Game Marketing Tips, Analysis, and News

Tuesday, September 19, 2017

The Struggle For Audience

Lawbreakers, the new competitive first-person shooter for PC and PlayStation 4 from Cliff Bleszinski’s Boss Key Productions, is apparently struggling to find an audience. According to Steam, there’s only about two to three hundred concurrent players on the PC every day, and that’s nowhere near enough to support this kind of effort. Analyzing how this occurred, and how to fix it, should provide some useful tips for developers.

What Went Wrong?
First off, let’s be clear: My analysis of the situation is entirely based on observations from the outside and guesswork. I don’t have any direct knowledge of the development process for Lawbreakers, nor the studio, nor any of the people. So I could very well be wrong in lesser or greater ways about this. However, while the problems I identify here may not be true for this specific instance, they certainly are true for a great many games these days.

First, I’ll venture a guess that this game was developed without a great deal of consideration for marketing, nor with any experienced marketer as part of the team. That’s typical of many indie/small game studio projects – marketing is not seen as something essential to developing and making money from a game. Usually the focus is on design, programming, and art. Consideration for marketing comes much later, usually as the game nears completion. This is a mistake, since marketing efforts will often be more effective with more time to take hold.

Lawbreakers started off with additional challenges – it’s a multiplayer game, for one thing, and it’s based on reflexes. Now, those are not bad things – in fact, some of the most popular games around share those qualities. (Look at League of Legends, for instance, or Overwatch.) But when you need a group of players in order to play, it makes it harder to get started – especially if you’re trying to keep people in the same skill range. That’s why many such games have chosen to be free-to-play – it maximizes the audience by removing a major barrier to play (the up-front cost). Still, you can be successful with an upfront cost – Overwatch has done quite well indeed while charging up front for the game.

Note, though, that Overwatch started with a huge advantage – Blizzard’s massive audience. Blizzard could, very cheaply, notify tens of millions of people who love Blizzard games that Blizzard has a new game – which they did, months ahead of launch, thus building up plenty of anticipation and initial purchases. This crushed Battleborn (developed by Gearbox Games) which could not compete against Overwatch despite being supported by 2K’s marketing.

Another challenge for Lawbreakers is the very competitive market segment that it’s entered. As noted, we have games like Overwatch, and Battleborn, and Titanfall, and arguably related games like Destiny and Call of Duty and others… there are plenty of well-funded, popular competitors that have big installed bases of players. When you’re entering a market segment like that, ideally you’d like to have some significant game features that provide a huge competitive advantage (something players really want but can’t get elsewhere), or a very strong license (like Star Wars or Marvel), or a massive amount of marketing money (and talented marketers who can devote plenty of time to this). Lawbreakers, apparently, didn’t have any of these qualities. More than that, you’d really want to have a strong marketing strategy, and start work building your audience (that is, marketing your game) very early on – soon after you start actually developing the game, in fact. This, to all appearances, wasn’t really done, either.

Fixing the Future
The really important question now for Lawbreakers is this: What can be done now to boost the game’s sales to where it needs to be? Marketing alone may not be the answer, but determining that starts with analyzing the data from the existing Lawbreakers audience. Are only a trickle of new players showing up to play the game? Then you have to figure out ways to bring in many, many more players – and considering a free-to-play version is one possible answer. Are players abandoning the game after playing a little while? Then you need to figure out why – is it that the game is too frustrating to play? Are newbies killed too easily by the pros? Does it take too long to find a match? Analyzing that is critical.

Marketing by itself may not be able to cure all of Lawbreaker’s problems. There may well be game balance issues, or playability issues, that need to be dealt with by the development team. Marketing can help inform some of those decisions with surveys and focus groups, if need be. But the first place to start for Boss Key is to look at all the player data they have now, and analyze that for clues about how to improve the game.

Even with the game adjusted to its best performance, it still may lack enough distinctive features to be an effective competitor in the marketplace (that appears to be Battleborn’s primary problem). Marketing can still help the game reach its full potential, but ultimately the potential for a game is determined by its design. That said, marketing can help – if there’s sufficient budget and skilled marketing talent available. Good marketers can evaluate the situation and set performance goals to see if marketing spending is working.

In a recent interview Bleszinski said they are overhauling the marketing of the game, and looking for a long-term build up similar to Warframe. That requires a steady commitment to improvements and additional content, among which Boss Key says is overhauling the onboarding experience of the game. 

Wednesday, August 30, 2017

How Apple TV Could Dominate The Market

Apple is likely to unveil a new version of Apple TV soon, and the major new features will probably be 4K/HDR support along with a faster processor. Supposedly Apple is arguing with studios over the pricing for 4K movies – Apple wants to charge $19.95, studios want $29.95. Really, this is a battle with no winners, only losers. Who buys movies any more? It’s streaming all the way down. If this is all Apple has for the Apple TV, the product will continue its slow downward slide in market share as Roku and Amazon continue to grow. What’s so great about Amazon and Roku? Look no further than the pricing – you can get a streaming stick for $40 or less. Apple’s TV solution begins at $150. That’s why Apple TV has a 5% market share, well behind Roku’s 18% (as well as Amazon’s Fire TV and Google’s Chromecast).

Apple could certainly dominate in this market if it wanted to – after all, the company has more money than any other company (well north of $200 billion in cash!) and an enormously talented hardware and software engineering team, as well as top-notch marketing. They have the resources, but not (apparently) the burning desire to dominate the TV market.

How could Apple TV dominate the market? Here are 5 ways:

Go Big with Games
Apple has already taken the important step of putting an App Store on the Apple TV, but they didn’t really push the idea. Some game publishers offered games, but nothing really compelling – and Apple didn’t really market the idea of Apple TV as a game-playing device. The problem isn’t the Apple TV’s horsepower (though a more powerful CPU/GPU would also help, along with more RAM) – it’s the lack of good controls. Apple should at least offer its own Apple-branded controller, or better still bundle it in. This could be a controller in the old-school mode of the Xbox, or even a bigger version of the touchpad with a thumbstick or two.

Beyond the controls, Apple needs to take some of its spare change and buy some top-quality exclusives – maybe a studio or three to make sure they are properly done and supported. Nothing moves game hardware better than kick-ass exclusive games. These can (and should!) be based on well-known IP, though you should also take some risks with compelling new IP as well. Throw a billion dollars at this, or maybe two, and you’ll get plenty of amazing games.

Finally, market the living hell out of these games, and push Apple TV as an important gaming platform that every publisher should support. Will this be enough to sell millions of Apple TVs? Not by itself, but if you take the next point seriously, it will.

Slash The Price
C’mon, Apple, if you really want to own the market you have to be price-competitive. You can make plenty of money on software here, but only if you have a huge installed base. Which means you need a low-cost option. An Apple TV stick for $49 would do the trick; you can still have higher-end boxes, but that should be $99 and perhaps $129 for the loaded version with extra RAM and two controllers. What about your margins? Consider those lost margins a marketing expense. If you’ve got compelling softwre and services, you’ll easily make that up.

Offer Bundled TV Channels
Yes, it’s time you stepped up and cut some deals, rather than demanding everyone bow to your will. If Sling and PlayStation Vue can offer bundles, why can’t you? With Apple’s massive power you should be able to offer a compelling bundle of channels at a great prices – or better yet, several options at different price points, ranging from $10/month up to $99/month (don’t leave the high-paying customers behind!). The right prices and collections of channels will make Apple TVs sell very, very swiftly.

Include DVR Capability
Sure, local storage is expensive, but that’s what vast cloud storage and streaming is for. Haven’t you been building out that capability? Give people what they want, and let them time-shift broadcast content. Heck, you can start charging for it after a certain amount of free storage, and probably make another huge fortune just from that. Record 50 hours of programming for free, then it’s $9.99 a month for another 100 hours… keeping adding 100 hour blocks if you like, we’re happy to sell it to you!

Encourage developers to really make use of the App Store, and HomeKit. Add some spiffy devices for the home with some excellent prices – they can be under Apple’s label, or not, as long as the company stands behind them. Bring Siri to the next level, connect all your Apple devices through Apple TV and make it indispensable. Support app developers with marketing , and as the installed base grows there will many great new apps coming to the platform.

You’ll note that I did not call for Apple to spend billions on original content, which is something they are apparently already planning to do. I hope that succeeds, but it will take a long time for that sort of initiative to drive hardware sales. Also, implicit in all of this is that Apple makes a strong marketing effort, much more than limply saying “Apple TV is here” and expecting everyone to buy it. Apple hasn’t done that in the past, perhaps because they realized the product wasn’t worthy of a strong marketing push. Add in some or all of the features mentioned here, and it will be.

Do I expect Apple to do all of these things, or even some of them? No, not really. The company seems content to let Apple TV remain a hobby. 

Friday, August 25, 2017

Xbox One X Sales Don’t Matter

As we approach the launch of Microsoft’s new console, the Xbox One X, there’s plenty of concern being voiced by commentators. “The Xbox One X probably isn’t for you,” blares one headline. Another says it’s “still a tough sell.” There are plenty of complaints about the $499 cost, the slim lineup of exclusive games, the fact that one of the best potential games (Crackdown 3) is delayed until next year. Microsoft’s released a list of about 100 games that will be enhanced in some way on the Xbox One X, but some critics correctly point out that the differences will be minor in many cases – and not really noticeable unless you have a pretty large 4K UHD TV, which is still a rare thing.

Given all that, and the fact that the Xbox One S plays all the same games and retails for only $249, many are predicting that the Xbox One X won’t be a big seller. True, Microsoft has noted that early Xbox One X pre-orders are the strongest they’ve ever seen, but we are given no numbers to make comparisons here. We do know that the PlayStation 4 Pro represents only about 20% of ongoing PS4 sales, which is actually a surprise to Sony that it’s doing that well. So in all likelihood, the Xbox One X will not be selling very well for Microsoft for some time to come, at least not until 4K TVs get more popular, games start to develop more compelling Xbox One X features, and/or the price of the hardware drops.

But none of that matters to Microsoft, I bet.

Why should Microsoft be OK with their new console not selling well? Because the benefits of the Xbox One X to Microsoft are primarily marketing ones not tied directly to unit sales. The Xbox One X (and the PS4 Pro) are primarily marketing tools, not direct profit centers.

Here’s the logic: Both Microsoft and Sony’s newest consoles are, unlike new consoles in the past, extensions of the existing console line, with full software compatibility between the entry level console and the high-end console. (This compatibility is currently mandated by both publishers, and is unlikely to change any time soon.) For both publishers, margins are slim on the consoles compared to margins on software – the incentive is clearly to maximize software sales. A user who replaces their current Xbox One with an Xbox One X isn’t really helping the bottom line, unless they begin buying more software than they did before the upgrade. So, from a purely monetary point of view, it doesn’t really matter what percentage of overall console sales is made up of the high end consoles. What matters is increasing overall console sales.

Here’s where the marketing benefit of the high end console kicks in. Screen shots will look better taken from the high-end consoles. The feature list of high end consoles is definitely premium, and the halo effect extends to the entire brand when you start talking about the teraflops and the 4K output. Microsoft can now boast having the world’s most powerful console, a clear marketing benefit.
The benefits of high-end consoles to players are mostly in the future. When 4K TVs become the majority of TVs in homes, and 4K streaming movies are the standard, then having a 4K console will become even more important. That will take a couple of years.

It’s also possible that high-end consoles will eventually get some exclusive software, and that at some point there will be a more clear benefit to games played on high-end consoles beyond the somewhat better graphics. The greater CPU and GPU power could also be harnessed to improve AI, or to put many more opponents on screen, for instance, or to make the world more responsive to player actions.

For now, though, don’t spend any time worrying about how well the Xbox One X sells, because however well it sells it is accomplishing its purpose for Microsoft. The Xbox One X puts Microsoft in the technological lead and provides a great list of marketing benefits, and should help expand the installed base of Xbox One consoles that Microsoft can sell highly profitable software into.

Monday, July 3, 2017

The Next Generation Consoles Are Coming

Yes, the Xbox One X isn't even shipping yet, and already people are starting to talk about how Sony will respond with a PlayStation 5. Let's just make this simple: Of course, Microsoft and Sony are working on the next generation of their consoles. It's relatively easy to do (compared to previous consoles, where each generation was designed from scratch), and it makes perfect marketing sense as I explained in my last post. The only real issue is exactly when these consoles will be introduced. The likelihood is both companies will be working on designs, updating them regularly, until forecasts show the timing is right for a new console generation. Then, about a year later, the new console can launch.

What features will these new consoles have? By and large, we can predict the feature set fairly well. Any new console from Sony or Microsoft will be based on the current PC architecture and maintain backwards compatibility with the existing line (just as the PS4 Pro and the Xbox One X have done). The most important feature, which will be highlighted in all PR efforts, will be increased graphics power -- we should expect 4K HDR output at 60 fps for most games. Other features? Yes, there will be a number of things like improved streaming, but we're unlikely to see anything that will be too unusual -- that would make it less compatible with older consoles. Likely, VR/AR support will be built in, perhaps wirelessly through a high-bandwidth short-range connection.

Sony will probably go first with a PS5, after giving the Xbox One X a year or three in the marketplace (and to let the installed base of 4K TVs grow). Microsoft may or may not be patient; it depends on how much they think it's important not to let Sony grab the graphics lead again.

What hasn't really changed with the current new generation of consoles, and likely won't change with the next new generation, is the nature of gaming. Sure, everything will get prettier -- but the game play and game types will remain about the same. The top console games will get even more expensive to produce due to the 4K graphics, though -- and that will mean a strong incentive to stick with old IP in new versions, rather than risk entirely new IP.

In other words, I don't think these new consoles will be expanding the market very much for console games. Maybe if they can find something interesting to do with VR/AR/MR... but I have yet to see that. Market expansion and innovation is occurring on mobile, for the most part -- though there's some choice innovation on the PC, even though that platform is actually shrinking rather than growing. Consoles, though, are mostly preaching to the converted.

Sunday, June 18, 2017

PS4 Pro and Xbox One X: Successful Regardless of Sales

Perhaps the most interesting thing about the new consoles from Sony and Microsoft – the PlayStation 4 Pro and the Xbox One X – is that they are successful products for their respective companies whether or not they sell well. How can this be? Isn't a product a failure if it doesn't sell well? Typically, that's true. But the PlayStation and Xbox markets are very different, because being profitable is not about selling hardware so much as it is about selling software.

Console hardware is, in itself, barely a profitable business. The PS4 and the Xbox One S are currently at $249 retail, and there's not a lot of margin there, if any, once all the costs of manufacturing, marketing, distribution, and retailing are taken into account. The money is in software and services. That year-long subscription to Xbox Live or PlayStation Network is mostly profit. Every piece of software sold for either platform pays a healthy royalty to the platform owner (around $7 for a $60 title), and that's nearly pure profit for the platform owner. First-party titles are even more lucrative. And DLC is more profitable still.

So the platform owners want to sell as much software as possible, which means expanding the hardware base as much as possible – which is why margins are low to non-existent on hardware. That makes it easier to sell more hardware, which gives more opportunity to sell the profitable software. The consoles are essentially a required marketing expense where sales cover the costs.

Which brings us to the introduction of more powerful consoles. In the past, a new console meant the company was starting over in creating a new player base and software base, because new consoles were not compatible with old software. This time, it's very different. The PS4 Pro and Xbox One X will run all existing software as well as all upcoming software for their respective platforms. In fact, they'll generally even make the old games look better, and some new games will look really good.

These new, more powerful consoles are essentially powerful marketing pieces for the platform. The platform is no longer the console hardware – it's the PlayStation 4 or Xbox One software platform. The new hardware, while more expensive, serves to promote the software platform. Sony and Microsoft will be showing ads for games displaying all the capability of the new consoles, and that will help sell the software and the older consoles as well.

So it's really not important to Sony or Microsoft what percentage of their console sales come from the newest hardware. There's no particular profit there – PC World tried to build a 4K gaming PC that could match the power of the Xbox One X for $499, and didn't even come close to that price point. What matters is overall sales – and powerful new consoles can help drive the marketing message for the games, which is where the profit lies. Sure, maybe the new consoles will only be a small percentage of overall platform sales this Christmas – maybe 10% or 20% of overall sales. That will rise over time as more people get 4K TVs and the price of these new consoles begins to drop.

Both Microsoft and Sony haven't really made strong cases for buying their new, more powerful consoles over the less expensive ones. They don't need to – the new consoles help them sell more software in any case, and that's where the profit is.

Wednesday, February 8, 2017

E3 Goes Public

The Electronic Entertainment Expo (E3) is going to allow in the public -- well, up to 15,000 of them, if they are willing to drop $150 (which rises to $250 later). It's an attempt to stem the show's continuing decline in importance and attendance. However, it seems like an awkward stance -- either you are a professional-only show, or you're a consumer show. If there are 15K fans swarming the show floor, doesn't that make it harder for the pros to do business?

There will be a "business pass" to try and ease some of the crunch for the pros, I guess. Which probably means a separate entrance, or maybe some extended hours. Still, it seems likely this move may result in less professional attendance. Will companies be more or less likely to buy booth space if there will be 15K consumers there? I don't know, but it will be interesting to see.

This may also lead to changes in booth design, as you have to figure on big lines and big crowds for the most popular games.

It will be interesting to see how fast the tickets sell -- will they sell out quickly, or sell out at all? Will some publishers return because of this, or will more drop out of the show? Will this move attract new publishers, perhaps mobile ones?

I think we'll just have to wait and see. At least E3 is trying something and not just sitting around, waiting for its relevance to completely dry up. I give them credit for taking action, and I hope it helps the show stick around just because of its historical significance.

It's interesting to contrast E3 with the Game Developers Conference (GDC), which has continued to grow from year to year. I think GDC has continued to remain relevant because it has embraced changes in the industry over time. When social games became big, GDC included them in the conference sessions. Similarly with mobile games, and now VR. On the other hand, E3 stayed away from new trends in the game business because of its historical focus on retail, which continues to shrink in importance. (That also kept E3 from dealing with social and mobile games, because those are entirely digital distribution and have no retail presence).

It will be interesting to see what Nintendo plans for E3 this year, as well as Sony and Microsoft. Will this announcement change any of their plans?

Thursday, January 19, 2017

E3's Slow Shrinkage Continues

Yep, that pretty much describes E3
As someone who attended the earliest Electronic Entertainment Expos (the E3 show) and continued to attend over many years, the slow shrinkage of the show has been apparent for years. The E3 show has been shrinking in many ways -- relevance, floor space, attendees, and importance. This last year saw two of E3's major exhibitors, Activision and Electronic Arts, abandon the show floor altogether. EA instead opted to produce EA Play, a show aimed at fans (not the professionals who attend E3) that took place at Club Nokia, the small expo facility located next to the LA Convention Center where E3 is held. This year, EA just announced that EA Play will again be held, but this time it's in Hollywood at the Palladium Theater, some seven miles away.

There's really not much reason to attend E3 any more. Most of the major events are livestreamed, and there will be extensive coverage on the show floor via Twitch and other streamers. The games being shown are often difficult to get in to see -- sometimes the lines can take hours to get through. Even with a press pass, some games are difficult to get hands-on time with. If you have face-to-face meetings with executives, that could be worthwhile -- but that time is hard to book, and the noisy environment often makes it difficult to conduct interviews.

Originally the intent of E3 was to show off the upcoming holiday product lines to retail buyers in order to book sales for the next several months. That was hugely important, because the holiday months represented the bulk of game sales and profits. Now, of course, things are much different. Retail sales account for less than half of console game revenue. Console games are no longer the largest segment of revenue in games -- that's been taken over by mobile games. Heck, even PC games are getting close to topping console game revenues, and PC games aren't even sold in stores any more.

The E3 show once occupied the entire LA Convention Center, including the downstairs Kentia Hall. That enormous space is no longer used. The two main exhibit spaces are no longer jampacked with booths -- in fact, there's plenty of open spaces, with large areas devoted to lounges (chairs and tables), non-profit exhibits (of old games), or just bare concrete with some tables for the thinly used food concessions selling highly overpriced convention food. (Nowadays, anyone who can visits the food trucks parked across the street, which offer a variety of tasty cuisine at prices lower than the convention center's tired menus.)

The fact that big companies like Activision see no point in spending millions to put on a big E3 show should tell you just how important the show is these days. You should expect even more defections from the show this year, until at some point the whole thing shrinks into a smaller space or a very different event.

The reality is that publishers like EA and others realize it's far more important to connect directly with consumers than to connect with retailers or journalists. Besides, in an increasingly more platform-agnostic market, brands are more important than promoting a specific hardware platform. You'll see that Sony and Microsoft will still have plenty of reasons to show hardware, of course -- that's still a strong seller at retail.

As for me, I plan once again to take in E3 remotely and avoid the traffic and the crowds. It will be interesting to see what Sony, Microsoft, and Nintendo will show off, but going hands-on can wait for a less frenetic venue.

Tuesday, January 17, 2017

Nintendo Switch: Off or On?

Nintendo's Switch is little more than a month away from launch, and the early reviews are decidedly mixed. Some of the games look great, but the high costs and limited support don't look so good. My assessment is that Nintendo's Switch is headed for a Wii U-scale disaster if it keeps to its current course -- but it's possible Nintendo could turn things around with the right moves. They've done it before with the 3DS, which if not a success on the scale of the DS at least can be counted as reasonably successful.

Let's look at the pros and cons of the Nintendo Switch, as we know them so far.

Nintendo Switch Pros

  • Good-looking, reasonable size screen (720p, 6.2")
  • Zelda: Breath of the Wild is a strong launch title
  • Flexible play options (home, handheld, tabletop)
  • (Probably) Easier to develop for than previous Nintendo systems (because it's likely based on Android)
  • Good variety of input options for developers (detachable controllers with motion and gyroscopic sensors, IR vision, multi-touch screen, lots of input buttons, two analog sticks)
  • Some future software looks exciting (Mario Kart 8, Splatoon 2, Super Mario Odyssey)
Nintendo Switch Cons
  • High price ($299 with no game included)
  • Limited system memory (only 32 GB before OS takes out a chunk)
  • Games will mostly be cartridges (otherwise you have to buy MicroSD card storage, which is not cheap)
  • Limited launch software (5 titles, only one major one, two ports, two very weak games)
  • Limited 2017 lineup (Only 23 titles for this year, most are ports of older software, only 3 or 4 look great)
  • There will be no Switch versions of the latest games from top third-party publishers (the system is too different, and not powerful enough to handle Xbox One/PS4 games)
  • High software prices ($60 for top games, $50 for a throw-away like 1-2 Switch)
  • Limited 3rd-party support (All titles from major publishers are simple ports of old titles)
  • Joy-Cons are very tiny and buttons are difficult to reach even for average-size hands
  • High prices for accessories ($79.99 for a pair of Joy-Con tiny controllers; $70 for Pro controller; $90 for a dock; $49.99 for a single Joy-Con)
  • Online service will cost starting in the fall; some features through a smartphone; one free game a month, which is either an NES or SNES game that you can only play for one month)
  • Not competitive with other home consoles in power, price, or software
  • Not competitive with smartphones or tablets in power, price, or software
  • Little pre-marketing (there's been no long campaign to drive awareness or purchase intent)
  • Confused marketing (videos so far targeted at Millennials, but kids are entirely left out -- though the colorful games are classic Nintendo that should appeal most strongly to kids)
When you look at the list and think about what those pros and cons mean, you get the idea that Nintendo fans will buy a Switch right away, but after those folks (a few million, perhaps) buy a Switch, it will be tough to convince other to do so when they look at other options.

Essentially, the Switch is a fairly expensive handheld console that can display games on a TV, though its horsepower is nowhere near comparable to Xbox One or PS4 (let alone PS4 Pro or Scorpio). The console is up-gunned when it slots into the dock, but that just means more work for developers who essentially have to create and test two versions of every title (see tech analysis here). The whole thing is shaping up to be a debacle a lot like the Xbox One launch or the Wii U launch.

If Nintendo keeps going the way it is, I think the Switch will look a lot like the Wii U or the 3DS initially. As always, when Nintendo announces a new console there's plenty of enthusiasm among the hardcore (and journalists, who are mostly Nintendo fans). The first month in sales will look great, as it always does. Then the product will meet reality, and sales will plummet a month or three after launch.

It's at this point that Nintendo could decide to make some changes, the way it did with the 3DS. If you'll recall, the 3DS did well for a while, but then it became obvious the device wasn't selling. Nintendo dropped the price an unprecedented amount (from $250 to $180), which rescued the 3DS (along with marketing shifts that de-emphasized the 3D display, which almost everyone turned off).

What could Nintendo do to rescue the Switch? One suggestion has been to release a version without the home-console items -- the dock, the grip, the straps. That could drop the price to $199 for the purely mobile version. Pack in the 1-2 Switch game instead of trying to get $50 for it. I would also get Niantic to create a version of Pokemon GO for the Switch, and include that as well. Focus the marketing around the mobile and tabletop play. Then you'd have a much better value proposition.

Of course, that would likely mean either dropping the 3DS line entirely, or reducing the price on that substantially so it would no longer be in direct competition. A 3DS XL should be $149, or perhaps $129, to really look good against the Switch. That could also help substantially boost 3DS software sales, which would be a nice profit boost.

Will Nintendo actually make such a gutsy move? They have done it before with the 3DS (well, the price cut part, at least). I doubt they will, though. The company is to wedded to the idea of selling hardware. So if Nintendo does make a move to rescue the Switch, it will likely be too little, too late. The Switch will limp along, selling a few million units a year. Then Nintendo has to hope it will finally figure out how to price mobile games and make some money from that. The fact that Niantic made $950 million in six months, with a very fat profit margin (likely in the 50% range even after licensing fees) doesn't seem to have gotten through to Nintendo.

Seriously, Nintendo's got iconic brands and characters that can be worth billions, if they put them on widely accessible hardware. Which Nintendo's proprietary hardware will never again be, not in today's world. Someday, Nintendo will figure out they should primarily be a software company, but they'll have to lose billions before they even have a chance of grasping that, it seems.

Friday, January 13, 2017

Nintendo's Switch: Will it Succeed or Fail?

Nintendo revealed more details about the Switch recently, and it's an interesting risk for Nintendo. The launch of a new console these days is anything but a guarantee of success (just look at the Wii U, the worst-selling console in Nintendo's history). There are some strong points to the Switch, but there are far more weaknesses or question marks. Will the Switch succeed for Nintendo, or become another failure like the Wii U? Let's look at the situation.

First, the hardware. It's $299 to get the console, the dock (for connecting to your TV), two controllers (called "Joy-Cons", tiny controllers with an analog joystick and four buttons the size of the original NES controller that slide onto the sides of the console, or can be used separately, or used by two people, or slotted into a Grip to make it like an Xbox or PlayStation controller), two straps for the controllers, a charger (using USB-C), and an HDMI cable. There is no game included.

Basically, the Switch is a 6.2 inch tablet with a 1280x720 (720p) multi-touch screen, running off an Nvidia Tegra chip (which means it's probably a modified version of Android OS underneath Nintendo's interface), where you can attach small controllers to the sides. You can also dock it and connect it to a TV, where it boosts the resolution to 1080p (though Zelda: Breath of the Wind runs at 900p). Or you can set in on a table, propped up with its built-in kickstand, and share the controllers to play a multiplayer game. As a handheld device, the battery life is about 2.5 hours to 6 hours depending on the game (the joycons last for about 20 hours); with Zelda, you get about 3 hours of play.

Software: There are only two launch titles from Nintendo: Zelda: Breath of the Wind (a Zelda open-world game) and 1-2 Switch, a very simple set of minigames using the joycons (like milking a cow or a quickdraw game, for instance). Other launch titles are Just Dance from Ubisoft (of course) and a Skylanders game from Activision. Some 80+ titles are in development according to Nintendo, but major ones like Splatoon 2 won't hit until summer, and Super Mario Odyssey won't be out until the holidays (a grand Mario game in the tradition of Super Mario Sunshine and Super Mario 64, from the brief video that was shown). Most software will be $60, though some like 1-2 Switch may be only $50.

One other important note: Nintendo will have an online service that you will need to use in order to play games with other people online. It will be free until the fall (as a trial run), when it will become a paid service (no price point announced). The service will give you access to some old Nintendo games every month, but you will only be able to play them for that month – then they go away. Unless, presumably, you want to buy them (just like you've repurchased other Nintendo games over time).

Interestingly, Nintendo's videos are centered on adults in their 20s and 30s... and some that look even older. Kids are almost nowhere to be found. (Probably because the kids were all too busy playing Minecraft or iPhone games.)

Here's what Nintendo hasn't talked about: Graphics power. No doubt because the Switch is probably somewhat less powerful than an Xbox One or a PS4, probably more like an Xbox 360 or a PS3. Certainly it doesn't compare to the latest iPhones or Android devices in terms of screen resolutions or graphics power, either. So Nintendo is wisely choosing to avoid talking about all that.

The graphics power does matter, though, when it comes to getting third-party publishers to create games for the device. The third-party lineup Nintendo announced was really quite lame – ports of old games like Skyrim or FIFA or Skylanders, or bringing back old icons like Sonic or Bomberman. What you will not see on the Switch are the big AAA titles that are the latest from the top publishers – because that would require a whole lot of work and expense for an unknown payback. No Battlefield or Call of Duty or Grand Theft Auto or Assassin's Creed, or any of the upcoming games from top publishers. Maybe someday, if the Switch were to sell 100 million units, but even then those top titles would arrive on the Switch a year after launch on other consoles, simply because of the massive effort required to port them.

So in the end, as a Switch buyer you will be left with Nintendo's titles and a number of second-string titles, mostly from small Japanese publishers. And it already seems clear that Nintendo will not be able to push out its very best titles very quickly – probably one a quarter if we're lucky. And unlike previous Nintendo handheld consoles, games will not be cheap. $60 this time, noth the $40 from the 3DS days.

Can the Switch succeed? Maybe, but it seems unlikely. Sure, Nintendo will sell several million in the first month or two (if they can make that many) to all of the diehard Nintendo fans out there. Beyond those people, it's going to be an uphill fight to sell this console. If you look at the Switch as primarily a home console, it will be more expensive than its competition (Xbox One S and PS4 Slim can be found for $250, with a game or two included) and far less powerful... and with a far smaller library of software, not just now but forever.

If you consider the Switch as a portable gaming device, it's not a very good deal compared to your smartphone or tablet. Poor battery life and screen, nice controllers, middling graphics power, and insanely expensive games compared to what you can find on tablets or smartphones. As a tabletop gaming device... it may get used that way occasionally, but likely no one will buy a Switch with the primary intent of playing it on a table.

While the Switch may beat the Wii U in sales, I don't think it will be an enormous success – nowhere near the 100 million units of the Wii. In the end, I don't think people want to carry around another portable device, especially one that cannot fit in your pocket. Everyone will always take their phone along, but the Switch will be a distant second choice. The $299 price point is going to be a difficult sell against the Xbox One S and PlayStation 4, especially once you start to look at the software libraries and other entertainment features.

The Switch will be a second console purchase for some, particularly Nintendo fans who will line up to buy it. After the first 5 million units are sold, it's going to be tough for Nintendo. Could the Switch succeed? Yes, especially if you define success as "selling 20 million units in two or three years." Beyond that, the Switch will have a difficult time, and it's not going to be the kind of profit engine Nintendo really needs to return to its gloriously profitable days of the Wii.