Column: Nintendo’s unenviable choice

9:00 pm EDT, April 26, 2012

For the first time since the publisher went public, Nintendo reported a financial loss for the fiscal year of $530 million. While the company projects a return to profit next year due to a reduction in production costs for the 3DS and the release of the Wii U, some analysts are advising them to ditch the first-party stranglehold they have on their most popular franchises.

“Nintendo has to deal with the change and let Mario games be played on non-Nintendo devices,” Japanese analyst Nanako Imazu told Games Industry after the losses were revealed.

It is well known that tablets and smartphones pose significant competition to Nintendo, maybe even more so, at least at the moment, than Sony’s struggling PlayStation Vita.

President Satoru Iwata has said before the company has no plans to have its franchises appear on outside hardware, including smartphones.

This presents an interesting dilemma for gaming’s arguably most beloved company. Would it be better to open up software such as Mario to non-Nintendo systems in order to increase the volume sold or stay the course and keep your main selling points close to the chest?

On one hand, opening up Nintendo’s most famous franchises will dramatically increase sales numbers for software, something the company could benefit from. Despite selling roughly 95 million Wii consoles to date, Nintendo’s most touted exclusive of last year, The Legend of Zelda: Skyward Sword, only managed to sell roughly 3.4 million copies of the game as of the beginning of this year. While this remains an impressive number of units sold, it’s nothing compared to the amount that could be moved if it were on multiple platforms.

Even classic Nintendo properties would benefit from a port to outside hardware. When a fake Pokemon Yellow was released to the App Store in February, people jumped at the chance to pick it up, making it the number one selling application despite the low ratings of the scam. There are countless thinly-veiled Mario rip-offs on the App Store already, also. It’s obvious people want to play Nintendo software, why not make it more accessible?

However, any benefits Nintendo would gain by putting software on other platforms would probably come back to hurt their own hardware sales. There’s a reason why the DS and Wii are two of the best selling systems of all time. The Wii was an underpowered system even at launch, but what helped sell it, in addition to the unique control system, was the promise of new Mario games and other key Nintendo titles.

The 3DS struggled mightily at launch because of the lack of software that fans wanted to play. While the price cut certainly helped sell the new handheld, what really put it over the edge was the release of Super Mario 3D Land and Mario Kart 7, the former selling over five million copies.

Personally, while I’m happy with my Vita as a handheld, I’ve even considered picking up a 3DS solely to play Mario titles, including the recently announced New Super Mario Bros. 2.

Nintendo is especially reliant on first-party titles as its systems are rarely as well supported by third parties as Sony or Microsoft.

If Nintendo does not have the rumored Mario or Pikmin titles ready for the Wii U’s release date later this year, sales numbers will surely suffer for the system early on. If this happens, they may be forced to cut the price similar to the 3DS and take a loss on another system.

While fans may want to play Pokemon or Metroid elsewhere, the fact that they can’t is actually to Nintendo’s advantage. Exclusive software is the reason fans buy into Nintendo hardware, and giving away their biggest advantage to competitors, while possibly beneficial in the short term, will only come back to hurt them in the end.

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