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On Nintendo And Marketing Myopia 123

Posted by simoniker
from the mister-magoo dept.
Thanks to Nintendojo for their editorial discussing why Nintendo may be heading for a fall by branding itself a 'video game company', as opposed to Sony and Microsoft's wider goals as part of the "entertainment or technology industries". The writer points out: "Theodore Levitt introduced an idea called Marketing Myopia. To summarize the basic idea of his concept: in an industry where future growth seems guaranteed, a leading company will mislabel itself and ultimately lead to its own downfall." Apparently, the best historical example of this is the railroad industry, who "...labeled themselves as being in the railroad business and not the transportation business, limiting themselves and causing their own downfall." The writer concludes: "The industry has changed. Nintendo is no longer the biggest player in a relatively large niche market. They are in last place in a huge segment of the home entertainment sector, and they need to remember this fact, because no one needs another Amtrak."
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On Nintendo And Marketing Myopia

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  • by infornogr (603568) on Sunday November 30, 2003 @04:38AM (#7591572)
    Because, as we all know, video games may not be around in a few years.
  • by Alcimedes (398213) on Sunday November 30, 2003 @04:43AM (#7591582)
    so they said they were a "video game company"

    that's not a console only company. that's not a hardware company, it's not a software company.

    the video game brand isn't exactly that restrictive. they can do software, hardware, etc.

    if i want video games, i want video games. i don't want something that records tv, plays dvd's, answers the phone, does spreadsheets and whatever else.

    i want a gaming machien to play games one. unless they are that 1 in 100 company that manages to get a product right that does 5 different things, they just cripple themselves with either inadequite hardware or tacked on afterthought "features".

    total waste of my money to toss shit on there i don't want.
    • by gearheadsmp (569823) on Sunday November 30, 2003 @09:27AM (#7592091)
      As far as I'm concerned, Nintendo didn't make the GCN able to play DVD's because 1) it would have required the addition of a SPDIF (optical digital audio) - which the other two have. And 2) the ability to read normal 120mm discs. Don't forget quite a few Nintendo-branded games still MSRP for more than $30 - despite how their gameplay is oh so similar to some of the Mario 64 titles.
    • by Mattcelt (454751) on Sunday November 30, 2003 @10:04AM (#7592166)
      if i want video games, i want video games. i don't want something that records tv, plays dvd's, answers the phone, does spreadsheets and whatever else.

      Absolutely correct. The railroad analogy is a poor one; Amtrak still makes millions of dollars a year, as do Union Pacific, Sante Fe and a host of other carriers [webmagic.com] - one can hardly call them unsuccessful. While rail transport is nowhere near the powerful money-making machine it was 150 years ago, that's simply because the market has matured and other technologies have filled niche portions of what used to be the rails' market more efficiently than the rails themselves could do it.

      It is ALWAYS better to be a niche player in a specific market than to try to be all things to all people. It allows you to focus on those things you do best, and forces you to concentrate on your core business instead of spending resources on things you really know nothing about.

      Nintendo is in no trouble from this decision. In fact, this decision will help them weather other things like bad management or adverse market conditions much more profitably than they might otherwise.
      • by bigman2003 (671309) on Sunday November 30, 2003 @11:35AM (#7592458) Homepage
        You're kidding about the Amtrak part, right?

        Amtrak receives billions of dollars (okay, actually 1.2 billion approximately) per year from the federal government. It is a subsidized service, because it cannot make it on its own. They had they highest number of riders ever, in 2003- but still, nobody cares.

        Soon, (or recently) Amtrak is/was supposed to get off the federal tit. They said they would need to go bankrupt.

        Amtrak should not be mentioned along with the other companies as a group comparison.
        • Amtrak receives billions of dollars (okay, actually 1.2 billion approximately) per year from the federal government.

          And how much government money goes towards supporting car travel? So do you consider the car industry to be "unprofitable"?

          • Well I'm sorry, but I don't see where I was comparing Amtrak to automobiles at all.

            I was trying to refute the poster who said that Amtrak "makes" millions of dollars per year. I was taking that to mean that he thought Amtrak profited millions of dollars. Amtrak as a distinct entity loses tons of money each year. I was only attempting to address that single issue.

            Now, if you want to turn this into a discussion about how the government actually subsidizes automobiles (and air travel too) then that is a d
            • Well I'm sorry, but I don't see where I was comparing Amtrak to automobiles at all.

              I was trying to refute the poster who said that Amtrak "makes" millions of dollars per year. I was taking that to mean that he thought Amtrak profited millions of dollars. Amtrak as a distinct entity loses tons of money each year. I was only attempting to address that single issue.

              You are saying "Amtrack isn't profitable" and you are saying it based on the fact that they recieve money from the federal govt.. Ok, fin

              • Actually, I base my judgment on Amtrak not being profitable using GAAP, or, generally accepted accounting principals.

                It isn't really rocket science. Amtrak makes far less money each year than they spend.

                This is a little old, but here is a fairly good description of it:

                http://www.dallasnews.com/business/scottburns/c o lu mns/archives/1999/991214TU.htm

                If you define 'profitable' in a different manner, please let me know. I may need to adjust what I've learned about accounting over the years...

                Thanks
                • Actually, I base my judgment on Amtrak not being profitable using GAAP, or, generally accepted accounting principals.

                  I know what GAAP is, but that is presumably excluding govt. monies. And as I said I didn't argue that Amtrack wasn't profitable atm. if you did that. I said that so are all the car manufactures (massive subsidies for both factories and the obvious road works that the govt. pays for). And most or all of the Air Lines would be in Chapter 11. if it weren't for subsidies.

  • Last I checked (Score:5, Insightful)

    by M3wThr33 (310489) on Sunday November 30, 2003 @04:44AM (#7591586) Homepage
    Sony saw huge profit drops this year as well and only EA made more money than Nintendo selling games. Nintendo is still fine and any doubters just base their "research" on American sales.

    Should Pepsi or Dr. Pepper give in because they aren't #1 or diverse?
    • by gangien (151940) on Sunday November 30, 2003 @05:05AM (#7591636) Homepage
      Every article about Nintendo is about how they are failing and how they are going to die and blah blah blah. THey are , as the parent said, making more money than MS and Sony, they are selling more units than MS, they produce the best games, and all have all the crossovers like the other stations. So how the hell is Nintendo dying or sure to die or whatever it is? they aren't. They will be around a long time. And they are sticking to what they know, and do well, games. Unlike MS and Sony which are trying to make mass media centers.
      • by dimator (71399) on Sunday November 30, 2003 @07:27AM (#7591877) Homepage Journal
        Yes Nintendo is not a poor company, and yes they make A-list games, but aren't you being near-sighted if you think the company is doing great? The author's main point is that there's no such thing as the "Video Game" industry, at least in terms of consoles. Consoles are becoming more and more powerful, and he argues that the consumer is going to see machine A which plays games, and machine B which is $80 more, but plays dvd's, goes online, etc., not to mention the fact that it has a game library at least an order of magnitude larger than any other machine.

        Nintendo makes great games. Sony makes a popular machine, so that other developers make great games for it, so they really don't have to produce A-list titles. What's the difference in these strategies? The way I see it, Nintendo can't make a dozen A-list titles every year. They just can't do it themselves. Sony can just sit back and watch the hits roll in, because developers want to target PS2, because it is the most popular, because its a more versatile machine. Makes sense to me.

        • by TRACK-YOUR-POSITION (553878) on Sunday November 30, 2003 @12:07PM (#7592569)
          When you compare Apple to Microsoft, you start to think "wow, Apple really needs to get their act together--both sell operating systems, yet MS makes way more money." But if you compare Apple to Dell, (they both sell computers), Apple starts to look pretty damn good.

          You're making the same mistake here--Nintendo is not a Sony that also makes games, instead Nintendo is a Capcom that also sells consoles. Sony and Microsoft are way the heck larger than Nintendo, and it's ridiculous to expect Nintendo to out-Sony Sony. Sony's model is to encourage other people to develop PS2 games so they can sell PS2s. Nintendo's model is to make gamecubes so they can develop Gamecube games.

          Perhaps the future of Nintendo hardware is in question. But that's not a big problem, Nintendo can simply abandon its hardware side if it no longer makes any sense to keep selling hardware. In other words, take the Sega route.

          • But if you compare Apple to Dell, (they both sell computers), Apple starts to look pretty damn good.
            How does Apple look good compared to Dell? The market value Dell Inc is over 11 times that of Apple Computers Inc.
            • Whoops, guess my example is a few years old.
            • You can't just look at the "market value," but you have to look at the performance of the company. Apple, in its niche, does outperform just about everyone else - save Dell. Of course, one could argue that Dell is overextending itself... but I'll wait for that to happen instead of saying it will..

              Just as Apple isn't going away any time soon, Nintendo isn't, either.

              • You can't just look at the "market value," but you have to look at the performance of the company. Apple, in its niche, does outperform just about everyone else - save Dell. Of course, one could argue that Dell is overextending itself... but I'll wait for that to happen instead of saying it will..

                If you believe that the US equity market is reasonably efficient, the market value provides all the information you need. The market value is what society as a whole is willing to trade in exchange of ownership

        • by AvitarX (172628) <me@brandywinehund[ ].org ['red' in gap]> on Sunday November 30, 2003 @12:53PM (#7592752) Journal
          I thought the same thing as you.

          I went to buy a game boy advanced, but for just a little bit more (99) I could buy a pportable system that was also and MP3 player, a cell phone, had network games, had blue tooth, could save games to a flash card. It was awsome.

          wait, no. The nGage sucks ass. I have a diskman, I have a good cell phone. And I don't want to play lan games on the bus, dealing with assholes at work is bad enough.

          I would also imagine that the saturation of DVD players is high enough that it is not a selling point. And I am skeptical that any console will have a PVR as good as Tivo's (unless they liscense from Tivo, that would be an add on I would want).

          Today at Walmart (I lie it was Friday) they had cheapo DVD players for 30 dollors. The last DVD player I bought was good, and it still broke quickly, so cheapo is good enough now. I would also doubt that this all in one machine has anything it is good at (I no the multi function faxes suck) 80 dollors is a large premium on a 30 dollor device. the thought that the built in DVD meant anything past the first season is rediculous.
          • Don't forget, using your console as a DVD player will also cause it to break sooner.
            • and I heard that people were fighting over $30 DVD players this weekend at WalMart, so I doubt that 'plays DVDs' is worth $80 more to many people, especially when you consider that those $30 DVD players are probably better than the PS2's DVD player.

              The reason the PS2 plays DVDs is because Sony makes movies. The reason the PS1 (and PS2) plays CDs is because Sony makes music CDs.

              The reason the XBox plays DVDs and CDs is because the PS2 does, and a DVD drive is a low-cost standard piece of PC hardware (in fa
              • The reason the PS2 plays DVDs is because Sony makes movies. The reason the PS1 (and PS2) plays CDs is because Sony makes music CDs.

                The reason the PS1&2 play music CDs is because it is an easy as piss feature to add considering that the game media is also CDs.

                The reason the PS2 can play DVD videos is because it was a reasonably cheap and easy feature to add considering that the game media is also DVDs. Also at the time the PS2 came out DVD players weren't available for $30 ata Walmart, so it gave the
        • as previous posters have pointed out, more or lesss, there are basically different markets, Nintendo is in one and sony and MS are in another. Yes they compete, but they are after different things, and as such will be successful, unless someone comes in, and directly competes with Nintendo. Which doesn't seem likekly since everyone seems to want to build the media center. maybe Nintendo will end up as the Apple of the console world. I'm fine with that. But my point is, they are not anywhere near dead a
        • Maybe so, but do I really need three machines that play DVDs? Hell, I'm kinda doubting whether or not I'll need the DVD playback in my next generation system because my PS2 seems to play them fine. So, DVD playback won't really be a huge factor for a PS3/XBox2 purchase, at least for me-- and I kinda doubt it'll really affect Nintendo in the long run because they can keep their prices lower for having the more narrow focus.

          The only thing Nintendo REALLY needs to do is to shake off this "kids only" perceptio
        • The "Video game" industry, that you say does not exist, has netted in more than $10 Billion in 2002, surpassing (according to the WSJ) the "Movie" industry...

          What the author is trying to say is that people will shift out of videogames towards "house entertainment", in which Nintendo is not currently competing, and Sony is very strong at. It could be true for new customers, people who never played before and want to have integrated machines because they don't see gaming as a main activity. But many existing
    • Check Again (Score:2, Informative)

      by TubeSteak (669689)
      Last time I checked... Nintendo posted their first loss [gamespot.com] since 1962.
      So base your "research" on some facts.
      I was going to mod you down, but stupidity like this shouldn't be silenced, it should be corrected.

      Also.. Pepsi is an incredibly diverse company. They have 11 unique brands and a bunch of variations [pepsi.com]
      like a decaf this [starbucks.com] and french vanilla flavored that [liptont.com] that.
      Dr. Pepper is owned by Cadbury Schweppes [cadburyschweppes.com], another large multi-national corporation.
      Gee... it seems like those two examples you gave suck... just like yo

      • Re:Check Again (Score:3, Insightful)

        by Anonymous Coward
        Usually quarterly losses don't mean shit come end of financial year. Funnny you don't mention Sony and particullary Microsoft's massive, consistent losses.
      • Actually, on Pepsi, you just hit the tip of the iceburg.

        The link you gave goes to the Pepsi-Cola list of products. Pepsi-Cola is owned by Pepsico. Pepsico also owns Frito-Lay, Quaker (oats and stuff), Tropicana, and Gatorade. Here is a good link to all of their brands: http://www.pepsico.com/company/brands.shtml [pepsico.com]. Stock ticker symbol is 'pep'. The main Coke stock ticker symbol, if anyone wants to compare, is 'ko'. Yes, Coke is diversified too, and is a larger company, based on market cap.

        So Pepsi(co)
    • At issue isn't so much Nintendo's current status as its current trajectory. They have very little margin for error: if their next-gen console is a bust, or if they go a year without any software hits, they may slip to a distant 3rd in the rankings. At which point companies like EA might stop porting their EA Sports line to Nintendo's consoles, etc. Nobody's saying that's going to happen, but... just look at Sega if you need proof that it can, and that past success is no indicator of future existence.

      In

      • Well, while I mostly agree with your statements, I have to put some clarifying thoughts forward on the topic of Sega.

        Sega went wrong on an entirely different front, and it came back to bite them in very large ways-- three generations of systems, and five different cases of them shafting the consumers and game manufacturers.

        Game Gear. Sega CD. Sega 32X. Saturn. Dreamcast.

        Each one of these was yanked before its time, but for different reasons. The Game Gear never had a killer game, so it might be justified
    • by t0ny (590331)
      Im sure we will see EA go out of business long before Nintendo does.

      Nintendo has long been doing the 'right' thing, despite not being #1. They are able to just put their stuff out on the market and turn a profit; they dont have a "#1 at all expense" complex. IMO, the quest for #1 has been a greater downfall than focussing on a single market ever has been.

      BTW, Pepsico is very diverse (but its a good example of not worrying about #1 and focusing on being a profitable company). Dr. Pepper/7Up, Inc. is a ver

      • I'd be happy if they'd just produce the next generation GBA with a port that allows me to hook it up to a cellphone; I'd rather buy my own phone and have it seperated from the system so that I'm not wasting battery life on the phone when I'm playing single-player.
    • Should Pepsi or Dr. Pepper give in because they aren't #1 or diverse?

      I agree with your points on Nintendo but Pepsi and Dr. Pepper are horrible examples of "not diverse" companies.

      Dr. Pepper is a bad example because it's not its own company any more; it's owned by London-based Cadbury/Schweppes, which makes all kinds of things including candy around the globe.

      Pepsi is one of the most diverse corporations, having its hands in all kinds of food production -- they own Frito-Lay, they own Quaker, they own G

  • -1 Flamebait (Score:5, Insightful)

    by Locky (608008) on Sunday November 30, 2003 @04:48AM (#7591596) Homepage
    Videogame Journalism is going great guns when one of, if not the most profitable gaming companies can be identified as 'dying'.

    There are 3 main markets (PC, Console, Handhelds) for videogames, and Nintendo is the only company who currently dominates any one of them.

    File this one in the ever-growing anti-Nintendo wing of gaming journalism.
    • Re:-1 Flamebait (Score:3, Insightful)

      by NanoGator (522640)
      "Videogame Journalism is going great guns when one of, if not the most profitable gaming companies can be identified as 'dying'."

      It's especially funny considering the popularity of the Game Boy Advance and any title made by Nintendo.
  • by Julius X (14690) on Sunday November 30, 2003 @04:50AM (#7591602) Homepage
    While the information presented is good, I don't think the hypothesis is sound. Nintendo isn't just a Video Game company, it is merely their base. MS & Sony are first a software company and a media hardware company, respectively, but both delve into each others' realms, and into video gaming.

    Nintendo's had its hands deep in the media industry for years - movies, television, toys, etc etc etc - are all extensions of Nintendo's little media empire. Think about all the various Pokemon TV Shows, Movies, Toys, heck I think they even have a cereal now. The same is true for other Nintendo properties - like Mario Bros., although some may argue that the plumber brothers may be past their prime in the marketing dept...

    So it's not that Nintendo doesn't have its hands in the other industries, it focuses more on pure entertainment mediathough, instead of other media hardware.

    The part about Nintendo having always made the highest quality games made me laugh, and discredit the article as little more than Nintendo fanboy pleading...
    • You have to understand that 'quality' is different for everyone. I recommend you read 'Zen and the Art of Motorcycle Maintenance' for an idea of what 'Quality' can represent to some people. I personally think that the quality of Nintendo games has generally been low, but a few specific titles have had more quality than any other game, ever. Have you played the early Zelda titles, or enjoyed super mario 3... or even more recently enjoyed Pikmin? Admittedly not for everyone, but most certainly for anyone.
  • Context Error (Score:5, Insightful)

    by NanoGator (522640) on Sunday November 30, 2003 @05:18AM (#7591656) Homepage Journal
    "They are in last place in a huge segment of the home entertainment sector, and they need to remember this fact, because no one needs another Amtrak."

    Psst, the video game market isn't Russian Roulette, you really can have 1st, 2nd, and 3rd place trophies. Nintendo may not be the largest, but they are raking in oodles of cash, and they have distinctive titles that you simply aren't going to get with Sony or Microsoft. Sony could easily be unseated by the next newcomer with whizbang flashy graphics, Nintendo is a lot harder to replace.

    I'm getting a little tired of the "one company to rule them all" mentality that flies around here.
  • Nintendo once upon a time claimed to be a "cartridge company." They would live and die making cartridges. After the market reality of the N64, they changed their tune. If Nintendo had stayed a "cartridge company," then they would be in the position that the author of this article describes... they would be the locomotive industry not realizing their impending obsolescence.

    But Amtrak it is not. 1st of all, Amtrak was created in the 1970's by mandate of congress long after the battle with cars was a forgone conclusion. 2nd of all, Nintendo has broadened its perspective to see what it industry it is in. It is a videogame company. It does not make movies, it does not release multimedia CD's. It sells videogames, and players that play videogames. Sony can rightfully claim to be an entertainment company, because it owns movie studios, theme parks, musicians, etc. Microsoft can rightfully claim to be in the technology industry, as it does, well, techie stuff. But Nintendo's primary market is in gaming, and their competition in the gaming arena is with other video games (some would say they're competing with homework). They are right to be focused upon being the best gaming company they can be.

    The article mentions several things the XBox does which the 'Cube does not, and rightfully so. The hard drive was a great addition to a console, as was the ethernet port. Some would say they are as revolutionary as the N64's addition of the analog stick. However, These were great in service of the videogame playing part. Nintendo was one of the first companies to test market a modem adapter (for the NES), and the rewritable bulky drive was a predecessor to the hard drive in the Xbox. Both were ahead of their time, and both failed. Now apparently the market is about ready for them, and hopefully Nintendo will notice on their next generation of hardware.

    On the other hand, the author exposes a deeply flawed perspective of the situation claiming that Nintendo's lack of DVD playback capabilities are due to being videogame-only. DVD playback is a great feature in modern consoles. It's also the only feature mentioned that has nothing to do with videogames. Why is DVD playback not included in the GameCube? The reason Nintendo cited at the time was that they expected people who wanted to play DVDs would buy a proper DVD player, much like how the PS1 was capable of playing CD's but people kept buying real players. Furthermore, by not including DVD playback capabilities, Nintendo saved themselves an estimated (at the time) 50 dollars per console. That allowed Nintendo to ship at the magic $200 mark, and stay the low-price leader throughout the console wars. Stand-alone DVD players are now available for less than 80 dollars, with PC DVD drives hovering around 40.

    Nintendo is attempting to avoid falling into the trap of so many systems before them. The historical landscapes are littered with systems that tried to do more than play videogames. The Saturn, for example, had a modem adaptor and a copy of Netscape available shortly after launch. How did it do? It died in the market. 3DO wanted to play games, read children's storybooks, play movies, surf the web... After about a year of beating around the bush, they refocused upon purely gaming, but by then the damage had been done. CDI? A console whose most compelling piece of software is an encyclopedia? The game.com organizer, game player, trivia master? The N-Gage? Admittedly, many systems that didn't try to be more than game playing machines have also died over the years. Dreamcast for one. Virtua-Boy for another. But no system that tried to market itself as a set-top box managed to survive.

    Perhaps someday the set-top box analogy will be correct, but perhaps not. To function as a set-top box, the machine requires a fast connection to the web. That kind of connection will only exist if the person already has a computer. Why does this matter? Well, if downloadable content is your goal, the computer you already have can do
    • Nintendo once upon a time claimed to be a "cartridge company."

      Nintendo never claimed that. They claimed that CD technology was too slow at the time of the N64 to be useful for games.

      I, for one, agreed with them. It wasn't ready yet. There were few of my Playstation games that I could stand playing because of load times, and there were several cases where I gave up in frustration (Parasite Eve, anyone?).

      But now that optical media technology has improved, Nintendo is using it, and you almost wouldn'
    • It has never occurred to me before, but now that I think about it, hard drives in a console are an absolutely horrible idea. Here's what is great about consoles:

      1) Don't have to upgrade them like computers
      2) Usually only have one or two moving parts so they...
      3) Last for years and years

      Hard drives are the thing I've seen fail the most in my short time using computers (about 9 years). I don't think the XBox hardware will last as long as my NES & SNES. But I do think my Gamecube will: it only has to
      • Having gone through 3 sets of PS1s and being on my 2nd PS2, don't expect any of this current generation of hardware to last. At the QA center where I worked last year, dead consoles were a fact of life. The laser assemblies died long before the HDD's.

        Spinning a disk is tough work for an electronics device... especially if it has to spin constantly.

    • "But Amtrak it is not. 1st of all, Amtrak was created in the 1970's by mandate of congress long after the battle with cars was a forgone conclusion."

      Amtrak's problem isn't cars, Amtrak's problem is that, whenever they want a passenger train to get from point A to point B, they have to say "Please Mr. Freight Train Company, sir, can we use your railroads for a moment?" Passenger jets can share airspace with cargo planes, busses can share roads with tractor-trailers, cruise ships can use the same ports as
    • Some would say they are as revolutionary as the N64's addition of the analog stick.



      The Saturn introduced analog control for Nights: Into Dreams. I believe they even started packing them in with the system after they released Nights.

  • by Anonymous Coward on Sunday November 30, 2003 @06:08AM (#7591735)
    "The Nintendo Difference, we've all heard the term."

    Yeah, it refers to the high quality of their software. When you were 10, it was what made you pay attention. Now that you are 20, you may no longer care about it, although you probably may have lost sight of the fact that it still exists and is still what appeals to those who are 10 right now. Regardless, it still matters to me and the other 11 million people who own GameCubes worldwide.

    "150 years ago, the big railroad companies controlled transportation in the United States.....They labeled themselves as being in the railroad business and not the transportation business, limiting themselves and causing their own downfall."

    Well, too bad for the railroad companies. They didn't market themselves to the people who NEEDED them. But the video game industry is not the railroad industry. Nobody NEEDS video games, they are a luxury. (Fanboys, shut up.) People needed cheap, flexible transportation, and non-railroad transportation methods served that requirement. Regardless, the railroad industry is still quite large, since it serves its original purposes very well to this day.

    With games, nothing about movie DVD playback makes the software gameplay better. Nothing, other than free MPEG support (which is easy to do otherwise) and the optical disc technology itself (which the GaemCube also uses). So, if Nintendo can deliver a system that is not encumbered by DVD licensing fees and misdirected movie-playing features, while delivering a low-cost yet very powerful system which is easy to develop for and which features A-quality software, who is to say that the decision is a wrong one?

    Then there's online gaming. Sigh. I have very little interest in it, but let's spell out the facts:

    - Online gaming takes significant R&D ($$$) to do right.
    - Due to system inconsistencies, cross-platform online gaming is non-existent in the current generation.
    - Because of the above two facts, it makes sense for 3rd parties to support online play only for (A) the market leader, Sony, or (B) the alternative who is willing to foot most of the bill and technical development, Microsoft.

    - Nintendo understands that they are neither the market leader nor are willing to develop an expensive online infrastructure while there are no guaranteed revenue streams in the online gaming sector. So, they release their online adapters as a token gesture, then tell developers, "Online gaming will be what you make of it. Go crazy."
    - 3rd parties shrug their shoulders, since by forging ahead with online GameCube games, they would be going after a smaller market than the PS2, and there is no pre-existing network architecture as with Microsoft's offering.

    Hmm, let me summarize another way: Cube online gaming doesn't exist, because it makes no direct money for Nintendo. However, by not investing in a network, Nintendo isolates developers who would want a network in order to develop games on Nintendo's platforms, which themselves would make money for Nintendo. Problem is, since Nintendo isn't THE market leader, there's no guarantee that developers would develop for Nintendo's network even if such a thing existed. So, given the risk, Nintendo played the safe hand and watched as two differing approaches battled against each other.

    The market leader did the same thing that Nintendo did, release a token adapter and let 3rd parties largely figure it out for themselves, but they also released 1st party online games with much success. The alternative threw dumptrucks of money at the issue and developed a lovely online system for gamers and developers alike, but at extremely high losses for the company. If Nintendo is smart, they now have one example of how to do online gaming adequately well, and one example of how to do it extremely well while going bankrupt in the process: the smart way, and the Microsoft way, respectively.

    "Let's face it. Most 13 year olds wouldn't be capable of dropping six hundred dollars to inve
  • Marketing Myopia? (Score:5, Insightful)

    by aitsuda (633462) on Sunday November 30, 2003 @06:39AM (#7591794)
    Looks like somebody at Nintendojo's taken marketing 101, then... Levitt was insightful in the context of his time, and "Marketing Myopia" remains a classic text in the context of understanding professional marketing's roots. But marketing theory has moved on a hell of a lot since the 1960's. The point of the text is more sophisticated that the idea that companies need to do "more things" in order to compete. Quite the contrary - the point is that to be competitive a company has to understand not what it does ("we're a train company"), but what its (current and potential) customers need. So rail companies' customers don't want trains as such; they want to be transported from A to B. Nintendo's customers want to be entertained interactively. But that's as far as it goes. Whether "what customers want" is some kind of ill-defined "entertainment device" (second-rate DVDs attached to a console?) rather than high quality separates is debatable, to say the least. It's also a hugely unoriginal idea - people have been saying that games consoles will somehow mutate into "entertainment devices" for years (everyone in marketing is familiar with Levitt - you can be sure that Nintendo's marketing department is too!) In fact, there's already am enormously popular device for non-specific electronic entertainment, including games, media, networking, messaging etc - and the majoriry of us reading this are sitting using it right now. There's not one "marketing strategy" which all companies should blindly follow; expanding your market is often a good thing, but not always (AOL Time Warner?) In my opinion, Nintendo would be exceptionally unwise to take on Sony directly - Sony are already in the "electronic equipment" game and could frankly squash Nintendo if they tried. Not, of course, that I would ever admit to being in marketing on Slashdot...
  • by hlee (518174) on Sunday November 30, 2003 @07:11AM (#7591852)
    Video gaming is about more than just playing games now ... this isn't just about games; this is about hardware, games, and pure unadulterated Marketing.

    Huh?

    We play games cause they're fun - something no amount of marketing or hardware no matter how good can impart.

    The railroad industry and transportation sector isn't such a good example of marketing myopia either. Rail and air are such different beasts, its tantamount to abandoning one business for another. A better example would be to make use of the existing track infrastructure by laying fiber optics across it (I forget which company now) and diversifying to the telecommunications sector.

  • Railroads (Score:4, Interesting)

    by Snowspinner (627098) <(ude.lfu) (ta) (dnaslihp)> on Sunday November 30, 2003 @12:36PM (#7592679) Homepage
    Anyone who believes that the railroad industry has died should spend a night in my apartment, which has railroad tracks about 15 feet from my bedroom window.

    Your lack of sleep will prove you wrong.

    The railroad companies were very wise to declare that they're in the railroad business. It turns out that the railroad business was and still is a very useful business - huge amounts of US product are shipped via rail.

    It turns out that although trains make crappy methods of transportation nowadays, (Planes do the transport to a limited number of points faster, and cars can go anywhere), they're still the best thing if you want to, say, move several tons of coal, lumber, etc. I mean, trucking is nice for some things, but, really, there are some things that railroads can do that no one else can do.

    I think Nintendo offers a kind of game that no one else offers. When I pick up Zelda, or Metroid, or even one of their B-titles like Mario Sunshine, the game has a particular feel that other game companies don't match. I'm not sure what it is - I've hypothesized several times, but I'm never happy with the answer.

    If I want to play a Nintendo-type game, though, the fact of the matter is that I need a Nintendo-made game. So, more than simply being in the video game business, I think Nintendo is in the Nintendo business. And I think that they're "who are you?" marketing, as odd as it is, is a conscious move in that direction.
  • by Metroid72 (654017) on Sunday November 30, 2003 @01:17PM (#7592888)
    Nintendo has repeatedly said that the company is in the Video Game business. Not the entertainment or technology industries, like Microsoft or Sony, but the Video Game business. Sure, the difference is small on paper, but it represents a huge gap in what Nintendo is willing to do in comparison to what their competitors will do.

    What the author of the article doesn't seem to get is that Nintendo is in the business of MAKING MONEY, and they are kicking everyone's butt in that aspect.

    Since we're consumers, we'd love Nintendo to put the gloves on and play Microsoft and Sony in their own turf, we'll benefit, but when that happens, that's when Nintendo will succumb. [The other two guys have too much money].
    Remember... survival of the firm is first.
    Nintendo will choose to fight at a leveled field (or at the level that they're best -making games-), worse comes to worse, Nintendo will become a 3rd party, but on their own terms.
  • The truth is the railroads tried to get into the airline business, but the courts ruled that was anti-trust. If they'd succeeded, our airlines would have names like Union Pacific and Illinois Central instead of United and Midway. And none of that had anything to do with Amtrak.
  • by Guppy06 (410832) on Sunday November 30, 2003 @03:57PM (#7593594)
    "Apparently, the best historical example of this is the railroad industry, who "...labeled themselves as being in the railroad business and not the transportation business, limiting themselves and causing their own downfall.""

    Yeah, because we've all seen now how incredibly popular locomotives that also functioned as a tractor-trailer and a jumbo jet have been. I mean, who wouldn't want a train with wings?

    "The industry has changed. Nintendo is no longer the biggest player in a relatively large niche market."

    Whether it has changed for the better remains to be seen. The gaming industry is still far too young to make long-term predictions.

    "They are in last place in a huge segment of the home entertainment sector"

    Apparently he hasn't looked at the numbers since the $99 price drop.

    But actually that's besides the point. Sony and Microsoft are jumping up and down about the 18-25 male market while Nintendo has never targeted so exclusively. Their main target market is still there and still churning out lots of cash for Nintendo.
  • by OleMoudi (624829) on Sunday November 30, 2003 @04:31PM (#7593767) Homepage
    Apart from the relatively small variety of games Nintendo has compared to Sony or MS, the article only points out the gamecube is unable to play movies as a example of one of the reasons for the future fall of Nintendo. Seems to me the ability to play dvd movies on your videogame system is more a marketing thing than actually a real advantage. I think almost everybody owning a PS2 or GC has some other kind of platform (dvdplayer/computer) to watch movies on DVD. Yes, the PS2 can play movies but... is it really the main reason for its success? I guess not. People don't buy a console only to play movies, but they do only to play games, or games and movies. Consoles are still all about games, and Nintendo knows it.
  • by GaimeGuy (679917) on Sunday November 30, 2003 @05:57PM (#7594286) Journal
    WHY, WHY, WHY do I always see articles about the demise of Nintendo, when they're in EXCELLENT condition? Here are some examples:
    1. Nintendo has NO DEBT.
    2. Nintendo went FORTY ONE YEARS without posting a half-year net loss, and are on pace to go for forty TWO years without a full year net loss.
    3. Nintendo has over eight billion dollars cash, and probably a couple more billion dollars in assets, making it an 11 figure company, with each cent of its money spendable for itself.
    4. Nintendo will ALWAYS have dedicated fans who will buy their products, who will raise kids that will become dedicated fans, ensuring that Nintendo's products will ALWAYS sell.
    5. The highest selling publisher of console games and handheld games, worldwide, is Nintendo.
    6. GBA and GC are the only systems to see INCREASED sales in 2003.
    7. Sony posted a net loss of over 1 billion dollars last fiscal year. MS lost money, as well. Nintendo posted a profit. Who's in bad condition, here?
    8. Nintendo has maintained firm control of the handheld market for two decades, and it's stronger than ever.
    9. Sure, Sony and MS are valued at over 50 billion dollars. However, they have to spread that money over several different markets: PC hardware, PC software, CD players, TVs, movies, video games, etc. Nintendo can focus all of its resources, all 10 billion + dollars on one market: Video games.
    It's funny. I never hear complaints about MS losing billions on the X-box, nor about how they're in 3rd place in worldwide console sales. In spite of the skeptics, the crticism, and the reminders of every little thing that goes wrong, Nintendo is in a comfortable 2nd place in the console market, on top of the software charts, as always, and on pace to continue to profit yearly. Nintendo is doing much more than merely surviving: They're expanding, and it doesn't look like they'll be slowing down any time soon.
    • Unfortunately it won't stop because there will always be some moronic reviewer, market analyser, or some joe blow dreaming up ways how Nintendo will die, which is a bunch of BS to begin with.

      Hell, they've been around since the 1890's when they first made card games for crying out loud.
    • 7. Sony posted a net loss of over 1 billion dollars last fiscal year. MS lost money, as well. Nintendo posted a profit. Who's in bad condition, here?

      Um, I can't say for sure about Sony because I've never really looked at their financials, overall....but Microsoft didn't lose money last fiscal year overall. The Home and Entertainment Division, which does hold the Xbox Division bled money left and right (anyone still in denial on this needs to be shot, the Xbox is not making any money for Microsoft, and t

  • by Snowmit (704081) on Sunday November 30, 2003 @07:47PM (#7594864) Homepage
    The classic story of the railroad tycoons who didn't realize that they were actually transportation tycoons is all well and good but Nintendo does not have the same problem.

    According to the COmpany History [nintendo.com], Nintendo is over 100 years old. They started out making playing cards. Read the history on that link. It shows them going through a few different changes. The important common factor? Nintendo has always made games.

    That's right. Nintendo is not a console company and it's not a video game company and it's not an entertainment company. It's a game company. They make games. They have been making games for over 100 years. I think that we can all agree that "making games" is a pretty broad understanding of what the company does.

    Myopia, indeed.
  • It seems some people here and limited hindsight. They seem to forget that Nintendo had to halt production on the GC for a while to let warehouses reduce stock.

    I'm not saying Nintendo is doomed but the number one thing they've got to do is wake up and join Sony and MS in a couple of things. Number 1 is online gaming. I could care less how many Nintendo fanboys (and I used to be one) say Nintendo can survive without it, they are wrong. The console market has moved that way (look at the proliferation of
    • GC's are cheap and easy to manufacture, resulting in a 4 million backstock of cubes last November. Nintendo was producing Cubes a LOT faster than Cubes were being sold. That doesn't necessarily mean Cubes weren't selling well.
    • by unclethursday (664807) on Monday December 01, 2003 @01:27AM (#7596412)
      Number 1 is online gaming.

      Except that it isn't the number one priority, really. And I play online on my Xbox and PS2 all the time. But I'm not fooled into thinking online is the big thing in console gaming right now.

      Look at the facts.

      Sony only sold 780k online adapters before launching the new online bundle for the PS2. Out of, what, 60+ million units? That's less than 1.5% of the total PS2 userbase that bought the online adapter. Sony isn't making any money off of their online abilities.

      Microsoft has touted 500k Xbox Live subscribers as the number since before E3. 500k is around 5.5% of the total Xbox userbase. It hasn't gone up signifigantly since then, or beleive me MS would definitely toot their own horn. Now they're giving away 2 free months of XBL with every single Xbox sold, in order to try and get people to subscribe. Notice that in order to get new subscribers they're resorting to giving away two months of something they want you to subscribe to. Yeah, seems like XBL sales have more than flatlined over the months.

      Sorry, friend, but online is not the big thing. Not right now, anyway.

      Microsoft is losing millions of dollars per quarter on Xbox Live; and for what, a measly $25 million per year in subscription revenue? They lose more than four times that on the Xbox every single quarter, so $25 million a year in subscriptions isn't doing jack shit for them.

      Sony is losing money on the hardware they bundle with the PS2, and they don't get a whole lot in return.

      Nintendo can easily see this. And Nintendo is all about profits.

      Microsoft is willing to throw money at the Xbox to make it suceed; but they have Office and Windows to fall back on (at least for now, who knows what the shareholders might say after seeing the quarterly loss of the Xbox this Xmas season... it's going to be a huge sum of money lost).

      Nintendo doesn't have the luxury of having a product that brings in twice its operational costs in profit each quarter *cough*Windows*cough*ripoff*cough* like Microsoft does. Nintendo can't afford to try and do what MS is doing with Xbox Live, and then not make any money from it; or at least not lose too much money from it. They don't have overpriced operating systems and office suites to make up for every other money losing division within their company, like Microsoft does.

      And Nintendo knows this. Nintendo needs to show a profit each year to keep going. Trying to make a huge deal of online gaming, when the numbers clearly show it is a niche market in the console world, is not conductive to profits.

      Microsoft could never turn a profit on the Xbox and never care; because their Windows and Office divisions will subsidise every single money losing venture they delve into. And trust me, XBL isn't making any money any time soon.

      Thursdae

      • Live is doing quite well I'd say.

        Take for example a few weeks back...on Nov 2, a total of 83,652 players were online at once. Last time I checked, that rivals and excels the numbers of some computer games (and let's face it, most computer games sell because of their multiplayer aspects).

        As for total people subscribed, worldwide figures put it about 500k easily (as you said). They say the goal is 1 million subscribed by June 04 but I wouldn't be surprised if it hits that mark months ahead of schedule
        • Alright then, lets assume that by June 2004 there will be 1 million subscribed to Xbox Live around the world (and that is a big if) and assuming that there will around 15 million Xbox's sold that will mean that there is only around 6% of Xbox users who are signed up to Xbox Live! The reasons that you cited as to why people are using Xbox Live are exactly the reasons why Nintendo has steered clear of online gaming this generation! One day in the future, the majority of people will have trouble-free broadba
        • Live is doing quite well I'd say.

          Not saying it isn't. But it's hardly doing as well as MS originally hoped.

          As for total people subscribed, worldwide figures put it about 500k easily (as you said). They say the goal is 1 million subscribed by June 04...

          After the initial good launch of XBL in North America, MS said they expected 1 million subscribers by November 2003, worldwide. Then sales started falling on XBL, and by May 2003, they only had 500k, worldwide, after a nearly 250k intital burst in N

          • Nearly 8 months have gone by and they haven't even been able to say 550k or some such to make it appear that XBL sales are still going.

            I think that is mostly attributed to the fact that they'd sound pretty damn stupid announcing a milestone like "550K"

            Good sports games? Hardly.

            Hence my comment that it needs support for 3rd party games.

            Hey, just for fun let's add in the 10+ million GCs and the probably 100k online adapters they've sold and see how much it is!

            Since the number of online capable GC g

            • I think that is mostly attributed to the fact that they'd sound pretty damn stupid announcing a milestone like "550K"

              Yes. You're right. But as of now, MS looks like it's sold all the Xbox Live kits it's going to, since in nearly 8 months the number hasn't grown to 600k or more. Remember, it's all in perception. With 8 months at the same number, the perception is Xbox Live is simply not selling.

              But the point I was making is to make that 1 million number by June, they damn well need to show it is sel

    • I've got a great idea... lets bring up a point that is no longer applicable!

      Cube sales were slowing with all video games in 2003. Nintendo stopped production to sell a backlog. They dropped their price, and suddenly they sold their whole stock of cubes. Slashdot ran an article a few months ago saying Nintendo had started production again.

      I love my Gamecube. I've got a PS2, but I don't use it online. Nintendo is not going to die because they didn't innovate online play.
      • It is quite applicable! Plenty of people are acting like Nintendo didn't run into a problem for a while. People need to acknowledge that Nintendo has struggled a bit. A side note...I thought I implied that the started production again...I had considered it understood but that's my bad.

        I'm not saying Nintendo is going to die. But as I said in /. a month or so back, if Nintendo does not find some way to start planning and testing an online gaming system before the next generation of consoles comes out,
  • One DEFINETLY has to wonder if some former IGN so called "journalists" started working for Nintendojo to create this "Myopia" trash - or if Nintendojo is smoking the big fat ones lately.

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