Op-Ed: Nintendo Improvement Plan

Occasionally, when a topic arises that merits is, I’ll go beyond the normal Law of the Game discussions to exercise my MBA and discuss a more business-oriented topic.  In this case, the topic is what can be done to turn around a floundering Nintendo.  There have been no shortage of pieces on this topic as of late, some with more practical suggestions while others clinging to the age old (and still incorrect) supposition that the only way to save Nintendo is to take them out of the hardware business.  What follows is the plan I would begin to implement if Nintendo’s fate were in my hands.  I won’t say all of these ideas are new, or even ones that I originally came up with.  However, I have yet to see anyone present this complete of a plan, with all of these elements present.  This is, of course, just my opinion on the matter.

Before I get into the specifics, I need to set forth what I believe Nintendo to be, since that foundation is what the plan rests on.  At its core, Nintendo is a family entertainment company, and like other family entertainment companies, control of the entire experience is what makes a key differentiation between the offerings of other companies.  In that regard, Nintendo’s game ecosystem is like Disney’s theme park ecosystem.  Control is what keeps the system pure and what makes it function, and it’s why so many others have a difficult (if not impossible) time replicating the experience as a whole.  Therefore, as a fundamental premise, Nintendo needs to control the platform as well as the software on it, just like Disney needs to control the parks and hotels along with the cast who operate them.

Nintendo’s largest flaw in this regard is that the experience is no longer consumer friendly, and it’s no longer family friendly, in regards to being friendly to the family as a consumer unit.  The core flaw is the fragmented online ecosystem.  While the finally combined Wii U and 3DS login system was a step, it’s still substantially behind what I would consider acceptable, much less industry leading.

The answer is a system overhaul.  Users need to have a core login, and purchases need to be tied to that login.  The overwhelming consumer unfriendliness of the entire online system is multiple generations behind. A basic change like this fixes many of the biggest consumer gripes with Nintendo’s system.

Similarly, given the family-oriented nature of the Nintendo business, setting up family account systems would be a welcome change.  A truly robust system would even allow for parental management from a centralized web portal, and perhaps beyond simple controls, some additional monitoring systems.  For example, since Nintendo has expresses many concerns with the friend system, perhaps the parent account could monitor and restrict different kinds of online interactions.

The second major issue is the virtual console.  Right now, I, like many other consumers, have copies of games that I’ve bought close to a half dozen times now.  For example, I own copies of The Legend of Zelda: A Link to the Past for SNES, GBA, Wii, and DS, and possibly more.  While it is my favorite Nintendo game of all time, I’m not sure why I needed to get different copies of it for the virtual console for each system, especially when no new features to speak of are being added to the experience.

There are two ways to solve for this.  The arguably less profitable one is, provided a single sign on, allow for people who have one version to have other versions of the same game for free, or for a minimal additional cost.  For example, using my The Legend of Zelda: A Link to the Past example, if I bought the Wii version, I could have the DS version at no additional charge, or for a modest fee, $1 or $2. Or, perhaps you could buy a premium version of the initial release of, say, Earthbound, that allowed additional access as it moved to other platforms.

What would potentially make more sense would be for Nintendo to offer their own Virtual Console subscription service.  Paid monthly or annually, it could be as simple as anything from the catalog, or even subdivided into into smaller parts (all the NES catalog,  all the Mario catalog, all the 16-bit era catalog, etc.).  A flat rate for the entire virtual console catalog, though, would be the easiest to implement, and would certainly get a substantial number of subscribers.

Expand this with a family offering, and you’ve created a smart, easy experience for families to get behind.  Like other services, there would need to be a limit to the number of systems or simultaneous users, but perhaps that would even be scalable with a base fee and a fee for consoles over some preset number.  It’s difficult to peg where these numbers would be without the kinds of metrics only Nintendo has, but I imagine there would be good traction at $8 a month for 3 systems, and an additional $1 a month for each additional system added to the family plan.  Given the Club Nintendo system already allows for family accounts, it would be easy to tie it to consoles registered to a Club Nintendo family account.

The major question is whether these kinds of software changes can be implemented given the current hardware, or whether it will take new hardware to get there.  The 3DS still continues to sell well, while the Wii U is obviously struggling.  If new hardware is needed, it would be an ideal time to not only roll out those changes, but also change the underlying architecture to make it both easier to port games from the other competitor consoles but also to tie the home console and the handheld console together.  Easier ability to port titles would help bring back third party content, though for the most part that shouldn’t be viewed as the core of the business.  As I stated before, the best results for Nintendo are like the best results from Disney: when the entire experience is controlled.  This is afforded in the first party titles, and that is what has been Nintendo’s forte.  Third party titles need to continue to be viewed as a bonus, not a core business.

Another benefit a hardware change could bring is more interaction between the home and portable consoles.  True remote play on the 3DS from the Wii U, or better still, ability to play DS/3DS titles on the Wii U combined with a TV would be great.  Features like this might be more easily implemented on new hardware.  These features may be just around the corner, but I think they would be best coupled with improvements to the virtual console system.  That said, just the ability for multiple 3DS consoles to remote play existing Wii U virtual console titles would be an improvement.

Other obvious plays are to take advantage of the Toys to Life category (i.e. Disney Infinity and Skylanders) with a Nintendo IP in the area.  Given the family focus and huge profitability of the sector, this seems like a no brainer.  Current rumors point to an offering possibly as soon as E3, so we will see.  Either an all-star Nintendo roster, a Pokemon game, or an entirely new IP could work well in the space.

To the extent possible, increasing the rate of release of core IP would also help.  Not that we need an annual entry from both Mario and Zelda, but working it out so that there are at least 2-3 releases per console from the major series per year would make a huge difference.  This would require investing more effort into some of the neglected IPs, but Donkey Kong has shown that this can happen.  Metroid in particular has been neglected as of late, and Kid Icarus continues to have a hard time getting back off the ground.

Finally, in any business turnaround, a pretty necessary step is to do the kind of internal review that only the company itself can accomplish.  I certainly don’t have the kind of Nintendo insider knowledge to make any realistic assessments of what kinds of systematic problems may exist, if any.  The path that Nintendo is on was the result of some decision making, the major questions is whether those decision makers can learn to make better decisions, or whether the problem is so endemic that major staff changes may be required in order to make things stay on the right path.  Similarly, if changes prove not to work after being given an adequate opportunity to work, then decision makers need to be in place who can pull the plug and chose an appropriate new direction to try to resolve the problem.

Without more information, data, and the ability to analyze those two things, it’s impossible to formulate a more comprehensive plan for a Nintendo turnaround.  But I think the core philosophy of control the experience should be the foundation for any attempt to fix what ails Nintendo.  Nintendo can, and should, learn a lot from the approach Disney takes to many of these things.  They are companies who share man core philosophies, and each has been home to one of the greatest creative minds the world has yet known  in Walt Disney and Shigeru Miyamoto.  Certainly, there are many ways to approach Nintendo’s recent struggles, and I hope that whomever is chosen to guide them through this rough patch figures out a way to do so, bringing Nintendo back to the level of success it has known in previous years.

About Mark Methenitis

Mark Methenitis is an attorney in Dallas Texas. Mark received his Juris Doctorate and his Master of Business Administration from Texas Tech University and his Bachelor of Arts from The University of Texas.

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