:

I keep hearing that Nintendo is only for the casual gamer. Witch is just odd. There's been plenty of "hard-core" games from them for both the Wii and the DS/3DS. It's like everyone only thinks of Wii music and such and has blinders to the rest of the software Nintendo puts out.

Great write-up and analysis Hal. Apple and Nintendo do tend to think alike witch is why Nintendo is eyeing them more then the other two. It'll be interesting to see where this all takes us a gamers. In the end, all this competitive spirit is really going to be a win for us :).

Hal said:

Thanks Admirer and Matt. And yes, Matt, competition between console makers is great for the consumer in the end. Were Apple to release a game-specific device I personally think the result would be one of the most exciting generations of consoles yet. Of course, what a "generation" will mean in the future is not very clear.

Daniel K said:

Nice post! The one thing I don't think you touched on with regards to the cards Nintendo holds is, I think, the trump card: Nintendo's "stable" of well-known and well-loved characters. Apple certainly doesn't have that, and the other console competitors don't quite have anything to match the likes of Mario and Zelda.

With that said, it will be interesting to see what happens next...

Hal said:

Daniel, that's definitely true. I would never argue that Nintendo is going to get pushed out of the console business because of that very reason. It survived the disappointing sales of the N64 and Gamecube based on those sorts of games. People will buy Nintendo systems to play Nintendo titles, and the bonus for Nintendo about being smaller than their competitors is that they can survive on smaller revenue; a relatively lower-selling console won't hit them as hard as it would a bigger company that has more overhead (which is ironic, considering that a bigger company can purposely take a loss on their consoles in the hopes of making it back on licensing fees...as long as the console sells big...)

Zack said:

Great article! This is my first time on the site and I'm really enjoying the content. Nintendo and Apple are two of the most clever companies I can think of. As a Nintendo fanboy, the thought of them battling is scary but also very exciting. Can't wait to see what happens!

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Zack on Opinion: With The 3DS and Wii U, Nintendo Has Aimed Its Sights Directly At Apple: Great article! This is my first time on the site and I'm really enjoying the content. Nintendo and Apple are...

Hal on Opinion: With The 3DS and Wii U, Nintendo Has Aimed Its Sights Directly At Apple: Daniel, that's definitely true. I would never argue that Nintendo is going to get pushed out of the console business...

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Hal on Opinion: With The 3DS and Wii U, Nintendo Has Aimed Its Sights Directly At Apple: Thanks Admirer and Matt. And yes, Matt, competition between console makers is great for the consumer in the end. Were...

MattMyx on Opinion: With The 3DS and Wii U, Nintendo Has Aimed Its Sights Directly At Apple: I keep hearing that Nintendo is only for the casual gamer. Witch is just odd. There's been plenty of "hard-core"...

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