Cheap Games a Risk To the Industry, Says Nintendo President

Recent comments from Nintendo president Reggie Fils-Aime indicate that the company is worried about the effect of inexpensive mobile games on the industry. "'Angry Birds is a great piece of experience,' he said, 'but that is one compared to thousands of other pieces of content that for one or two dollars I think create a mentality for the consumer that a piece of gaming content should only be $2.' Taking one last dig at the mobile competition, Fils-Aime added that he 'think[s] some of those games are actually overpriced at $1 or $2, but that's a different story.'" While low-priced mobile games might not be good for Nintendo, it can still work out well for indie developers. 2DBoy, makers of World of Goo, released some statistics about launching the iPad version of the game.

Comments

Competition

[bbqsrc]

It's hard to compete with value for money, isn't it Nintendo?

Re:Competition

[Anonymous Coward]

Not really. Nintendo doesn't generally have a problem competing on value for money, that why the Wii can compete with the PS3 and XBox, and why the DS is the market leader. Better value for money on mobile gaming is frankly the exception, not the rule

Angry Birds is the exception not the rule, and Nintendo knows a thing or three about the gaming industry, including that they remember the great video game crash of '84, and more importantly what caused it. That has little to do with value for money or even competition, but more about knowing all to well what happens when a market gets flooded by cheap, shitty products.

The funny part is that it was Nintendo who came around and resurrected the North American market by locking down their platform and controlling who can release what for it, very much like Apple is doing with their app store. Some people learn from the mistakes of the past, others don't.

Re:Competition

[Lilith's Heart-shape]

Nintendo knows a thing or three about the gaming industry, including that they remember the great video game crash of '84, and more importantly what caused it.

Then why do they keep slapping their seal of approval on blatant shovelware? Oh, that's right: it makes them money.

More like

[Anonymous Coward]

Cheap games a risk to nintendo profits.

I'm so so so so so tired of being fed this crap by rich people that we need to prop them up in order to support industry and economies.

Sounds familiar....

[SuricouRaven]

In related news, youtube is a threat to the television industry, and people who are so insolent as to make and release their own music for free are a threat to the music industry.

Marketing / planning is a threat to people.

[unity100]

Planning/marketing departments of corporations are filled with mba grads who have been taught to shove a product to public from the maximum price they think they can pay. and hence, depending on their self-judgment, they decide what the selling price of any product should be. since all corporations employ the same mindset, all look to each other, adopt similar price points, and then start thinking that that is a correct price point.

products are produced/sold up to that point. more products are not produced and sold, because that would decrease the 'optimum' point. naturally, as a result, as you can understand too, the 'mass production/competition aspects of capitalism, goes out of the door.

what we are seeing here, is the retort of a corporate man, who is used to corporations determining the price points (even unknowingly) instead of public. had there not been internet, this industry would - if we take gaming for example - just continue forcing a 'reality' which says that a 'decent' game should be worth $40-60. thanks to internet, even if the industry doesnt want to, competition enters the scene. corporate world, naturally, is unable to understand or stomach the situation and is threatened.

however, while gamers can get competition thanks to internet, the situation is to the contrary in almost all other sectors, ranging from auto industry to healthcare. corporations are determining what gets sold from what price range, and because majority of the corps do it, after a time it becomes the 'industry norm'.

Re:Marketing / planning is a threat to people.

[dkleinsc]

Another way of describing the same problem: Assuming no government interference, when there are only a few sellers in a market, prices become artificially high, and when there's only 1 seller in the market in question, prices become higher still. This is fairly well-established microeconomics, read all about oligopoly and monopoly to learn the details. An example of this is that an major factor in the cost of an airplane ticket to a particular location is how many other airlines fly to the same airport (or in some cases close enough to the same airport to be easily reachable by ground transportation).

Similarly, if there's only a few or only 1 buyer in a market, the prices end up artificially low. This condition is oligopsony or monopsony. A common place where this happens is the US corn market, where most industrial farmers only have a couple of places they can sell their crop, so the price ends up artificially low, so many of them depend on agricultural subsidies to make ends meet.

The basic issue in those kinds of markets is that the established players will do everything they can to prevent another entrant into the marketplace (because that will lower their profit margin), and are effectively in a tacit agreement that having a price higher or lower than it should really be is more profitable than actually competing for market share based on price.

Re:Marketing / planning is a threat to people.

[Eil]

Planning/marketing departments of corporations are filled with mba grads who have been taught to shove a product to public from the maximum price they think they can pay. and hence, depending on their self-judgment, they decide what the selling price of any product should be.

So companies do their homework to evaluate market conditions and develop a product strategy before selling something. And that's bad, how?

since all corporations employ the same mindset

There's a factually incorrect statement if I ever saw one. Yes, *many* corporations tend to organize, manage, and run themselves using similar methodologies but ultimately no two companies are exactly alike. (And by the way, not all businesses are corporations.) Would you say Apple and Dell employ the same mindset? As corporations, they're structured similarly and they both make money the same way. They operate in the same markets, probably even have similar suppliers, partners, and business relationships. But you can't deny that their "mindsets" (strategies) are remarkably different.

all look to each other, adopt similar price points, and then start thinking that that is a correct price point.

There is no such thing as a "correct" price point. The price *paid* for a given item is whatever the buyer decides the item is worth to them. The power ultimately lies with the consumer to decide whether or not he or she will buy said item for the offered price. Sometimes negotiation is possible, sometimes not. Granted, there are things in civilized society that we must pay for and have little say in its price (gasoline to get to work, electricity and gas for heating our homes). But if you want to grumble about that $60 video game, it does no good to be doing it whilst handing your credit card to the cashier.

products are produced/sold up to that point. more products are not produced and sold, because that would decrease the 'optimum' point. naturally, as a result, as you can understand too, the 'mass production/competition aspects of capitalism, goes out of the door.

No, it is not anti-capitalist or anti-competitive for a company to control its own supply chain.

what we are seeing here, is the retort of a corporate man, who is used to corporations determining the price points (even unknowingly) instead of public. had there not been internet, this industry would - if we take gaming for example - just continue forcing a 'reality' which says that a 'decent' game should be worth $40-60. thanks to internet, even if the industry doesnt want to, competition enters the scene. corporate world, naturally, is unable to understand or stomach the situation and is threatened.

Yeah, Fils-Aime is being a douchebag here. But consumers still bought enough games to make the video game industry grow to overtake Hollywood in terms of revenue. What's interesting is that when I was a gamer (mid 90's, 16-bit era), new games were $40-$60 then too. So the current generation of gamers is paying something like 37% less than I was, and still whining about it.

Translation

[Opportunist]

We cannot compete with that! 2 bucks doesn't even cover the overhead for our beancounter and legal department that the games have to pull besides their own weight! Plus, state of the art graphics and animations are expensive, and since our games are hardly innovative in any way (seriously, usually we just improve graphics and increase the version counter), we cannot compete with games that rely on innovative gameplay and new, fresh ideas which are cheap but risky!

Is there some way we can outlaw those cheapskates?

Re:Translation

[Verunks]

you are kind of wrong, the problem here is that nintendo is in the same casual gamer market as cheap games, most wii and ds titles have graphics and animations from 10 years ago, so they're actually the same or worse than these 2$ games.
So these cheap games won't hurt sales of the elder scroll skyrim or battlefield 3 but it will be a problem for nintendogs, petz and shit like that

Re:Translation

[smash]

You're trolling, right? Most nintendo consoles are sold on the strength of super mario XXIV. Nintendo is no more or less guilty of sequel-itis and no more or less innovative than sony or microsoft. At least sony/microsoft have traditionally been a fuckload more open to third party developers actually being granted development licenses for their hardware.

Re:Translation

[ookaze]

As always, I see most Slashdot representative comments being completely wrong when it comes to Nintendo.
It seems like some people wait for every news on Nintendo to spew all the ire and BS that keep them enraged inside.

I'm still wondering where people are seeing anything about "competing". Yet, a lot of posts act like he talked about competing with these mobile devices.

Fils-Aime, who is NOT CEO of Nintendo (which should give a clue as to how misleading this news is) is talking about the content, the games, and people's perception of value on games. It has nothing to do with graphics or animations or whatever problem people have with Nintendo, it's about content and its value to the consumer. He's saying it's dangerous for the industry to make people believe that whatever the content in a game, it has a very low value (and so a very low price).
He doesn't even say it's threatening anyone right now, he says its a possible risk.

People on Slashdot, as with the DS or the Wii (or even the first iPod), are already talking like 3DS is dead on arrival and Nintendo is doomed (as always).
Yet, it's for opposite reasons. $2 games would kill most HD console games types faster than any Wii or DS ones.

I think what Reggie said is more a warning to 3rd parties. We see lots of 3rd parties porting their already (or not) profitable games to mobile platforms, for a very cheap price, and sometimes it's exactly the same content. The problem is that a consumer who paid $40-$70 for a game, that sees the same one for $5 on his mobile, will not really be happy about ever paying the high price again. And if lots of them come to the same realization, you will see mostly western 3rd parties die left and right (worse than what we see today). Because most western 3rd party games (and lots of eastern ones too) rely on selling a lot at launch, and then quickly die. If they don't sell a lot at launch, you see the games with quick slashed prices. 3rd parties can do that because the cost of the game is already taken care of by the other platforms, but there are very few people (the hardcore) that will want to pay so much more to have the privilege of playing the game day 1.

Nintendo doesn't have this problem as their games sell with veeery long tail. Basically, 3rd parties (the big one) are shooting themselves in the foot if they go on, and less 3rd parties alive to make games for Nintendo platforms means less revenue for Nintendo.
Apart from that, Reggie is not really complaining, not yet at least, as even the DS is right now more threatened by the 3DS than by any mobile device with games.
They're not in direct competition like computer games (like flash games and all that existed for a long time) are not competing directly with console games (except for devs resources). Or that would mean consoles are winning...

News at eleven

[Gaygirlie]

Big corp. executive not happy with decline of prices, blames competitors.

Headline was misleading

[uofitorn]

When I read the headline I thought "Hmm good. Nintendo might be doing something about all the bad shovelware they grant a license to. Browse your local game store. For every Twilight Princess, Dead Space, and Super Mario Galaxy 2, there are dozens more cheap movie knock-offs littering the shelves like "Hannah Montana The Movie", "Pimp My Ride", and "Big Momma's House 2 -- Even Larger" Guess I was wrong.

Boohoo, competition.

[Arancaytar]

For being so staunchly capitalist, big corporations sure hate the free market. Huh.

Re:Boohoo, competition.

[angus77]

Capitalism != Free Market

The free market makes capitalists have to work harder for their profits. They'd much rather have the lazy security of a monopoly.

Re:Boohoo, competition.

[the_womble]

To paraphrase Adam Smith, businesses want a free market for everyone except themselves.

Re:This is good

[nEoN nOoDlE]

I don't know if you've seen what's on the app store, but it's not games which take risks. There's a 1000 variations on Angry Birds, Doodle Jump and Bejeweled. I wouldn't call something like Fruit Ninja a risky proposition in terms of game design. Fact is, you need a fairly decent budget in order to make some really compelling content. iPhone games are fun for anywhere from a few minutes to a couple hours, but I've played a lot of iPhone games and none have come close to being a truly great gaming experience. Low budgets and really low priced games just mean that people will be making short arcade games that can be played for 30 seconds at a time and will have a limited number of characters, backgrounds and animations because that looks to be the golden ratio of where it's worth it for a developer to make a $.99 game and for it to sell enough copies to people who want a game to play on the toilet.

Won't be an issue for disc games

[mentil]

Big-name games that cost $10 million to develop and have $25 million marketing budgets aren't going to be $1 any time soon, the market just isn't large enough to sell 50 million+ copies, at any price. Only 50 million Xbox 360s have been sold, for reference.

The console makers set the licensing fee that publishers pay per disc, AFAIK it's a flat fee, so disc games will never be $1. Do you think Wal-Mart would bother stocking $1 games? They might set up a RedBox-style machine that spits out discs, but the shelf space used for the traditional route would no longer be feasible.

Publishers are running scared because they know the future is in digital distribution, and precedent is being set, while they're still on the fence twiddling their thumbs, for $1 games being the norm. This is problematic as $1 is a suboptimal price for many games, especially high-quality games with a massive advertising budget. The main reason it 'works' in the mobile phone space is due to the mechanics of toplists and how they're self-influencing. Console makers could halt this simply by eliminating the ability for end users to browse and download games via toplists. They could be replaced by alternative, possibly more complex lists.

For downloadable games with low (under $200k) budgets, it's alot iffier if a $1 standard is bad or not, as the market is definitely theoretically large enough to make it sustainable. When cellphones start coming out with analog sticks and buttons (like the PSP phone) and still have $1 games then I might start worrying.

Re:This is good

[bemymonkey]

backgrounds and animations because that looks to be the golden ratio of where it's worth it for a developer to make a $.99 game and for it to sell enough copies to people who want a game to play on the toilet.

Isn't that exactly where the money's at? People that work all day and have friends don't have time to play games except on the toilet... :(

Nintendo and pricing

[RogueyWon]

Nintendo seems to have developed a pricing problem all of its own of late, which has nothing to do with $2 phone games. I'm pretty sure this has contributed to Nintendo's current profits slump, at a time when the company should be using its large installed base for the Wii to really rake off the cash.

The company just seems to have some really, really odd ideas of what a game should cost. It's most notable in the Wii's online store, where in the UK, direct, unmodified ports of 25 year old arcade games (many of which are hardly timeless classics) often tend to be priced in the £6-£8 range. Things are mildly better in the US, I believe, but the prices seem out of whack.

I absolutely don't want to hold up the Xbox Live Arcade and Playstation Network Store as paragons of value for money, but they certainly offer a better deal than Nintendo's online shop (and have much more consumer-friendly terms of service as well, which link games to an account rather than a console). Compared to the classic game packs you can pick up on Steam and other PC services such as GOG, Nintendo's pricing looks positively extortionate. If Reggie wants to talk about games that would be over-priced at $2, he should look at the stuff like Exed Exes and Commando in his own online store - which he's trying to sell for four times that price.

Things aren't much better on the boxed-game front either. As we get further into this console generation, the general quality gap between Wii games and games for the other consoles and the PC is widening. There are a few honorable exceptions, but most of the Wii games released these days tend to feel short and shallow. And yet despite this, and despite their increasingly painful graphical shortcomings (with most Wii games still struggling to match the best the PS2 had to offer), the games tend to be priced at roughly the same level as games for other platforms (usually a few $ behind the PS3/360 games and a few $ above the PC games).

If I were Nintendo, faced with the dramatic profits slump they've seen, I'd be looking to boost volumes of sales by pitching more boxed games at the more realistic $30 (or £20 in the UK) price-point and slashing the prices of titles in the online store. If you sell more games, you keep people using their Wiis. And if you keep people using their Wiis, they will buy more games for it. Sony managed to achieve that virtuous circle on the PS2, but despite their installed base lead, Nintendo haven't managed it this generation.

if good games are $2

[smash]

... then you're going to need to provide something actually special for the cost of a console game aren't you? I have no problems paying a decent sum of money for something that will keep me entertained for say $2-5/hr.

However if your sole justification for charging 50-100 bucks per game is "oooh look at teh shiny!" and nothing else then kindly fucking die already.

cheers
gamers everywhere

$40 worth of risk

[RoverDaddy]

Even if it's true that the console game will give 40 times the value of the $1 mobile game, that can be seen as an enormous leap of faith to ask the consumer to make. What if I decide in the first 30 minutes I don't like the game? Can I take it back to Gamestop and get my money back? Fat chance. If I download a $1 game and decide I don't like it, then meh.
Considering how many $40 or $50 Wii games my kids have that never get played again, I can see how people can become leery of that model.

What?

[adamofgreyskull]

This is just so off the wall I don't even.

Angry Birds is a simple concept with some great levels and compelling replay value. Would I pay $40 for it? No. However, conversely, I probably wouldn't pay even $2 for some of the "mini-game compilation" titles that have been released for the Wii (having been burned by one such abortion, priced at GB£15), nor would I pay $2 for any of the hastily hacked together "Dogz" clones for the DS. I love those platforms, but some of the crapware that's been released for them should give this man pause for thought before throwing around insults about "cheap" games.

There's a market for AAA US$40-50 titles and a market for US$1-10 casual/indie titles. These are two separate things, and complement each other. What he's probably worried about is that these $1-10 casual/indie titles will compete with similarly priced re-releases of 1st/2nd generation console titles on WiiWare/DS like Super Marios Bros., Sonic the Hedgehog, Ecco the Dolphin etc.. Now, do I really want to play Sonic on my Wii or do I want to try out VVVVVV or Chime or Clickr on PC?

Now, if you price your SDK and impose restrictions in such a way as to exclude or discourage casual, indie or hobbyist developers then don't be surprised when they turn to other platforms with lower barriers to entry...

He's right.

[DavidDM]

Slashdot honestly doesn't seem to get content creation or business sometimes. By constantly lowering prices and conditioning customers to accept them, you actually stifle innovation and drive out businesses. In the bricks and mortar world this is what Wal-mart does, and they've managed to destroy and dominate markets while offering less overall quality and selection. For media, there is less barrier to entry, but the sheer number of crapware games competing at artificially low pricepoints are eventually going to start killing a lot of midrange developers as they simply can't make enough money in a reasonable timeframe. What the low price does is benefit AGGREGATORS not developers, who take a long tail approach and try and get tremendous amounts of content to make pennies on over time. And, of course there are no end of eager lemmings to help push themselves off the cliff. The low price points may make Apple and Steam rich, but not devs.

Re:He's right.

[Just Some Guy]

And you honestly don't seem to get economics. What you've described is the natural order of any industry: young upstarts come in and disrupt the older establishments by outcompeting on price or quality. The biggest difference here is that the barrier to entry is so low. I bet a lot of smart auto mechanics have had great ideas for a faster or cheaper or safer or more economical car, but don't have access to the capital to built it. The investment required to build a new game is almost zero by comparison, usually at most the cost of buying an SDK for the desired target platform. If you can make it a web-based game, you can write it in Notepad / Text Editor / Emacs / Vim, upload it to a free PHP host, throw on some Google Ads, and start making a trickle of pennies for no monetary investment at all.

If my kid writes an iPhone game after school, what economic or moral obligation to they have to release it for a price you'd consider fair and non-destructive? You claim that these games are sold at artificially low prices, then complain that they should be sold for artificially high prices. How about we let the market decide what the proper price for a video game is?

In further news

[David Gerard]

In further news, home fucking is killing prostitution.