On Nintendo And Marketing Myopia 123
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."
Last I checked (Score:5, Insightful)
Should Pepsi or Dr. Pepper give in because they aren't #1 or diverse?
-1 Flamebait (Score:5, Insightful)
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.
Seems like a fluff piece... (Score:5, Insightful)
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...
Me too, I'm sick of this (Score:4, Insightful)
Context Error (Score:5, Insightful)
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.
Re:-1 Flamebait (Score:3, Insightful)
It's especially funny considering the popularity of the Game Boy Advance and any title made by Nintendo.
Re:Check Again (Score:3, Insightful)
Do we really need another 3DO? (Score:5, Insightful)
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
Uninformed, Uninsightful: Mark Martinez (Score:5, Insightful)
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)
Re:Seems like a fluff piece... (Score:3, Insightful)
Video games is about playing games (Score:5, Insightful)
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.
Re:Check Again (Score:1, Insightful)
Re:Me too, I'm sick of this (Score:5, Insightful)
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.
Comment removed (Score:4, Insightful)
Nintendo is not in the Videogame Business... (Score:5, Insightful)
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.
Re:Check Again (Score:3, Insightful)
One of their problems is the GameCube; its not selling like they thought it would. Nintendo has only sold ~10.5 million Gamecubes since its release (2001), while Sony sold twice as many PS2s in 2002 alone. Its not about the economy, its about poor sales. I agree Nintendo will survive, but they've lost the market edge and they need to take it back.
Re:Nintendo to Sony isn't a worthwhile comparison. (Score:3, Insightful)
Nintendojo's myopia... (Score:4, Insightful)
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.
movies in DVD playability (Score:3, Insightful)
Re:Nintendo to Sony isn't a worthwhile comparison. (Score:3, Insightful)
Just as Apple isn't going away any time soon, Nintendo isn't, either.
Oh for God's sake, DOES IT EVER STOP?! (Score:3, Insightful)
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.
Read your (corporate) history. (Score:4, Insightful)
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.
Nintendo's down but its marketing is fine (Score:2, Insightful)
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 people saying that the next Gameboy should have wireless capabilities to make multiplayer gaming even easier). Number 2 is they are gonna have to consider hard drive storage in the future. Memory cards aren't going to cut it for next generation games (if trends continue towards online extras especially).
This article is a bit stupid to harp on Nintendo for calling itself a video game company though. What else does Nintendo do?! The fact that they stay completely focused on games is the only thing that keeps them in the hardware market. If they were merely about creating games for the industry, the GC probably would fail...instead they have a desire to make their hardware do useful things (like the GBA link, the first wireless controller...). Nintendo is far from dead in the water for admitting that their only focus is what it should be...gaming!
Re:Nintendo's down but its marketing is fine (Score:4, Insightful)
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
Re:Me too, I'm sick of this (Score:2, Insightful)
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 fact, they use a full-size drive in the XBox iirc).
The reason the Cube doesn't play DVDs and CDs is because it's a game system.
Re:Nintendo's down but its marketing is fine (Score:3, Insightful)
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 November-December 2002, they only got another 250k in the next 5 months. So, they revised it to June 2004 instead of November 2003. Not surprising, as they've revised forecasts on the Xbox hardware multiple times to make it look like they've met projections...
but I wouldn't be surprised if it hits that mark months ahead of schedule.
It's December 2003. In late April 2003 they said 500k subscribers. 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. Now they're giving away XBL to try and get subscriptions. I'll be very surprised if they hit that number before June, and keep it. Trying to use the free 2 month people who may not keep going doesn't count, you know. And who knows how many people didn't re-sign up in November? I almost didn't. If it wasn't for Crimson Skies, I would have called up MS and cancelled until Halo 2 came out.
Finally, let's not forget stuff like XSN. While the current incarnation of the sports network is inclusive to MS games, if it includes 3rd party game someday it could be one of the best ideas console gaming has ever seen.
Good idea? Yes. Good sports games? Hardly. The only two I've heard good things about are Links and Top Spin. All their other major sports games are almost as bad as the 989 Sports titles, and the ONLY selling point they really have for their MS Sports titles is online play. If I was a sports game player, I think I would rather forget about XSN. I'd rather go with Sega Sports' offerings than Microsoft's first party sports titles.
I often enough find that people who say online gaming isn't that great are the ones who are in denial just because they see no use in it.
While I'm home stuck in bed with this blood clot, I see very much a use for online gaming on my consoles....but I'm not fooled like you are into thinking in straw man arguments. In fact, I'm still playing more offline games, especially RPGs, while I am stuck in bed.
Just because 50% of the consoles owners aren't online doesn't mean they wouldn't like to be.
Like to be and are are two entirely different things. I'd like to be banging Rebecca Romijn Stamos all the time, but I'm not. I'd like to not have a blood clot taking up a good chunk of my leg, but the reality is that I have one. I'm sure more people want to be online with their consoles, but the reality is they aren't. Wants and reality are two seperate things.
And, if we add up the 60+ million PS2s, and the 10+ Million Xboxes and then figure out the percentage of them online... well it's more like 98.28% of the PS2 and Xbox console users aren't online; not just 50%. 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! Wow! A whopping 1.725%, or less, of all the current gen consoles out there are online! That's still 98.275%, or more, of all the current gen console owners not going online with their consoles.
That's slightly more than the 50% you seem to think are online now.
Hell, MS claims that 50% of all Xbox owners could get online with XBL... so why are there only 5.5% of the Xbox owners online? Most PS2 online games support dial up, which I'm sure a vast majority of PS2 owners have....so why is the total PS2 online userbase at less than 1.5%?
Online console gaming is beyond a niche now.