Nintendo's first-party edge

by Blake Snow { Aug 3rd 2006 at 11:25AM }

The Street analyzes Nintendo's fifth generation home console, the Wii, as compared to Microsoft and Sony's offering. In addition, the article explores the success of the company's first-party games, especially for the DS. Tero Kuittinen writes:

"DS is a game console that has become a mainstream success basically on the back of the software sold by the console provider. In Japan, Nintendo has sold more than 21 million units of DS games -- the second-biggest DS software supplier has moved only 2 million units. Usually, console vendors have to grovel for the support of third-party game developers in order to gain strong sales of their game consoles, but Nintendo has the ability to sell 50 million units of its portable consoles on the back of its own game development. That's an edge no company can match."

Should be interesting to see if Nintendo can continue to translate first-party strength into solid hardware sales for Wii like it has done with the DS (see top games as compared to market share).

Reader Comments (Page 1 of 1)

common sense @ Aug 3rd 2006 11:44AM

NO it is not possible to translaste this into wii.
Have people not seen what has happened the last 2 genrations of console gaming? or all that doent matter now because the ds has sold well in the handheld area where nintendo have always done well.

Though these are not all the factors for the success of the ds, it is for the games.

Nintendo makes good hanheld games. Third party developers do not.

Now before these nintendo fans, come and show me some of the good third party games, I ask them how many of them were PUBLISHED by nintendo. There is a reason nintendo published them, and thats because thier games they would make.

Loque @ Aug 3rd 2006 11:45AM

Too bad that logic didn't work for the gamecube

Jason W @ Aug 3rd 2006 11:48AM

Nintendo has always made strong first party games. The DS had a weak launch but soon after it started getting a steady stream of AAA titles. I may have been the only one that thought "Feel The Magic" was fun but the other titles that followed made up for the systems rushed launch.
As for the WII it may end up next to my 360 but im not 100% sold. I love the live arcade for the retro of it all and think the WII will be even better when it comes to old school games. Now that the regular games for the WII are starting to look like something new I may buy it. Hell if they can do with the WII what they did with the DS it would be great. Something new and fun for the home console.

Jeff @ Aug 3rd 2006 11:52AM

"DS is a game console that has become a mainstream success basically on the back of the software sold by the console provider."

SHOCK!

You know, back in the day, this was just how it worked. Manufacturers released consoles to play *their* games. Originally, third parties didn't even exist - and when they first appeared on the scene, manufacturers tried to sue them out of business.

Nintendo is the last old-school game company still making consoles, so they remember those days well (in fact, they were part of the attempt at curtailing unrestrained third-party development). They understand that a strong first-party showing and a "house style" are what defines a game console.

The idea of first-party games being the primary motivator of a game console has taken a hit in the PlayStation and Xbox days. But the problem is you can't rely on third parties to do your work for you. In essence, Sony and MS have gotten lucky with their third-party libraries so far, but they have no control over that.

Nintendo has by far the largest first-party development house of any current console manufacturer: EAD. They control their own destiny. If their systems don't sell, it's nobody's fault but their own. Sony and MS, meanwhile, have to hope that third parties come through for them. Nintendo's strategy may not *always* work, but long-term it is a safer bet than the way Sony and MS operate.

Some people who have grown up in the past ten years think the way Sony and MS do it is just the way it's supposed to work, but the way Nintendo operates has been the standard for a lot longer. Eventually, Sony and MS's reliance on third parties is going to cause one or both of them to fall flat on their faces.

I'm not always a huge fan of Nintendo. But their success or failure is in their own hands. If I was a betting man, I'd always bet on the company that holds all the cards. Sony and MS only control half the equation. They do both own various first-party developers, but none are even close to the size of EAD (even combined), and there's no common thread between them - no defining style or common goal in mind other than short-term sales of individual games.

The point being, it should be no surprise that the DS is selling based on its first-party library, and the Wii (despite the last couple days) will succeed or fail for the same reason. The PS3 and Xbox 360, though, will have to rely on external forces to carry them.

32_Footsteps @ Aug 3rd 2006 11:58AM

I wonder how many more they would have moved in the States if they had released Jump Superstars and Daigasso! Band Brothers here.

It's interesting to note my own DS collection, which only has 3 games not published by Nintendo (Sprung, Feel The Magic, and Mega Man Battle Network 5 Double Team DS - though I'm going to get around to getting Castlevania soon). I don't think I've ever had such a preponderance of first-party titles for one system in my life (not even the N64). But then again, I don't think I've seen even Nintendo hit this much of a creative goldmine as they have so far on the DS (and I don't even own New Super Mario Bros. yet).

fwacce @ Aug 3rd 2006 12:00PM

Thanks for that post Jeff. I'm downloading it now to my PDA. I'll try and read it during my 3 hour long commute to work.

minus_273 @ Aug 3rd 2006 12:01PM

#1
This is poster #1 in 1993.

NO it is not possible to translaste this into playstation.Have people not seen what has happened the last 2 genrations of console gaming? or all that doent matter now because the walkman has sold well in the consumer electronics area where Sony have always done well.

darryl @ Aug 3rd 2006 12:14PM

The Nintendo circle-jerk continues... relentless.

idioteraser @ Aug 3rd 2006 12:15PM

Jump Superstars is held up by licesing issues. Band Brothers is coming to Europe though.

There are an increasing number of great third party titles coming out or already out in Japan.

RPGs are flocking to the DS in droves.

300,000 copies of Final Fantasy III were preordered in Japan.

That cookbook utility sold out half the printing run which was supposed to last for half a year in only a week.

icantdrawanime @ Aug 3rd 2006 12:17PM

I for one welcome our new third party overlords.

gman @ Aug 3rd 2006 12:24PM

Jeff is absolutely right. Every word. Nintendo knows the game business best, and how to turn a profit. They made a killing on Gamecube, despite people labelling it a "failure" because it didn't dominate the entire industry. I've never even really thought about Jeff's angle much, but I think he's right in that, the amount of control you have over the success of a console (whether you use it wisely or not) will be one huge, if not THE determining factor which decides your success. Luck with third parties notwithstanding.

DojoRacoon @ Aug 3rd 2006 12:25PM

Can anyone link me any definitive infromation that Nintendo suffered losses because of the gamecube. Or is it just that they didn't make as much as they could've. I know Iwata said that if they don't sell more Wiis than Gcs then the Wii will be a failure. Is that just because to stay in the console business they can't lose market share again or did the gc actually lose money.

ipodfanboy @ Aug 3rd 2006 12:34PM

I agree with you number 4 about nintenods part they do need to rely on 1st party games to make thier console sell well, surprsingly it only worked for the gba and the ds but has not worked for the n64 or gamecube hopefully it can work for the wii. On a second not Microsofts xbox dont rely on 3rd party support either, of course microsoft had some big 3rd party games like splintercell and ninja gaiden but didnt gamecube have soul calibur resident evil4. Like nintendo microsoft has to rely on its mascot masterchief. a first party title like halo2 helped microsoft take the number 2 spot. Microsoft is in the same boat as nintendo now what about sony. Sony home console really need 3rd party thats where the playstation shine, the only popular first party game sony has is gran tourismo, a game like god of war will only sell well in western markets but not in japan. Success of the ps1 and ps2 diffentenly laid in the hands of 3rd party developers that made revolutionary games taht defied a generation like GTA. Surprisngly the psp was continously outselling the ds here in the states eventhough the psp does not have in hot games for it like no orginal 3rd party games and crappy ported 3rd party games. People buy the psp here in america because of the playstation name. I wonder if people will buy a ps3 for 600 dollars because of the name alone and not the games which is highly possible. Everything will change when the wii takes on the ps3 this xmas.

vidGuy @ Aug 3rd 2006 12:47PM

Nintendo made money on the GameCube, but its relatively lack of third part support kept it in third place. Wii already has great support, and as sales climb more developers will jump on board.

Nintendo will sell consoles for their games and a few choice third party games. But third party support will win or lose the console war. The largest part of the gaming market goes where the games are.

Every week, more developers join Nintendo's camp. It sounds like it'll be in a good position to more than hold its own.

32_Footsteps @ Aug 3rd 2006 12:52PM

I know why Jump Superstars isn't getting released outside of Japan (let's see...Naruto rights are split between Namco Bandai and Tomy, One Piece is all Namco Bandai, Dragon Ball is Atari/Infogrames, Capcom has JoJo's Bizarre Adventure, Konami has the rights to Yu-Gi-Oh, and that's just a portion of the manga in JS that's already licensed in the States for video game purposes). I'm just imagining how much stronger the DS lineup would look if JS and Daigasso had been released here.

Not that it bothers me. I already own both (so I'm proud to be two units in that 21 million cited above), I'd probably own Ouendan if Elite Beat Agents wasn't coming out in the States, and I'm just waiting for a release date for Jump Superstars 2. I'm hoping the import market grows to the point that companies start wising up and get even more aggressive with bringing solid properties to the US.

pixelator @ Aug 3rd 2006 12:55PM

"The DS had a weak launch but soon after it started getting a steady stream of AAA titles."

Actually, it took the DS about 10-12 months to start getting good games, and of all of them, it still ranks on Metacritic as having 2 AAA's & Gamerankings as having a whopping *3* AAA level titles. I wouldn't call that a 'steady stream'.

Scooby Doo @ Aug 3rd 2006 1:09PM

First-party seems like a very strong word in relation to Nintendo. They also have a large amount of games that are 2nd-Party. I think the reason you see so many games published by Nintendo is because they are more willing to take a risk and not only grant a license, but also help a development company push the product out the consumer.

Like Jeff said, this gives them a lot more control at the risk of losing more capital if a product fails. However Nintendo gets in bed with these companies and provides them with developer support and experience (and perhaps a little Big-Brother watching), so it's a calculated risk.

You will probably see a lot more of that with the Wii, especially considering the new control scheme. Tack on the fact that the President of Nintendo himself has stated that he wants small development companies to bring their ideas to the Big N and Nintendo will bend over backwards to help them develop and publish the game (the good ones anyway), and I wouldn't be surprised if over 50% of the Wii's titles in the first year aren't published by Nintendo.

It's not like the days of the N64 or GC where publishers avoided the system because it used a bad media format or didn't have enough market share to risk capital on a GC version. It seems more like Nintendo just wants a bigger piece of the pie and so publishes more games themselves rather than just getting just license revenues.

nootau @ Aug 3rd 2006 1:15PM

Of course this translates into Home console systems. The gamecube would have been an abject failure without nintendo (Metriod Prime, Mario Stuff, Eternal Darkness, Starfox Adventures, Zelda, etc). Instead the gamecube held its own against the Xbox, and only sold 3-4 million less world wide than the xbox, AND made a profit 95% (i think 100%) of the time! Microsoft, who sold more than the Gamecube, lost billions!

The reason why Itawa says that if the Wii doesnt sell more than the gamecube, it will be a failure is because the Wii's specific purpose is to get new gamers who havent played games before, etc while keeping their core demographic. So 21 million Wii's worldwide is a failure to Nintendo. But business wise, selling 21 million Wii's is still a success when you are making a profit on every console!

I find it amazing that people really think that the Gamecube was a failure. Many people loved their Gamecube, for first party games alone! 21 million people bought them! For the record, microsoft has only sold 24 million Xboxes as of 2006 (12.5% difference) at a loss..... http://en.wikipedia.org/wiki/Console_wars#World_wide_shipped_figures

Ian @ Aug 3rd 2006 1:15PM

What I'm wondering is why 3rd party developers even try. I mean they know they don't have much of a chance making money anyway and the format it self (cartridges) are more expensive then discs. When Nintendo sells over 10X as much as the second closest developer it must be hard to want to make games for it.

John @ Aug 3rd 2006 1:16PM

The fact that Nintendo has such a large supply of iconic mascots is a huge drawing for them. People see Mario or Link or Samus and they immediately associate them with quality games. IMHO, New Super Mario Bros was a mediocre game for a verity of reasons, yet I still bought it, played it through, and enjoyed it. If the EXACT same game was made but had brand new characters, it would have gotten only a small fraction of the attention that it got. I think its safe to say that Nintendo's mascots have kept Nintendo relevant all these years.

Christopher J. Ivan @ Aug 3rd 2006 1:27PM

Of course it's possible. Even though the Gamecube isn't as big a seller as the PS2 or xbox, take a look at the 1st party games available. Check out ebay for Mario Tennis or Mario Baseball, or even Mario Strikers. You'd be hard pressed to get a copy for under $30 (and if you can/have you're very lucky). My point is that Nintendo's 1st party games are so good that even though the GC is dying and no one is really playing it, Nintendo's 1st party games are still selling strong. The same thing will happen with the Wii.

common sense @ Aug 3rd 2006 1:31PM

NO18
Nintendo fans though should be the last people to say that the gc was not a failure. They say psp is a failure or even dead, wheras its shipped 17.5 million units, which is close to the ds 21 million sold to the ds, its nowhere near the loss of the gamecube of over 80 million units.

So nintendo fans have 2 options.
S
ay the psp is a raging success, and that the Gc was not a moderate success.

or say the psp is dead, and say the gamecube was never alive.

Then remeber that its because of the japanese bias that xbox didnt sell even a million units in japan. If japan wernt biased then gamecube would have been a collosal failure.

And please dont say games like eternal darkness is good when games like Silent hill teach it several lessons. And there was only 1 good mario game this genration, and strfox adventures!!!!!!! Boy oh boy nintendo fans need excuses.

Whats also funny is that silicon knights and rare are now part of the ms team.

gman @ Aug 3rd 2006 1:58PM

@ 13 ipodfanboy

the psp was never outselling the DS, even in north america or the UK. The psp has always been at at least an arms length by 100k and up.

32_Footsteps @ Aug 3rd 2006 1:59PM

CS, you know the difference between "sold" and "shipped", right? The PSP units gathering dust at the Circuit City by my house count as shipped. The DS Lites flying off the shelf there don't count as sold until John Q. Customer pays cold, hard cash for it.

Sony doesn't make their money until it actually gets sold. So it doesn't matter how many have shipped, just how many sold. Curious indeed why Sony doesn't say how many PSPs they've sold.

gman @ Aug 3rd 2006 2:06PM

common sense, there is a reason you have -1*

"Then remeber that its because of the japanese bias that xbox didnt sell even a million units in japan. If japan wernt biased then gamecube would have been a collosal failure."

So you're telling us to imagine that the Japanese were american...i think many things would be different there, if that were the case.

"Whats also funny is that silicon knights and rare are now part of the ms team."

Well m$ has a ton of money...so they buy whatever they like. Halo was a PC title that microsoft liked, so they bought the company and got their exclusive franchise...still hasn't helped them win over those "biased" japanese though. How DARE they not buy things that don't appeal to them! how dare they!

vidGuy @ Aug 3rd 2006 2:18PM

@ Bailama Pessima, #23

The Wii is said to have roughly twice to three times the hardware capabilities of the GameCube. Because many of the GameCube games were near XBOX quality, the Wii should be able to output about twice what the XBOX can, regardless of how you count it - visuals, phsyics, depth, size. It also helps that Nintendo is going with a dual layer DVD (likely in a proprietary software formatting to prevent piracy). This ups the game size from the 1.5GB GameCube disc to a little over 8GB per Wii disc.

Many of the games being shown right now are either not in their final form because developers didn't have full Wii hardware in their dev kits or are games that won't utilize much of the Wii's power.

With that said, the Wii will not be as powerful as the other two systems. Because the Wii is not outputing high def, though, it doesn't have to have amazing hardware to be capable of some comparable visuals in standard defintion. (The Wii will do 480p - progressive scan - but nothing more.)

Kirk @ Aug 3rd 2006 2:27PM

I love how people still bring up Rare leaving Nintendo as a BAD thing. Maybe Nintendo dropped them for a reason. Rare has YET to prove themselves as a quality third party with games released on consoles that are NOT the N64.

So sad that the Perfect Dark sequel wasnt on a Nintendo console...waaa. If you ask me Nintendo dodged a bullet when releasing Rare.

striderhayasa @ Aug 3rd 2006 3:42PM

@32 footsteps

I'm with you brother. I have Jump Superstars and I imported Bleach. Both are awesome. I'll be importing Jump Superstars 2 and Bleach 2. Great Stuff *

@ jeff

I agree 100 percent and have mentioned the virtues of superior first party development many times before. That is the reason that Nintendo commands the fan support and respect that it does. There is only one other company that has a portfolio of IPs that are as impressive....Sega.
But Sega's biggest problem was always stupid marketing or no marketing at all.
Great post!

Ryan @ Aug 3rd 2006 4:30PM

So many factors come into play in this November's upcoming console war. Nintendo has the legendary franchises, new way of playing games with the Wiimote, the virtual console, the very cheap price tag, and free online play. Sony has a yet-untested blue ray format, an incredibly expensive price tag, ports and sequels, and pretty much the same damn PS2 controller. Oh okay, and prettier graphics. As Link would say, 'Well EXCUUUUUSE me, Princess!"

When it comes to software, Nintendo beats Sony anyday. Hate it or not, all Nintendo has to do is say the word POKEMON and BAM! you have a million seller. Don't ever underestimate the buying power of kids. They may not have wallets, but they have parents that do. Parents aren't going to buy a $600 video game system for their kids, I assure that. And as far as adults, being a 23 year old student that supports himself, it's not about a money issue. I could buy a PS3 if I wanted one. The reason I don't want it is because I see the video gaming feature of the PS3 to be just as an accessory, rather than a main feature. Nintendo's Wii is specifically a video game system, and is built to be a gamer's dream (games from NES, SNES, Genesis, Turbo-Grafix 16, N64, maybe even Sega Saturn down the road) and being able to play Gamecube games to boot!

When I think of PS3, I can't help but think of it as a repeat of Sega's Saturn console. Expensive price point, difficult to develop for, and not really worth getting, save for a few of Sega's 1st party games. Ah well.

Also, with November 12th being the release date fo Gears of War for the XBOX360, it would be wise of Nintendo to release their console a week or two earlier than that, maybe end of october. Hallo-Wiin, anyone? =)

dotun.o @ Aug 3rd 2006 4:48PM

I don't know what your previous posts may have been, Jeff, but I see from your knowledgeable post why you've got 10 Stars :)
First off, I don't understand why the GCN is considered a failure - it is the only one that made a profit regardless of overall sales. Some estimates say losses only started when the price became $100, and they were single digit losses. This would mean 100 + 9 at most = $109 cost per unit; imagine the profits when the console sold for $150! As such, they more than made up for the minor losses per unit at $99 for every 1st party game sold.
People criticize Nintendo for relying on 1st party games almost exclusively, while Nintendo simply laughs all they way to the bank, for 1st party means all the profits are going to their pockets. The GCN is a superb refinement of the N64; for me the GCN is hands-down the best console ever when I consider size, stability and durability, price, and (mostly 1st party) games.
MS and Sony are too reliant on 3rd party and hardly any of theirs. Now, I've really got nothing against either of the 2 companies - they are not my favorites in their respective sectors, but I don't dislike them - but they've simply thrown money around to establish themselves and hardly influenced games themselves. Let's face it, even Sony is simply riding upon the success on the original Playstation:
They established a new console at a time Nintendo was becoming rather estranged from 3rd party companies (Nintendo's own fault though; but they still didn't take losses). They attracted 3rd parties with a console using CDs over carts, which had more space, were cheaper to develop for and consequently sold cheaper, plus of course the Sony name and influence. With 3rd parties locked in, the success simply carried over to the PS2 (sequels) and so far the PS3 is looking to continue with that. Without the PS1 heritage, the PS2 is quite an awful machine: compared to the GCN, it is graphically weaker, physically weaker, yet more expensive and still takes losses! It just screams shoddy engineering. If you ask me, Sony's greatest problems with the PS3 may be a console whose top-of-the-line specs could alienate the throng of small-scale developers they won over before, as well as the fact that all the specs so far only point towards one improved gaming feature - better graphics. If what the PS3 will offer will mostly be better-looking versions of the same games, even the most rabid fanboy will soon begin to ask questions to justify his purchase. Riding on the PS1 will only go so far. Nintendo seems the only console maker to have realized that graphical improvements no longer come in leaps and bounds and will only continue to marginally improve. The N64 era was the intro to console 3D, they fine-tuned the graphics in the GCN era, and immediately realized that would not be enough nex-gen.
Whether the Wii becomes next-gen leader waits to be seen (Nintendo doesn't actually need this, of course), but unless the console outrightly fails, Nintendo will comfortably keep making profits. And ultimately, that's what matters the most. Oh, and Mario and Zelda too; speaking of which, TWILIGHT PRINCESS!!! Great, now I made myself sad...

idioteraser @ Aug 3rd 2006 9:00PM

It took a while for the DS to catch on. After all a new interface etc coming out of left field caught everybody off guard. Heck Nintendo had kept it so secret they didn't have that many good games lined up. It was mostly tech demos. Heck even Nintendogs counts as tech demo. Brain Age was in Japan for over a year prior to coming to the states. The DS was a huge success in Japan long before the lite came about.

Elite Beat Agents was made for the US market. It has to due with the mere fact that localization of Ouendan would have ruined the Ouendan expierence.

Songs are a real pain in the ass to localize and keep it sounding good. Most songs sold in Japan by foreign bands are in languages the vast majority of the Japanese consumers cannot understand yet they still like gangbusters. American bands often have concerts in Japan that are sold out.

In America most foreign songs don't even sell over 25,000 copies. It's a niche. Ouendan could easily have bombed if localized. Keeping it fully in Japanese makes it more desirable to those that hear about it.

idioteraser @ Aug 3rd 2006 9:03PM

Actually dotun the cost for each gamecube was about 25-40 bucks. Most of the actual cost goes to the retailer.

Sony losses about 200 dollars each psp made since the manufactoring process costs about 250 bucks with componets shipping etc and at most sony gets about maybe 50 if they are lucky from the retailer.

dotun.o @ Aug 3rd 2006 9:48PM

@32 idioteraser, thanx; didn't know that specific, although technically, cost and profit are actually shared many ways (retailer, Nintendo, IBM, ATI, Matsushita Electronics)

radman @ Aug 5th 2006 3:56PM

I am a man who hasnt bought a third party game for a nintendo system. ever. And I couldnt tell you why. I have a ps2 and i love the third party games (mostly japanese).
But when it come to nintendo I cant push myself to buy castlevania no matter how many good reviews it got. I didnt even consider getting meteos until i heard it was published by nintendo. Im obsessed with devil may cry, but wouldn't even consider to buy it for wii.
When I finally convinced myself to buy sonic rush because it was supposed to be the best sonic game ever, I used my saved up 35 bucks to buy new super mario bros.

But the past is the past. before the holiday season I am making it my "new(gaming)years resolution to make my first-party third-party game ratio 1:1

SR @ Aug 5th 2006 10:54PM

#30

My sentiments exactly about the PS2. That system has nothing great going for it other than raving lunatic Sony fans. If people were going for a good gaming experience, they would have bought a Dreamcast. Many Dreamcast games even look better than a good number of PS2 games. Sure some PS2 games look very good, but only those where the developers invested large amounts of time and energy to optimize their code for that bitch of a console to program for. I'd say that the field of gaming would have advanced a lot further had people bought either the XBox or GCN in raving lunatic numbers like they did the PS2 because then developers would have flocked to that console and they would have concentrated their efforts on real innovation instead of worrying about how to get the POS cell processor and graphics synthesizer to give good results.