Being a native Washingtonian, I have a soft spot in my heart for Nintendo (their US headquarters are located in Redmond Washington). Not only did they arguably create the first mass market for casual games, they have continued to create perennial fun and entertaining games.
Reading their latest financial results, with a huge operating loss of $92.7 million (more than double the previous year) as well as a lack of product pipeline to bolster their shrinking console business, made me want to shoot out some thoughts on how they could potentially turn around the proverbial ship.
Nintendo continues to remain unwavered by their approach to customer lock-in through their proprietary hardware and software. Owning the family entertainment room is a fine goal, but it comes with a lot of competition from 'over-the-top' boxes from Google, Apple, and Roku as well as console manufacturers (Microsoft's Xbox and Sony). I am not advocating for Nintendo to not own the hardware. Rather, they should build a flanker strategy that embraces the tablet-style gameplay that has exploded on iOS and Android. Heck, Amazon didn't build its own operating system, they leveraged (and forked the code) from Android in order to leverage the huge population of Android app developers. Nintendo built their own version of their tablet that a) has a non-standard gaming metaphor that tablet gamers are used to and b) have not thought about how to embrace third party developers (aka developers outside of Nintendo's wonderful franchise). They built a weird, single purpose device that doesn't provide utility to move consumers away from their current mobile gaming experiences.
What would I do? Here are some ideas:
- Build an Android tablet - if you can't beat the trend then join them. Let Google own the OS while you focus on specific hardware gaming hooks and features in the hardware.
- If you own IP, keep it closed - if you own a mega property (e.g., Super Mario), then keep it in your ecosystem. That is a huge asset and a beloved game IP that can help you in my recommendations above. Make your own IP as one of many motivators for people coming to your platform. Be careful to not completely lock out other game developers -- why not put special hardware buttons and/or screen elements to launch your games on an Android device but, have a democratic (or fairly biased) app store.
- Separate P&L, separate marching orders - I wouldn't try to have the innovators and market disruptors exist physically or fiscally near the traditional P&L. Organisms like traditional businesses have a tendency to deploy antibodies designed to kill innovation or new business start ups.
Conclusion. Give up on the WiiU and build a kickass gaming tablet. Consumers love you Nintendo. We are rooting for you.