Nintendo's Switch: Will the Market Take the Bait?

Now we know a little bit more about Nintendo's new console, but really very little – especially when we're only a few months away from the release date. We know it's called the Switch, it's capable of playing as a portable and hooked up to your TV, it uses an Nvidia Tegra chip, and it's going to be released in March 2017. Officially, the only game we know that will be on the Switch from Nintendo is Zelda: Breath of the Wild. Most of what we know comes from this video that Nintendo released a while ago.

There's a lot of excitement over a new console from Nintendo, and fans are already salivating. We know there are a few million hardcore Nintendo fans who will buy pretty much anything the company releases, no matter what issues it may have. The real question here is can Nintendo find a massive audience for this new console – like the 100 million who bought the Wii – or at least one on the scale of the Xbox One (25 million or so so far) or the PlayStation 4 (45 million or so so far)? Or are we looking at another failure of Wii U proportions, with lifetime sales of 13 million to make it Nintendo's worst console ever?

My best guess at this point is that the Nintendo Switch will end up far closer to the Wii U in sales than it will to the Wii's sales. Why am I skeptical? Several reasons, including the software, Nintendo's continuing difficulty in appealing to modern gamers, the overall value of the system – and the fact that it's essentially a mobile device. Let's deal with each one of these reasons, in reverse order.

How Many Pockets Do You Have?

I think Nintendo has made a fundamental error here in trying to make its home console more successful by blending it with their more successful handheld consoles. What they failed to understand is that their handheld lines have already been on a downward slope – the 3DS line is selling in far smaller numbers than the DS line. Why? Smartphones, of course. You can now play terrific games on your smartphone, and nearly everyone who would be part of the target audience for the Switch already has a smartphone. You're always going to take your smartphone with you wherever you go. Would you take a Switch? Sometimes. The bigger question is, why would you even buy a Switch in the first place when you have a better game playing device in your pocket already?

Top-end smartphones will be better than the Switch. They have better screens, more RAM (doubtless), and a better CPU/GPU than a Tegra. If not now, then they certainly will in the next yearly update cycle. You can already put your smartphone games up on your TV (via Chromecast or Airplay). And now you're going to get Nintendo characters on your smartphone... so is a Switch really worth hundreds of dollars to play a few different games? No, I don't think it will be for most people.

What's the Value of a Switch?

It's hard to say until Nintendo announces the price, but you have to figure if the price was going to be low they would have announced this early. Delaying the price announcement means a chance to build up more anticipation, and perhaps less resistance if the price is high. Expect a minimum of $249, and $299 would not be a big surprise. Since it's Nintendo, even higher is possible – they really hate to lose money on every sale. Say the Switch is $299 – which is the same as the basic price for the Xbox One and the PS4. The Switch will certainly be less powerful than either of those consoles, but it will be portable. Is that really enough to sell the Switch?

The overall value of the console has to include what software is available. There will certainly be some Nintendo exclusives, but we don't know how many, how often we'll see them, or how good they are. As for software that you see on other consoles, that's unlikely except for one or two experiments. The Switch is going to be a non-trivial port for games from other consoles. It's likely the Switch will never have most of the popular console games that appear on Xbox One or PS4, so if you're interested in those the Switch becomes a second console to buy. That's a tougher sell, and gives it less value.

Nintendo Doesn't Do Internet Well

One of Nintendo's biggest problems in appealing to a modern gaming audience is that they still don't understand the Internet, multiplayer online gaming, and related issues. There's no reason to believe they'll have this any more figured out with the Switch. Maybe we'll see Friend Codes. Even if we don't see those again, there's not likely to be any great online multiplayer games for the Switch – and those are some of the very most popular games.

The Lack of Compelling Switch Software

Wait, you cry, Nintendo has already announced Zelda: Breath of the Wild for the Switch, and it looks great! True, except now rumor has it that the game may not be ready at launch, but perhaps months after that. While we saw things that looked like Skyrim and NBA 2K17 in the Switch video, Bethesda and TakeTwo have refused to confirm they are releasing those titles (or any titles!) for the Switch. This does not induce confidence in the software lineup.

Ideally Nintendo would be releasing major titles (using the best Nintendo characters) for the Switch every couple of months. If they were going to, they'd have already announced that. Nintendo has struggled for years with getting major new software out for HD screens, with constant delays. It's great that they want to release excellent software, but on a corporate level they don't seem to be able to figure out how to do that on a regular schedule. Other major game publishers have mostly figured this out, but Nintendo seems to be incapable of doing that – and honestly, most of the big titles from other publishers are significantly more complex than most of Nintendo's games.

The Switch is going to be ARM-based (using a Tegra CPU), so it's essentially going to be running an Android variation I'd expect. Which means porting from mobile titles should be easy – if Nintendo allows it. Though then you'd just have a title you can already get on a mobile device you already own (your smartphone), so this wouldn't seem to provide much of an incentive to buy the hardware.

Summary

It's true we haven't seen the hardware specs, the software lineup, or the price for the Switch yet. I submit, though, that while those will all be interesting, none of them are sufficient to guarantee the Switch sells in big numbers. Honestly, you'd think if any of those three things were really impressive, Nintendo would have been touting them for months, instead of waiting until the very last minute to make them public.

Perhaps Nintendo has finally figured out that mobile is the future for them, but they were so far along this hardware path they had to continue. Or maybe they really figure the Switch has a chance to generate Wii-like sales. That ship has sailed, though. With literally billions of good gameplaying devices in the hands of people around the world, there's no way to create a hardware market that's even a fraction of that size. With Pokemon GO, we've seen where even a pretty limited title (the game initially didn't have much to it), we could see 500 million downloads and over $600 million in revenue in a couple of months. That shows the power of great IP on the right platform with the right monetization – and it's not even as great a game as it could be (though it's becoming better).

Someday, perhaps, Nintendo will be able to realize its potential on mobile platforms. The Switch, though, just isn't going to be it. Even if the Switch is a huge hit, selling 50 million units in a couple of years, that hardware and all of its software wouldn't generate as much profit as Pokemon GO will in one year. That's the real switch Nintendo should be making – the switch to creating mobile games.

Super Mario Run Pricing Set: Will It Fly?

Nintendo has finally announced when its highly anticipated iOS game Super Mario Run will ship: December 15. And while the game will let you play for free, that apparently only applies to a limited part of the game (though you will be able to check out all three game modes, apparently). You can unlock the entire game for the princely sum of $9.99.

Wow.

Now, if there's any company whose brands could command a high premium price for a mobile game, it would be Nintendo. But $10 for an endless runner game? That seems like a big ask, when there are plenty of free runners out there. Sure, it's a big discount from a 3DS game at $30, but that's not the point of comparison that most mobile gamers will be making. They'll be looking at free games, or maybe something like Minecraft Pocket Edition at $5.99 -- which seems like it packs in far more value than an endless runner, no matter the IP doing the running.

 Of course, we don't actually know how much content there is that you'll get for your $10, nor how many hours of play you'd expect to get. Perhaps the game is a really good value at $10, delivering dozens of hours of game play. That seems unlikely, though, given the genre. It's not like it's a deep strategy game, or an RPG, or even a sophisticated platformer. What we saw demoed looked pretty simple, and not enough to justify the price.

Perhaps Nintendo can indeed command that price, and sell millions of units at $10. That would be great for the industry -- with Nintendo leading the way, we could make premium mobile games a real thing and not just a fluke. Let's hope that is what occurs.

I'm doubtful, though, because I think mobile gamers are less concerned about the brand and more about value. I think Nintendo will easily get millions of downloads, but getting people to drop $10 will be much, much harder. I don't think the problem is $10 per se, though there are few apps of any kind that demand that. It's a value question -- do you really get your money's worth? More than 20 million people have paid for Minecraft Pocket Edition at $5.99, so it can be done. But compare what you get for $6 to what Nintendo is offering for $10, and I don't think Nintendo compares very well.

Now, one of the many great advantages of digital distribution is that price changes are easy. Nintendo could (and should!) experiment with its price point to find the optimum level -- the point at which Nintendo maximizes its revenue for Super Mario Run. (In other words, selling 100,000 units at $10 each is not as good as selling 20 million units at $1 each.) That optimum level may be $10, or it may be $1, or $5. Only testing would reveal that. That said, I'm doubtful Nintendo will actually test various prices, because that's something they are not used to at all. I'd like to be pleasantly surprised, though.

While the upside for the $9.99 price is that it may help others in the mobile game business charge more for premium games, there's also a possible downside: Nintendo could create a great deal of ill will towards themselves and their brands if the value isn't there. The company's first mobile "game" Miitomo was a pretty clear failure, though it really wasn't a game per se (another mistake -- why should a game company release something that isn't a game, especially as their first foray into mobile games?). Nintendo might be hurting their future titles like Animal Crossing and Fire Emblem (both announced for mobile, coming sometime next year) if Super Mario Run is a big disappointment.

We'll see. I think Nintendo is trying to create mobile games that are very different from its handheld console games, to avoid cutting into those sales. That's a remarkably shortsighted idea, though. Here's a simple piece of data that should convince you why that is: Pokemon GO has been downloaded or 500 million times. That's an order of magnitude more than any Pokemon game, ever, and more than all of them combined by several times. So why in hell wouldn't Nintendo give up low-margin hardware and just make killer mobile games (with a very high margin)  that can attract an audience at least ten times larger than any they've ever had?

OK, hedge your bets a bit and do one or two mobile games first to demonstrate you can actually do that well before you give up on hardware. I can see that. But Nintendo's Switch is never going to sell more than a tiny fraction of the number of smartphones out there, and therefore any Switch game will be microscopic in sales compared to a good mobile game. There are no multiple mobile games that generate over a billion dollars a year in revenue with a profit margin greater than 50%. No Nintendo game has ever generated that sort of profit, and few indeed have ever created that kind of revenue.

It's going to be a very interesting product launch to watch, and come January we should have some idea of how successful it is.

The Death of Game Reviews

While there's no attending physician, and no generally accepted criteria for a cultural phenomenon subsiding into irrelevance, I think we can call it here and now: Game Reviews are dead, at least in terms of cultural influence. Bethesda Softworks' decision this week to stop providing advance copies of games to reviewers signals that reviews, long diminishing in effect, have crossed over into complete uselessness. Or, at least game reviews in the classic sense of being written by professional reviewers for professional web sites or magazines.

Here's what Bethesda said in their press release:

"At Bethesda, we value media reviews. We read them. We watch them. We try to learn from them when they offer critique. And we understand their value to our players.

Earlier this year we released DOOM. We sent review copies to arrive the day before launch, which led to speculation about the quality of the game. Since then DOOM has emerged as a critical and commercial hit, and is now one of the highest-rated shooters of the past few years.

With the upcoming launches of Skyrim Special Edition and Dishonored 2, we will continue our policy of sending media review copies one day before release. While we will continue to work with media, streamers, and YouTubers to support their coverage – both before and after release – we want everyone, including those in the media, to experience our games at the same time.

We also understand that some of you want to read reviews before you make your decision, and if that’s the case we encourage you to wait for your favorite reviewers to share their thoughts."

What's happened to professional game reviews is the rise of social media, the growth of reviews in online stores, the increasing popularity of public betas, and overwhelmingly the huge influence that livestreamers and YouTubers wield. People don't look to professional game reviews to make their buying decisions – they ask their friends, they look at what people have said online, and most of all they look for YouTube videos or a livestream where they can see the actual gameplay and listen to someon's commentary about the game.

Even though reviews don't seem to affect sales so much any more, why would Bethesda stop providing advance copies of games for review? It's very simple: Pre-orders. Bad reviews could hurt pre-orders. Heck, some game writers are even calling for people to stop pre-ordering, because it encourages bad games. While that may or may not be true, what is true is that once you've purchased a console game, you're not really able to get your money back unless you return it unopened. Which is why we see pre-order bonuses becoming more popular – publishers want to lock in your purchase by offering some goodies you can't get if you wait until the game comes out. Or until reviewers have had a chance to tell you if the game is any good or not.

Yes, that's the way the business has worked for decades. True, if a publisher ships a bad game there's going to be some blow back – reduced sales on the next title, perhaps. But it's usually not very substantial compared to all of those lovely sales that aren't refundable. And as game budgets rise, risk rises too – giving publishers even more reason to want to lock in your dollars before you even have a chance to know if you like the game or not.

Part of the reason free-to-play games have done so well is that they turn this model on its head. You don't pay anything unless you've found the game worth playing, and want to get more out of the game by spending some money. Now, the problem for developers is that all too often there aren't enough paying players to make the game profitable.

Ultimately the problem gets resolved, as good quality games rise to profitability and low-quality ones can kill off a franchise or even a developer. Players now have plenty of fine gaming choices all around, and if they really feel they are getting a raw deal by pre-ordering they'll stop.

Still, the professional game review matters very little these days – unless you can deliver it engagingly during a livestream or in a cleverly crafted video. It's bad news for traditional game reviews, but good news for streamers and YouTubers.  

Value Is The Key to In-App Purchases

Many games are free-to-play these days -- the majority of mobile titles are F2P, some of the leading PC games are F2P, and now even some console games. Usually, that means the games monetize through in-app purchasing (the sale of virtual goods or services inside of the game, usually abbreviated IAP) or advertising. Surveys show that many gamers feel in-app purchases detract from their enjoyment of the game -- according to an Ipsos survey, 47% of UK gamers feel that way. Why? And is this a problem that game designers need to tackle, or game marketers?

It's useful to take a look at some examples of games with in-app purchases that are doing very well, like League of Legends, World of Tanks, Clash of Clans, and others. Those games don't have a problem with players; their players seem pretty happy to have the opportunity to purchase things for the game. (The image of DJ Sona above from League of Legends is an example of an extremely popular in-app purchase.) Those who don't buy in-app purchases enjoy playing the game, or at least don't seem put off by the fact that you can buy things in the game. At least, we can infer that from the tens of millions of people playing these games on a regular basis.

What is it about some games that makes IAP annoying, and tolerable or even appreciated in other games? There are two factors, I believe. One is the game design: Games that annoy you with purchase requests (intruding during the game play), games that require purchases to speed up play (time-gating), games that let you buy your way to victory (though this depends on the culture, as its a desirable thing in China), those types of game design make IAP into something annoying. The other factor is value: Games that offer a good value in IAP don't annoy the players.

The important part of this value determination is that what constitutes value comes from the player's point of view, not the designer or marketer's idea. The fact that you can buy 100 game tokens for only $7 instead of $20 doesn't mean it's a good value to the player. Sure, maybe it's a deal compared to is usually charged for game tokens, but that may not connect directly to value in the mind of the player. What can you get for those game tokens? Are they readily usable for things that players definitely find useful or enjoyable? The determination of value comes from using a player's point of view to look at things.

You may not really know what is valuable to players at the outset of the game design, but game testing should reveal that if you ask the right questions. You could even run some tests with different groups of players to see what they like, and what they think is a good deal for an in-app purchase. Sure, start with some assumptions, but test them out and verify them. You can also test the effectiveness of different price points, too.

The ideal F2P game lets you have fun with the free version, for as much time as you like. Then it allows you to pay something to increase your enjoyment, but in a way that doesn't leave you feeling annoyed if you don't buy it. Doing this well requires both good game design and good marketing input.

The 4K HDR Console Wars Begin

Yes, 4K/UHD (Ultra High Definition) and HDR (High Dynamic Range) consoles are here, and the marketing battle is beginning. One major player has left the battle, and a major new weapon is yet to arrive, but it already looms large in strategy calculations. Let's survey the order of battle, and try to predict the outcome.

First, Microsoft introduced the Xbox One S, a smaller, lighter Xbox One that retails for $299 in its basic version. It's also about 15% more powerful than the original Xbox One; supports HDR output for games; supports 4K/UHD output for streaming video; and includes a 4K/UHD Blu-Ray player. The list of games with HDR output is short right now (Forza Horizon 3, Gears of War 4, NBA 2K17, and Scalebound) but you can bet it will grow. HDR support is usually quite easy to add, according to developers. The console will not support 4K gaming.

Now Sony has introduced its competitor: the PlayStation 4 Pro, with over twice the power of a PS4 (4.2 teraflops as opposed to 1.8 teraflops), support for 4K/UHD and HDR output for games as well as streaming video, for $399. Oddly, while the PS4 Pro includes a Blu-ray player, it is not a 4K/UHD Blu-ray player. The PS4 Pro, which has a 1 TB hard drive, will ship November 10. Meanwhile, the PS4 has been revised to the PS4 Slim, a smaller and lighter box with essentially the same capabilities as a PS4, retailing for $299 and shipping September 15.

Just to make matters more interesting, Sony also announced that a firmware patch would be pushed out to ALL existing PS4's that will allow them to output HDR to suitable TVs – that is, if you have any PS4 and a 4K/UHD HDR TV (virtually all 4K/UHD TVs support HDR), you'll be able to run games in HDR mode – provided the publisher of the game has provided a patch for that capability. Supposedly that's pretty easy to do for most games, but we'll see.

Looming on the horizon for launch in the fall of 2017 is Microsoft's Xbox 'Scorpio', a far more powerful Xbox One that has 6 teraflops of processing power. That should support true 4K gaming output. As of now, the exact specs and price are unknown – we probably won't know that until June 2017 (E3) at the earliest. This gives Microsoft plenty of time to decide its strategy based on the reception for the PS4 Pro.

The response so far to this news has been mixed. Some feel Sony is going to do very well with this strategy, expanding their lead in the market. Others think the PS4 Pro won't do all that well due to the fairly low number of 4K/UHD TVs installed, though it's worth knowing that Sony promises you can see visual benefits to games on a PS4 Pro even through a standard HDTV set. Assuming, once again, that the publisher of the game has provided some sort of patch to let the PS4 Pro show its power.

We're really in unknown territory here. Apparently the PS4 Pro does a pretty good job of making 4K games look very nice, even though it doesn't have the raw horsepower to drive true 4K games, but instead relies on some clever tricks to upscale lower resolution output to 4K and make it look pretty dar good. All observers seem to agree, though, that HDR color makes a big, noticeable improvement in games. The interesting thing with that is that soon all PS4's will be able to play HDR games, and so will the Xbox One S – but not older Xbox Ones.

So how many of the existing 40 million PS4 owners will upgrade (through selling their PS4 to GameStop or someone else) to the PS4 Pro? No one knows. Will Sony ever break out PS4 Pro sales from PS4 sales? Doubtful. And while the number of 4K/UHD TVs right now isn't large, the price on them has dropped to where HDTVs were last year. We should expect the bulk of TV sales going forward to be 4K TVs, so the installed base should be pretty good by next Christmas... about the time Microsoft ships the Xbox One Scorpio.

Microsoft is giving Sony a free year to build up some PS4 Pro momentum before the Xbox One Scorpio arrives with significantly more horsepower. Will Microsoft price the Scorpio aggressively? They could easily meet whatever PS4 Pro price Sony sets, even if means losing money... if Microsoft wants to capture market share. They haven't done that lately, but who knows what they will decide in a year?

Add to all of this is Nintendo launching its NX system in March. Odds are it won't have 4K output of any kind, so the Nintendo NX will be left out of the 4K Console Wars entirely. Which is probably fine by Nintendo, but it does make you wonder how well they will do. Will the NX be more like the Wii or the Wii U when it comes to sales? I don't know. Now that Nintendo is doing mobile games, will that help the NX somehow? Is this somehow an end run around Sony and Microsoft? Who knows?

The only thing I know for sure about the next year is it's going to be a lot of fun to watch the battle unfold.

The Dangers of Vague Marketing

No Man's Sky recently released for the PlayStation 4 and PC, and it's been getting mixed reviews – some fairly negative, like Polygon's rating of 6. What's interesting is how negative some of the social media reaction has been, and I think part of that is due to the sky-high expectations that had been set for the game. Kyle Orland over at Ars Technica summed up the situation pretty well in this article: "After years of vague marketing, this might not be the game you imagined."

Ever since the teaser video for No Man's Sky dropped at the VGX awards in 2013, people have been waiting breathlessly for the game. A dedicated fan base developed even before release, and there were many times in the media that praise was lavished on the game for its immense size and procedural techniques for generating huge numbers of worlds.

On release, though, many have been disappointed with No Man's Sky. The gameplay has been criticized as rather dull and repetitive, the procedural generation may generate lots of different visuals but planets feel very similar in the resources and other aspects. Numerous bugs with the initial Windows release added to the criticisms.

Often, the complaints seemed to be that the game was not what the player expected. I suspect that this was the result of players getting excited about the game from limited information, and then projecting their own desires onto what was essentially a tabula rasa. Hello Games talked about the procedural generation algorithms, and showed some beautiful planetary scenes, and threw around numbers like 18 quadrillion planets. As far as describing the game play went, though, the information was pretty sparse up until right before the release. It seemed like there would be exploration, and some crafting, and some combat, but exactly how these worked and what players would actually spend their time doing was not at all clear.

Here's a very revealing quote from Orland's article, talking about a post by Hello Games' Sean Murray, made right before the launch: "Murray clearly and concisely laid out the four key pieces of No Man's Sky's gameplay loop: exploring, trading with NPCs, combat, and survival/crafting. He also acknowledged, however, that the game exists in quite another form in many potential players' heads.

"That means this maybe isn’t the game you *imagined* from those trailers. If you hoped for things like PvP multiplayer or city building, piloting freighters, or building civilisations… that isn’t what NMS is. Over time it might become some of those things through updates. For instance, freighters and building bases *are* coming!... At launch though, it’s an infinite procedural sci-fi-space-survival-sandbox unlike anything you have ever played before" [emphasis added]

Basically, by keeping very quiet for a long time about what the game actually had you do, Hello Games allowed people to spin their own ideas of what would be in the game. It became some sort of Minecraft/EVE Online/Destiny mashup... a far cry from what it actually is.

So what's the result of all this hype? Right now, it seems like the game is selling very well on Steam. The game hit 212,620 people playing it concurrently on launch day, which is the biggest Steam game this year. It compares well with 2011's Skyrim, which went on to sell 3.5 million copies.

Is the message then that vague marketing and hype is a good thing? If your interest is a short-term one, it would seem so. It may well be that in the long run, Hello Games will make more from the game because of this early hype than if they had been more restrained about marketing it. Or, perhaps, the game may fizzle out quickly, with people not sticking around to see improvements made to bring it closer to what they had imagined it to be. Right now, it certainly seems like the added hype has paid off.

That's something I'm uncomfortable with, though. I'd rather let the audience generate enthusiasm based on how good the game actually is for them, not based on how good I was at igniting expectations. I suppose it means that at heart, I'm more comfortable as a game designer than as a marketer. At some level, though, I'd like to believe that in the long run I'd make more money by honestly marketing great products than I would by promoting them in ways that the games don't really live up to. Or, at least, I'll sleep better at night.

How Nintendo NX Will Fail... or Could Succeed

An NX mockup

Let's take a closer look at Nintendo's NX at what its strategy may look like. Does this new console have any chance for success? Many industry insiders have been saying for years that the console is dying – that is, before the PlayStation 4 and Xbox One came out and blew away console sales figures, both outselling the previous generation in the same time period from launch. Then insiders starting saying "Well, this is probably the last generation of consoles..." and now we've got the Xbox One S coming out (the first console redesign where it's not just smaller and cheaper, but actually better in several ways), and soon the PlayStation 'Neo' and next year the Xbox One Scorpio. Now, those new consoles may or may not set sales records, but at least we're seeing more new consoles with at least a fair chance of good sales.

Now we come to Nintendo. After the 100 million unit sales of the Wii, some at Nintendo felt they could repeat that with the Wii U. Instead, the Wii U is ending its lifespan this year with perhaps 13 million units sold, earning it the Worst Selling Nintendo Console of All Time award (not counting the Virtual Boy, which was strangled in its crib). Now, slated for March 2017, Nintendo has announced the Nintendo NX, about which we officially know – nothing. Well, aside from the fact that Legend of Zelda: Breath of the Wind will be coming out for it (perhaps at launch, you'd think, but Nintendo hasn't even confirmed that). As for the Nintendo NX features and price, Nintendo remains quiet. We'll probably get the reveal in the next couple of months, since the supposed launch date is fast approaching.

Instead of official news, we have a rumor (confirmed by multiple sources, according to Eurogamer) that the NX will be a portable device that you can plug into your TV, with a pair of detachable shoulder controls, powered by an Nvidia Tegra chip of some sort (K1? X1? Or a custom version? No one is sure). Games would come on cartridges (!), though you could also download them. The NX would not be Android based, but instead run a custom OS designed by Nintendo. No backwards compatibility with previous Nintendo devices, we assume. No word on NX price, of course, or the actual graphics power – though based on what we have seen of Tegra chips, the NX should be around Xbox 360/PS3 level, with perhaps higher resolution output and some better 3D shading.

Let's assume for the moment that the NX does indeed look a lot like this device. What are its chances in the marketplace? The answer really comes down to the software situation. The launch title should be Zelda, of course, though if they don't release it for months after the hardware launches, that may be enough to kill the device. Look, regardless of the NX price, whether it's $299 or $499, there will be at least a million people who would buy one so they could get a new Zelda title. Really, continuing sales of the NX will depend to a large extent on how many quality titles Nintendo can publish for it, and how quickly they come out. If we have to wait six months for a good Mario title, and then another six months for a new Smash Bros., then six more months for Mario Kart... the NX is dead. Even hit software only every three months would be pushing it – if Nintendo really wants the NX to sell, their top brands should be coming out for the NX every two months or faster.

Third-party software support would be very helpful indeed, but it seems doubtful that Nintendo would get much support from the likes of EA or Activision. They've got much more certain places to invest their development money, at least until Nintendo shows some significant market numbers.

One thing about the NX seems likely – battery life will be a problem. You may only get two or three hours before you need to find an outlet. Will this affect sales and usage? Perhaps, but if the software is there people will just be external battery packs and move on.

There are a few things we can deduce from this (rumored) NX configuration. One is that Nintendo is opting out of the horsepower race with Sony and Microsoft, remaining well behind the capability of the competing consoles. That has an immediate consequence – almost none of the AAA titles from major publishers would be available for the NX, due to the sheer difficulty of porting (not to mention whether or not the publishers would even want to). So, the NX software would be limited to what Nintendo could produce, along with perhaps a handful of Japanese publishers and some daring indies (if Nintendo even decides to allow indies to publish on the NX). The NX, therefore, is likely to suffer from a severe lack of games compared to every other platform. If Nintendo can't produce key titles quickly enough (as has been the case with the Wii U), the NX will fail.

The other thing that's obvious is that even if the NX is a hit, selling tens of millions of units in its first year, that will be perhaps two orders of magnitude less than the number of smartphones and tablets out there (now around 2 billion). So the 75 million downloads Pokemon Go has already seen, with a likely $1 billion or more in annual revenue (of which more than half will be profit), is not even remotely possible for the NX. Nintendo has said it now sees 2 million units of software sales as a hit. Compared to what mobile software can do, that's pathetic.

Look, Pokemon Go all by itself could generate more profit (for Niantic, not Nintendo – Nintendo only owns 32% of The Pokemon Co., which gets a royalty from Niantic – though both TPC and Nintendo have investments in Niantic) in one year than Nintendo has generated in the last three years. Think of the profits Nintendo could generate if it invested in high-margin mobile game development instead of low-margin hardware development.

Sure, Nintendo has mobile games coming from its partnership with DeNA – but if Miitomo is any example, these mobile games will sink like rocks. If Nintendo was smart, it would ditch the NX, buy the rest of DeNA, The Pokemon Company, and maybe a couple of other mobile studios, and plunge headlong into mobile games with its library of iconic brands.

I'm pretty sure they won't, though. They will launch the NX, and there will be plenty of talk about it, and the software will be late in arriving and new titles won't come out all that often... and the NX will perhaps sell 20 or 30 million units in its lifetime. That's what seems most likely given Nintendo's track record.

Sure, it's possible the NX could be a success. How? Make sure the price is low to start with, like $199. Use Android as its base so you can get an enormous number of developers on board. Add GPS and a version of Pokemon Go that's better than the one on smartphones, because then every Pokemon Go player will want an NX. Give it a good name that doesn't have "Wii" in it anywhere. Spend a couple of hundred million dollars on savvy marketing, and pay a few hundred million to get several top game studios working on hot titles for the NX. How much of that will Nintendo actually do? Probably none of it, as they amble along hoping to eke out a couple of hundred million in annual profits, maybe sweetened by an occasional payout from The Pokemon Company or from licensing Nintendo characters to theme parks or beach towel makers.

Anyone care to argue that the NX will be a huge hit? Let's hear some good reasons.

Where E3 is Headed

This year marked several significant changes for the Electronic Entertainment Expo (E3). The most obvious is that Activision Blizzard and Electronic Arts both chose to leave the show floor, just maintaining the usual second-floor conference rooms for meetings. Their games could be found on the show floor in Sony and Microsoft's booths, but the massive presence those two major publishers usually had at E3 was completely gone. EA instead hosted the EA Play events (next door to the convention center, and a simultaneous one in London) where they brought players together with creators and celebrities to play some of their upcoming games.

E3 reported it had 3.6% fewer attendees this year, around 50,000 in all. They staged an event called EA Live in the parking lot next to the convention, giving out 20,000 free tickets. Apparently, though, this was a big disappointment; it was an area about the size of two tennis courts, mostly selling merchandise and barely any games. Fans felt liked they'd been duped; they'd been led to believe this was like E3, and of course it was nothing like being inside the halls. While E3 seems to understand that going direct to consumers is the future, this was not the way to do it.

E3 now has all its major media events streamed, and Twitch has a studio on the show floor with continuous programming during show hours. Essentially, all you get from actually being at the show is the chance to go hands-on with games, and to have in-person meetings. As far as getting time with games, you will have some problems with that unless you are a VIP or a member of the media. The line to play the new Zelda game was reportedly as much as eight hours long... or the entire time the expo floor was open one day.

Business meetings are something that benefits from personal contact, so E3's value in that area isn't going to change. The other reasons for the show – generating media coverage, generating excitement and social media amongst fans – those can and are being done more effectively in other ways. E3's value is dropping, and that's clear by what Activision and EA have done. Essentially, those two companies said "we can take the resources we'd spend on E3 and get a better return spending it elsewhere." Other large companies will probably be making that calculation in the coming years. For smaller companies, E3 is a good place to be because of the sheer volume attention directed to the show, which can spill over onto smaller companies. However, that will be less and less true as larger companies depart – less attention to the show, less attention to smaller companies, less reason for them to appear.

There are also other places to get significant attention. Gamescom, with its 340,000 attendees, is already running a trade show during the same week as Gamescom that attracts almost as many people as E3. Other consumer shows like PAX and San Diego ComicCon and many smaller ones are also packed with consumers. That's not even considering streamers and YouTubers and other ways of connecting with an audience.

I predict E3 will continue to try out new tactics in order to remain relevant, but it will probably continue its decline as both console games and retail sales are no longer the core of the games industry. Moreover, there are better conventions for companies that want to maximize audience influence with consumers. E3 will probably continue to shrink in size and influence, though I think there's a reasonable chance that (at some point) the ESA will decide to make some radical change – possibly a reduction to a more business-oriented conference without the huge exhibit floor. Or the ESA may decide to go large and make it a huge consumer show... but that would definitely have to be at a different venue. I think all options are on the table, and it's hard to predict what might happen beyond the next couple of years where E3 has a contract for the LACC. What, if any, contract E3 signs next will be very telling about how they view the future.

Create Games For a Brand, Not a Platform

The electronic games industry has been focused on the technical challenge of making games work on a platform since its inception. Sure, there'd be an idea for what the game could be -- and then a seemingly endless struggle to bend the hardware to make it deliver your vision. Most of the industry's resources (in time and money) went to overcome the technical challenges in just making games work for each successive platform -- early consoles, early PCs, the NES, the new wave of consoles, more advanced PCs (now with graphics cards!), the Internet (and if you don't think dealing with multiplayer games was challenging from the start... you weren't there), mobile games on smartphones and tablets, and now the latest versions of consoles and PCs (which have become more closely aligned, thankfully) and the emerging VR platforms (mobile, console, and PC based).

Fortunately the tools to create games have advanced even faster than the hardware. There are now multiple choices for excellent tools like Unity, Unreal Engine 4, and many more services that take care of handling servers, payments, and all manner of fiddly pieces of software that developers used to have to write themselves. Or spend endless hours debugging platform makers' tools and early dev systems.

Now, unless you're pushing the hardware limits of a particular platform, more resource can be spent on design than was formerly the case. Heck, you don't even have to chase the best possible resolution for your artwork -- stylized art can be easier to produce and look very nice. Even a style as basic as Minecraft works just fine, thank you -- 100 million copies says artwork is not necessarily the only reason people will buy a game.

Now VR is sucking up a lot of time and energy among developers trying to figure out how to build great VR titles while the hardware is still in flux, and the tools are still being refined. Profits are years away, in all likelihood. Does that mean we shouldn't build VR titles? No, the effort has value in many ways -- and at some point VR will become a market where a developer can make a profit, and those who have labored in the trenches are going to be more likely to reap the early benefits of that.

Still, game developers should realize that the platform is not the most important thing any more -- your brand is. Game players are less platform-fanatic than they used to be, and with the incredible expansion of the game-playing audience through mobile devices all the most dedicated game players have at least two game-playing platforms: Their console or PC and their smartphone. Many have multiple game-playing devices. Do they only play games on one device. Nope, for the most part, they play on the device that makes the most sense at the moment. Hearthstone may be better on a PC, but when you're away from your PC it plays just fine on your phone.

The larger audience of game players cares more about playing their game than on what device it's on. Play Candy Crush on your phone while you're on the train, on your PC at work (during breaks, I hope!). Games should try to be on the platform where their players are likely to be found.

Besides, profits come from games that last for years -- and those are brands. Look at Call of Duty, for instance -- does it matter what console or PC you find it on? Not so much as the brand name does. Sure some game brands are tied to a platform, like League of Legends. But many of the games that earn a billion dollars or more a year are found on mobile -- which means, at minimum, Android and iOS, and probably a special version for the iPad, too. Most top console games these days are found on the PS4 and the Xbox One and on PC as well. Most of those top console brands also have mobile titles linked to the brand, even though the gameplay may be completely different. Heck, Fallout 4 had a top mobile title for months simply on the strength of its brand being applied to the smartphone game.

So, while you may spend a lot of time getting your game to work on given platform, if you want to make money in the long term with that effort you should be thinking about how you can extend that brand to as many platforms as you can, assuming it's successful on the first platform. Don't be thinking "I make (platform X) games;" instead be thinking "I make (specific genre) games" and try to figure out how you can get those games in front of all the players who'd be interested.

Brand first, platform second. That's how you should think about building and keeping an audience over time, which is ultimately how you make money with games.

PS4 'Neo' (PS4K) Confirmed; Scorpio Still Rumored

Sony has confirmed that they will be introducing a more powerful PS4 with 4K output, but the company will not be showing it at E3. They still aren't getting specific about the features, or when it will launch, other than to say it will have 4K output and all PS4 games will work with it -- and it will be more expensive than the PS4.

The main reason for the PS4K is rumored to be in order to make the PlayStation VR work better, and to provide 4K output to support Sony's 4K TV business (the console may have a 4K Blu-ray player, which would be a strong incentive to buy for 4K TV owners). Note that this doesn't mean games would be playable in 4K resolution; that requires very expensive levels of graphics hardware unlikely to be found in a console that would (probably) retail for $499 or less. Although I could see making some cut scenes or an intro video in 4K for a game... a pure marketing feature.

Rumor still suggests that Sony will introduce this new console this fall, in conjunction with the already announced launch of PlayStation VR in October. Normally you'd expect a fall device to be introduced at E3, but Sony may be thinking that the PS4 Neo would drown out all of the other things Sony wants to talk about at E3. That's certainly a valid concern. By confirming the device before E3, Sony is no doubt hoping that they can focus on new PS4 titles at the show, and perhaps generate some pre-E3 buzz greater than Microsoft.

Also, Sony is doubtless trying to keep current PS4 sales from slowing down too much with a new console on the horizon. SCE head Andrew House confirmed that the current PS4 would continue to be sold; they will have both consoles on the market for the foreseeable future, separated by price and capabilities. But both will be able to run all software for PS4. (House said making software work with the PS4K would be relatively easy, though one would suppose that varies depending on how much developers want to improve the game's look for the PS4K version.)

There are risks here, though. Now that the PS4K is real, journalists and social media may still focus on that rather than new PS4 titles. You can bet there will be questions about every upcoming Sony title like this: "What will this look like on PS4K?" Also, knowing that a PS4K is coming, some buyers may hold off picking up a PS4, though probably most of those who really care enough about horsepower to pay more for a more powerful console already have a PS4. GameStop will probably get a bunch of PS4s as trade-ins when the new PS4K comes out.

Perhaps the greater risk for Sony is that it gives Microsoft a chance to capture more E3 buzz by actually talking about upcoming hardware. Microsoft is probably going to introduce a smaller, cheaper Xbox One  -- that's a normal part of console evolution. Microsoft is also rumored to have a more powerful Xbox One in the works, codenamed 'Scorpio', that is rumored to be even more powerful than the PS4K.

Now, Microsoft may also want to avoid depressing Xbox One sales by announcing a more powerful console too far in advance. Rumors have suggested a 2017 introduction for the Xbox One Scorpio; touting it now would seems to hurt Xbox One sales, unless you offered some sort of upgrade plan. Which Microsoft could in fact do if they really wanted to; one of the big advantages Microsoft has over Sony is the immense amount of cash Microsoft has (over $100 billion at last count). Microsoft has been reluctant to use this weapon in the Xbox One fight up to now, but they could unleash it.

If Microsoft is really planning for a Scorpio launch in 2017, they'd be wise to keep its features unspoken for now. Let Sony and Nintendo reveal everything about their new consoles (PS4K and NX) by the end of this year, then Microsoft has a chance to tweak the Scorpio a bit to make it as competitive as possible. Yes, complicated changes would mean a delay, but simple things like choosing a higher clock speed for the GPU or CPU, or adding more RAM or higher-speed RAM could make a big difference in the specs without changing the timetable. That might increase the component costs for Microsoft, but they could certainly deal with a lower profit margin better than Sony or Nintendo could.

Of course, one of the big reasons to create a more powerful Xbox One is virtual reality (VR). Given that the Oculus Rift ships with an Xbox One controller, it's not difficult to imagine Microsoft would like to have an Xbox One Scorpio powerful enough that an Oculus Rift could plug into it. Or a HoloLens.

It will be interesting to see exactly what gets announced at E3 this year.

The Origin of Crunch Time for Game Development -- and Why It Should Die

Recently, the issue of 'crunch time' in the games industry has come to the forefront of discussion – crunch time being the still-common practice of forcing employees to work 60, 70, 80 hour weeks or more, sometimes for months on end, in order to complete games. Crunch time is in the news because of an IGDA report on the issue (and a promise to work with publishers about the issue, because according to an IGDA survey 37% of employees report they are not compensated for crunch time).

What really brought the issue to a boil was the derisory response to the IGDA report by industry veteran Alex St. John, who essentially said that crunch time is just part of the business – he concluded his screed by saying "Don’t be in the game industry if you can’t love all 80 hours/week of it — you’re taking a job from somebody who would really value it." Now, a number of people like Rami Ismail have fisked St. John's article (among others who wrote in opposition, his own daughter), so I don't feel the need to directly address the issues raised.

Still, I want to explore why crunch time arose in the games industry and became a standard part of the production process for many years – and why most of those reasons are no longer valid for most games. Let me make one thing clear up front: I think when crunch time occurs, everyone should be well compensated for it regardless of the reasons behind the crunch. And that while crunch time is often due to avoidable problems like feature creep or bad management, there are times when it's the least bad alternative – but those cases should be rare.

The Origin of Crunch Time in the Games Industry
Crunch time arose in the games industry because of the need to hit specific ship dates for several reasons. These reasons were dictated by the technology and the business model of the time, which was in the 1980's as the initial videogame console era (led by Atari) came to a close. Whether games were being created for consoles (after 1985, this was the Nintendo Entertainment System or NES, and later the Sega Genesis and other systems) or for personal computers (the Apple II and Commodore 64, initially), they all had some common features. The games were put onto some form of media (a cartridge or a floppy disc) and put into a box along with instructions, and then sold in retail stores.

This meant that manufacturing had to be prepared in advance for the final game code (the "gold master") to be ready for duplication, along with all of the packaging. Retailers had to be told of the game's ship date months in advance, so they could place orders. All marketing efforts, including advertising and PR, had to be created months in advance, with large amounts of money spent, in anticipation of a certain ship date that had to be chosen many months before the software was finished.

Add to all of this, once the software was duplicated onto its medium there was no way to change it or patch it – there was no online connection. Theoretically, you could perhaps recall all the packages you had shipped and replace the software, but the cost would be staggering – and I don't know of any cases off-hand where that was done.

Because of all these factors, the games had to be finished, tested, and debugged by a certain time or else the publisher would lose a lot of money. A missed ship date could mean advertising appeared months before release, rendering it useless (or worse than useless, if it got people mad).

Add to this the problems associated with early console games, which were all on cartridges (memory chips in a proprietary plastic case) that were only manufactured by the console maker. If you wanted to put out a game for Nintendo's Super NES, for instance, you not only had to have your game approved by Nintendo (which meant the game had to be submitted in final form), but Nintendo would manufacture the game as well. You had to tell Nintendo months in advance not only when you would deliver the game, but also how many cartridges you wanted made (and pay a large amount of the bill up front, too). If you missed your delivery date, your manufacturing window might be gone for weeks or months – so you might well miss the all-important holiday season. Thus, a huge incentive to go into crunch mode and get the game done.

Don't forget, too, that manufacturing was only part of the issue – huge amounts of money were spent on time sensitive marketing and PR. Advertising in magazines had to be created and scheduled months in advance. If you pushed out your game release by a month or several months, you'd miss the issues where your game was advertised – or worse, where your game was featured on the cover or previewed in a feature article.

Many video game companies in the '80's and '90's were positioning themselves to go public through an IPO – that was the primary way companies paid back initial investors at that time, and employees could realize huge amounts through their stock options. Thus companies like Electronic Arts were focusing on meeting quarterly financial goals for years in order to look good prior to an IPO – which meant meeting projected sales in a quarter, which meant doing whatever you could to ship software on the date you had promised many months ago. Crunch time again, with the carrot that your crunching could make you rich someday through a more successful IPO.

Finally, there was typically an extremely limited time to generate revenue from your game. Retailers didn't keep games around for more than a few weeks unless it was a very strong seller. Over 90% of a game's lifetime revenue might occur in the month after its release – so if that month was not perfectly timed with all marketing efforts and the peak game-buying season, you could be losing millions. Hence, crunch time.

Now, none of those reasons to go into crunch mode meant that you shouldn't compensate employees for crunching. Some companies did directly through added pay or bonuses or vacation time. Sometimes it was more indirect (the stock options might have an increased value). Often crunch time just wasn't compensated at all, but expected.

Why Crunch Time Should Now Be Rare
If you think about most of the reasons I listed for the existence of crunch time, most of them just don't apply in today's game market. Many of the most lucrative games earn their revenue over years, and are essentially services – like League of Legends or Clash of Clans. New content is constantly being delivered every few weeks, but it really doesn't matter what day it ships on. There's no manufacturing times, or long marketing lead times. New content is created and presented to players. Crunch time would be burning out your employees to no financial purpose.

As for getting the game perfect before it ships, that does matter to some degree – but it's nowhere near as important as it used to be when you couldn't patch a game. In fact, many games now make a point of having early open betas to let people test out the game and help refine the design, as well as add to the marketing excitement. Yes, games that are sold in retail stores still have some time constraints that might encourage crunch – but not to the same degree that it used to.

Really, crunch time should be rare if you are at all good at scheduling and don't succumb to feature creep in your game design. Yes, there are still good reasons for crunch – for instance, you're a small developer and you're going to run out of money unless you get your new game out the door generating revenue. But managers at all levels should strive to avoid crunch whenever possible. When it's necessary, make sure you are compensating the employees as generously as you can for the immense sacrifice you're asking them to make.

PlayStation 4.5 And Xbox One Plus Make Sense

The latest rumor making the rounds is that Sony and Microsoft are both considering introducing new versions of their consoles, possibly as early as later this year. Microsoft's Phil Spencer even hinted at this in a talk, as reported by Polygon. The rumors are that these machines would not represent a full new generation of consoles (which usually means a new architecture), but instead they would be a speed bump for better graphics performance.

Of course there are many questions, starting with "Why?" There's an obvious answer from the perspective of Sony, which is still in the business of selling TVs: The PlayStation 4 cannot produce 4K output, and increasingly 4K TVs are taking over in sales. Additionally, a PS4.5 (which some are calling "PS4K") could potentially build in the additional graphics box that will be coming with the PlayStation VR.

There's precedent for this sort of speed bump -- Nintendo's done that with the New 3DS, for instance. Of course, fans instantly want to know if there will be some sort of upgrade path for those who bought the original console. That seems unlikely, though certainly GameStop would probably offer a trade-in value for your old PS4 or Xbox One.

One thing that's quite different with these consoles is that they use standard PC architecture in many ways, so dropping in a new CPU and a new GPU wouldn't necessarily be all that difficult. Given how component prices have dropped, we might not even see much of a price increase. It's likely that Sony and Microsoft would keep their current consoles around at a $299 price point, and then charge $399 for the speedier version.

As far as compatibility goes, there's no reason that these console would have any issues running current software. Would developers conceivably build new titles that would require the added horsepower? Sure, but supporting the older consoles would be easy enough that it should happen in almost all cases. Games would probably just detect what hardware they were running on and change graphics modes automatically, or give you a couple of options.

These new consoles would also likely be able to read the new 4K/Ultra HD Blu-Ray discs that will be coming out. Otherwise the consoles would probably look much the same, except for some obvious visual way to distinguish them from the original versions.

No doubt consumers would be annoyed to some extent if more powerful versions of consoles they already owned were introduced. Some sort of trade-up program, even if it were done through a third party like GameStop, would help mitigate this backlash. Sure, people could sell their old consoles and buy a new one themselves, but it would be better if Sony and Microsoft sweetened the deal somehow; a low-cost way to do that would be to offer some free games for trading up

While still only rumors, this sounds like a good idea. This would extend the lifespan of existing consoles (and the sales lifespan of existing software), and keep up with the relentless advance of PC graphics, and provide more horsepower for VR and AR. For Sony, it helps sell 4K TVs and makes the PlayStation VR more attractive. For Microsoft, it might make the Xbox One more competitive graphics-wise with the PS4 (or rather, the PS 4.5), and perhaps provide enough horsepower for the Xbox One to drive an Oculus Rift. That would be a very smart move on Microsoft's part, even if it meant losing some money on each console sold.

This is a chance for Microsoft in particular to reset the console race and to actually move ahead in the VR race. Microsoft has had a huge advantage over Sony that hasn't been used so far -- Microsoft's huge pile of cash in the bank (well over $60 billion), compared to Sony still struggling to turn a profit. Microsoft could provide more horsepower than Sony at the same price, even if the company had to lose $50 or $100 per console. Say that's over 20 million consoles, by which time the component cost would have fallen enough to make much of that differential disappear. So it costs Microsoft perhaps $2 billion to catch up to Sony in terms of installed base; given how much more software the company could sell that seems like a reasonable deal.

Nintendo's NX vs. Xbox One vs. PlayStation 4

Nintendo is currently working on its next console system, the NX. The company has announced no details as yet about the hardware, the software, the release date, or the price. Rumor has it that Nintendo has shipped NX development systems to key developers, who are already hard at work on software for the system. Given how Nintendo's sales of the Wii U and the 3DS are going now (the company just revised its forecast downward yet again for its current fiscal year), it's safe to say we should see the NX sooner rather than later.

The obvious, traditional launch plan (and Nintendo has great respect for tradition) would be to announce the NX at the E3 show this June, and ship it to stores prior to the Thanksgiving weekend -- perhaps as early as mid-October.This provides time to build up excitement and pre-orders, and maximize initial sales for the holidays.

The NX Hardware
There's a persistent rumor that the NX system will be both a home console and a handheld device, merging Nintendo's two main hardware lines into one line. This would simplify the company's production and marketing, as well as third-party development efforts. However, it leads to the core design problem facing Nintendo: Cost versus power. Nintendo could make the NX more powerful graphically than the Xbox One or PS4 with the advantage of the relentless advances in CPU and GPU power -- the NX design is at least a couple of years in advance of the Xbox One and PS4, which means CPUs and GPUs have gotten much better at the same price. Portability, though, is much harder to achieve with graphics that exceed current consoles. You quickly run into issues of power consumption and heat, not to mention increased costs for trying to put powerful chips into a portable package.

Even if the handheld rumor is not correct, Nintendo will still have to decide what the NX retail price should be -- which controls how powerful the console is. Nintendo could conceivably beat the Xbox One and PS4 in terms of graphics power, but probably not for much less than those consoles are selling for right now.So, will Nintendo try for a higher price point for the NX than the competition (roughly $349 now) or will it try to undercut the current console pricing?

Nintendo has had great success before with undercutting the competition's price (the Wii was a great example of this), but may well choose to make the NX more expensive in order to put in desired features. A hybrid home console/handheld will have to deal with screen costs and battery costs, and if the entire system is to be competitive graphically with current consoles (or better than them) that means there will actually be two parts to the system -- a portable part and a base station, where the base station has additional graphics capability (at least; it may also have more storage and connectivity options). That adds significant costs as well.

The bottom line is this: If the NX is more powerful than Xbox One/PS4 and has a portable component, it's going to be more expensive than Xbox One/PS4. Now, Nintendo has stayed away from the technological arms race for decades -- it's been content to be less powerful graphically than the competition, preferring to have a lower cost and some unique feature to set itself apart, as well as its own extremely popular IP.

The NX Software
If the past experience from Nintendo's previous hardware is any guide, don't expect too much from the system software or interface for the new NX console. All of the basic functionality will be there, of course, and there may be some added features like connecting with mobile devices.

The issue of backwards compatibility will n doubt be raised, but this is something you shouldn't expect -- at least not right away. If Nintendo changes the basic system hardware to a different platform (a distinct possibility), then compatibility will be much harder to achieve. The company's resources would be better spent on getting new games ready for the system.

The most important thing for Nintendo to get right is its first-party software. The Wii U should have shown quite clearly the danger of not having key Nintendo franchises ready at launch. The really good Wii U games didn't begin to arrive until the console had been out for almost a year, and that certainly didn't help sales. Thankfully, we have an obvious candidate for an NX launch title in the new Zelda game, which coincidentally (ahem!) is due to come out this year. Hopefully the game will launch for both the Wii U and the NX, with the NX version showing some very clear improvements that will help convince fans to buy the new hardware. A truly compelling Zelda game for the NX could motivate more than a few people to spend $400 or $500 for the new console, regardless of what else is available.

NX Marketing
We can hope that Nintendo will budget a significant amount for NX marketing. First, though, the company should make sure to name the system properly -- "Wii" was widely acknowledged as a lousy name, and Wii U compounded the error by giving many people the impression it was not a new console at all, but merely some sort of peripheral. Or, if it was a new console, Wii U didn't make it clear that it was better in any way. If Nintendo uses the word Wii in any way for the NX console's name, that would be a huge mistake.

We should expect plenty of TV advertising, because that's what Nintendo has done in the past. It would be nice to see some events (Nintendo has done well with these in the past few years), and hopefully get the new hardware and software into the hands of influencers. Maybe Nintendo can truly embrace social media for the first time, and let people stream NX experiences. Building a launch around streaming would be a clever plan, but it requires that Nintendo break free of its inherent conservatism. Let's hope they can.

The Prospects for the NX
It's one thing to point out all the positive things Nintendo could do to make the NX launch a success, but what Nintendo is likely to do is quite different. Nintendo will probably price the NX higher than it should, design it with less power and fewer features than it really should have, and have fewer software titles than it should have at launch. That's just the way the company has tended to do things in the past decade.

We may or may not see Nintendo rally good third-party support for the NX, but that's probably not the deciding factor in how successful this new platform will be. The alliance with DeNA may be more important, if it means Nintendo gets a good back end for online services and perhaps some help in creating mobile titles that connect with NX titles.

The difficult thing for Nintendo to realize is that the world is fundamentally different in many ways from the world of Nintendo's greatest success. Back then, there was no Internet to speak of; multiplayer games were something you did with all players sitting in front of the same TV. Consoles had the best animations, graphics, and sounds. Mobile gaming was only available on a Game Boy.A free-to-play game? Oh, you mean a demo?

Nintendo thrived in that world, especially with the lock-in provided by its console hardware. Selling hardware was a key part of the strategy. Now, great gaming hardware is all around -- everybody has at least one great gaming device, and usually more than one (a tablet or a PC in addition to a smartphone). Yet Nintendo is persisting in trying to sell proprietary hardware, with its low to non-existent profit margins. Meanwhile, a company like Supercell has 100 million daily active users across only four games, and pulled in over $1.5 billion last year with about 100 employees.

Yes, Nintendo has created many iconic characters and memorable game franchises. But how long has it been since Nintendo created the last such character or franchise? A decade? Two decades? When its greatest hits of the last few years have been the third or fourth or 8th or 10th version of a franchise, you have to wonder how creative the company still is. Splatoon is great, and fresh, but it's not a new Zelda title.

So I'm skeptical that the Nintendo NX will change the overall course for Nintendo. At best, it will help keep the company going forward, as it overall share of the market dwindles with the continuing strong growth of the rest of the industry. Nintendo was once directly or indirectly responsible for about 90% of the game industry revenue, some 25 or so years ago. Now it's under 5%, and that percentage will continue to fall. Let's enjoy it while we can, and celebrate when the company can come out with another great game, for as long as that continues to happen. Unless major changes in direction happen, that won't be forever.

Glu Mobile's Celebrity Game Strategy Stumbles

When Glu Mobile released Kim Kardashian: Hollywood, few thought the game would be successful. Yet it quickly demonstrated great strength, notching up $50 million in revenue in short order and gaining millions of fans. As the success of the game continued, Glu Mobile went all in on signing licensing deals with popular celebrities, signing deals with Katy Perry, Britney Spears, Nickie Minaj, Jason Statham, and now signing up famsou chef Gordon Ramsay and mega-pop star Taylor Swift.

The grand strategy hit rough times in the latter half of 2015, with Glu's revenues and profits declining and Glu laying off 50 employees in December. What happened? The company's two new games, Katy Perry: Pop and James Bond: World of Espionage were flops. De Masi explained what happened with Katy Perry: Pop like this: "Poor technical decisions coupled with the newly hired team led to all key metrics being below thresholds required for an ROI positive title," he said. "Additional development time was not provided due to contractual restrictions as well as the team's mediocre trajectory." The James Bond game failed, with low installs and poor retention, because of "creative decisions made in partnership with the licensors to avoid firearms and classic shooter mechanics."

I think the celebrity license strategy is a good one in the abstract: Sign up a celebrity who has millions of social media followers, and you have an instant audience for your game. What Glu seems to have forgotten, or not felt important, was that the success of the strategy depends on a couple of key things. One, you have to have a good game -- one that's fun, has good retention and that generates good revenue -- regardless of what license is attached to it. Second, the game has to have a strong appeal for the celebrity's fans.

Kim Kardashian: Hollywood started with a good game -- one that already existed and had a proven audience appeal and ability to make money. Glu took the Stardom: Hollywood game and re-skinned it with Kim Kardashian, and it worked brilliantly because the games' activities were exactly what Kardashian's fans wanted.

Now, I don't know what the Katy Perry: Pop game is like, but I'm pretty sure there are significant differences between her fans and Kim Kardashian's. For one thing, Perry is a singer, so certainly her fans like her music. Maybe her fans want to sing with Perry, or dance with here. I don't know, but you'd sure want to know what Perry's fans want in a game before you started creating one. And it's a good bet you wouldn't be successful taking the Kim Kardashian: Hollywood game and re-skinning it with Katy Perry.

Without enough time to do a thorough job of understanding the Perry fans, and a team with technical issues, the inevitable result is a bad game. Signing up celebrity licenses is not all you have to do; you have to make sure the license agreement gives you the time and the creative control you need to create a good game.

One major drawback of the celebrity licensed game is that you may lose the chance to effectively cross-market your game to players of your other games. Maybe a Taylor Swift player might like to see the Katy Perry: Pop game, but they probably won't be interested in the Jason Statham game.

I wish Glu success in the future, but they should realize by now it's that easy to have a hit game, whether or not you have a celebrity license. They've got some great licenses, but they also have great challenges in making hit games for those licenses.

EA Avoids E3 Show Floor

Electronic Arts announced today that it's not going to be on the show floor for the Electronic Entertainment Expo (E3) this year. Instead, the company will hold a press conference on Sunday, and no doubt have the usual conference rooms for important meetings. THis doesn't mean EA is passing up the chance for major publicity; the company is planning a public event at the nearby Nokia Center, and another at the same time in London, where the public can come and and get its hands on EA games. These EA Play events will require tickets to attend, though EA has not yet said how it will distribute those tickets.

A few points spring to mind about this development. First, this isn't really going to save EA money over its usual presence -- it may well end up costing more, and it certainly will be more difficult to organize and stage. So this isn't being done as a cost-saving measure. Clearly, EA is doing this because it feels the effort will generate more interest (and perhaps more press) than its traditional showing. I wonder if they'll allow the public to stream from within the event? That would be clever.

The hardworking development teams will find no relief from this change; there will be just as much pressure to get games ready for E3 as there was for a more traditional show.

The key here is EA really wants to get the public in to experience new titles first-hand. Going direct to customers is far more important than impressing some retail buyers these days, as sales move to digital distribution -- and a direct relationship with gameplayers. These EA Play events, no doubt with others to come at other shows (Gamescom, certainly -- and PAX shows? Other consumer shows? Not a surprise if they do) will help build even stronger connections with gamers.

The larger question is whether any other game companies plan to follow suit, or will the wait and see. The E3 show already began experimenting with letting in some of the public last year, when companies exhibiting at the show were given some passes to distribute to the public for one day. How long will it be before the show is opened up completely to the public? It's bound to happen sooner or later...

Working With Game Startups

Dawn in Kuala Lumpur, from my hotel room

I'm back from a week in Kuala Lumpur, Malaysia, where I had the honor and privilege of working with a number of game startup companies under the auspices of GameFounders (check 'em out, particularly if you're interested in starting a game company). I came in to offer advice on marketing for game companies as well as game design principles, and some thoughts on starting and running small game companies. It was a tremendously fun experience for me, and as always I learned a great deal by working with these enthusiastic game creators.

I delivered two lectures, one on the state of the game market and game marketing, and one on game design, both around and hour or so  plus another half hour of questions. I then spent two long afternoons in one-on-one sessions with the startups, addressing their particular questions and concerns -- and delivering specific advice for their games and their studios.

Those sessions were intense, because in a twenty-minute session I had to absorb and understand their game(s) and their intent, and come up with specific, creative advice. I felt a great responsibility to make this advice as specific and actionable as I could, knowing that in their position that's exactly what I'd want -- and need. By the end of those days I felt like my brain had gotten a thorough workout, but that's good -- stretching those mental muscles will build them up, right? At least, I hope so.

It's a big challenge these days for game startups. While the tools to create games are better than ever, and more accessible than ever (many of them being free for small companies), the competitive picture is far more difficult. In decades past, the challenge was building a game: Tools were expensive, and distribution required a huge amount of capital or (almost always) getting a deal with a big publisher who had access to distribution. Now the distribution part is easy and almost free -- upload a completed game to an app store or Steam and poof!, your game is available to millions. The challenge is that none of these millions of people know or care about your game, and you have to figure out how to create, maintain, and grow an audience. Those are skills most new game developers don't have, or even know how to acquire.

It was highly educational for me to work with these teams and see their enthusiasm and skills. I hope I was able to help them in some small way, at least. The game industry needs continued innovation and new blood, and I hope all of these teams find success in the future.