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Nintendo's Iwata addresses company's third-party woes

4:00 PM on 07.09.2013 // Tony Ponce

The boss man restates Nintendo's immediate plans to attract third parties

Yesterday's big story was the reveal that the Wii U-exclusive ZombiU was not profitable for Ubisoft -- yet another black mark in Nintendo's ongoing quest to attract third parties to its new console. The hole Nintendo has dug itself into is seemingly much deeper than ever before, and it has pundits and fans alike wondering how or even if Nintendo can climb back out.

During the 73rd Annual General Meeting of Shareholders, from which we previously learned about Nintendo CEO Satoru Iwata's stance towards staff reduction in the wake of financial downturns, Iwata was asked about his thoughts on third parties' reluctance to release Wii U versions of upcoming multiplatform titles. He understands the very undesirable situation the Wii U currently faces, hence why the company must take certain steps in the short term.

"One is to seamlessly release our first-party titles starting from next month to improve the momentum of Wii U. As third-party software developers do business for their own profits, they tend to avoid investing in a platform with little presence. We would therefore like them to see Wii U as a platform with which they feel they can make profits from an economical perspective." This parrots what certain third-parties claim would get them interested in Nintendo development again.

One item that others like to point out is Nintendo's massive war chest of billions of dollars. If Nintendo wanted an immediate influx of software announcements, perhaps it should start throwing that money around to secure exclusive deals, those people suggest. But Iwata doesn't trust that strategy: "[I]f we tried to do nothing but buying our way to create such a good condition for developers, our own business could collapse. Accordingly, we will give more momentum to Wii U through our software."

The second step relies on third parties' own efforts. "I am not in a position to discuss the software to be launched by the third-party developers in detail, but there are more key titles to be announced by them," Iwata reminded. "The other important thing is to have a hit from such third-party titles. There were so many games released by third party publishers for Wii U during the launch period, but most of them were converted from other platforms and therefore could not enjoy brisk sales. As a result, some software developers have become pessimistic about Wii U."

This sounds like an indictment to me. However you feel about the first-party launch lineup, I think you can agree that the third-party selection was hardly appealing on the whole. Perhaps Iwata was hoping for more exclusive titles or at least more games with a significant amount of exclusive content. We don't know to what lengths Nintendo was willing to cooperate with third parties or how well it demonstrated the Wii U's features to them, so there's no way of knowing how much of this was on Nintendo and how much was on third parties.

But there is a new round of third-party titles coming up in the fall, and Iwata has more confidence in those games' potential success: "[T]he time will come when some third-party games for Wii U and for other platforms are released at the same time this year. It is important to have given much momentum to Wii U around that period. If the number of consumers who prefer the Wii U version's unique entertainment value, such as the ability to play games only with the Wii U GamePad (while the rest of the family is watching TV), increases to a certain extent where third-party publishers notice unexpected hit Wii U titles from other publishers and realize this system's business potential, its momentum will be improved. Even if these publishers did not have any concrete plans to develop Wii U software, they will swiftly change their minds when they see the successful examples from others.

"By giving sales momentum to Wii U through our first-party software in the short run and seeing success from third-party software within this year, we would like to dramatically change the situation of Wii U next year and beyond." That's the plan, anyway.

I'm afraid all parties involved are trapped in a catch-22. We've heard complaints in the past from third parties that they are unable to compete with Nintendo's output on Nintendo platforms, resulting in lower sales and far more sporadic support. At the same time, they will only develop on Nintendo platforms if the audience is large enough, and the only way that will happen is if Nintendo brings out the "big guns" and builds that audience by itself.

That Nintendo agrees with this logic doesn't spell good news for Wii U's prospects. If consumers are only attracted to Nintendo consoles for the first-party lineup, what guarantee is there that those people will have any desire for third-party games? Especially in the short term, where the third-party games Wii U will receive are also available on hardware with much larger install bases and even wider third-party offerings. Nintendo would need to attract major third-party exclusives somehow, and at this point that won't happen unless Nintendo is willing to spend the green.

You also have to factor in how much of third parties' resilience is based on Nintendo's nearly two-decade-long history of having poor third-party support in the home console space. Not that there haven't been third-party successes in those years, but there's been no consistency in those successes. Such damning precedent is extremely difficult to overcome.

Let's see how Nintendo fares through the holidays for now. But if Iwata and company really want that third-party hotness, they'll need to rethink their strategy big time. It's foolish to believe that they don't have something cooking -- the idea that they are ignoring all bad news and riding on hopes and prayers is pretty absurd -- but the only way to regain consumer confidence is to speak up sooner rather than later.

The 73rd Annual General Meeting of Shareholders Q&A [Nintendo]

Tony Ponce, Contributor
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