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When you think of companies that derive most of their revenue from mobile devices and software, you might think of Symbian or Research In Motion, but Nintendo certainly qualifies. In its 2002 fiscal year, about 60 percent of Nintendos hardware revenue came from its Game Boy products and about 70 percent of its higher-margin software revenue came from its handheld platform.
Nintendo has been able to capitalize on a monopoly position after years of putting finishing moves on such competitors as Segas Game Gear, SNKs Neo Geo Pocket, and Hasbros forgettable Game.com. Its recipe for success has included developing an ever-growing cadre of memorable characters and placing them into beautifully crafted games. Few developers embody the art of game design as Nintendo (videogamings answer to Disney).
Recently, however, this magic kingdom has come under siege from more formidable competitors. In one corner is the growing phalanx of mobile handset game developers including Jamdat Mobile, Sorrent, and console game developer offshoot THQ Wireless. Expect these offerings to increase as Sun and Qualcomm step up evangelism efforts for J2ME and Brew.
Games developed with these technologies are already starting to rival the graphic quality of Game Boy Advance games. Their interfaces, optimized for the casual gamer and streamlined by access to permanent storage, allow quick amusement for many subway riders here in New York City. These gamers attract a few looks peering into their screens and madly pressing buttons, but all in all are less outcasts than adults using even the stylish Game Boy Advance SP. As the cell phone game crowd is fond of saying, people outgrow the Game Boy at some point.
One company that certainly agrees with that perspective is Sony. Its PlayStation Portable (PSP) announced at E3—which the company has labeled “the Walkman of the 21st Century“—will be a technological tour de force, but not exactly a tiny one. Boasting a Memory Stick slot, USB 2.0, proprietary UMD optical media (complete with tasty plastic coating) and a whopping 4.5” display, the PSP will likely be more akin to one of the emerging portable video players than the squat and square Game Boy Advance SP. Indeed, the PSPs screen dimensions alone already dwarf those of the chunky Archos AV300. It wont be something you casually toss into your pocket.
Still, with cell phones nipping at its heels and Brandzilla hovering above its head, Nintendo should reconsider the long-running weaknesses we find in its product strategy.
Not the Same Old
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- Leave the past behind. Sure, its an impressive engineering feat that the Game Boy Advance SP, which debuted in 2003, can play games designed for the original Game Boy that debuted in 1989, but its time to move on. I understand the rationale behind nostalgia marketing, but Nintendo is allowing adults to keep using the same cartridges they owned as kids (not that anyone would want to)! There comes a point where backward compatibility simply becomes backward.
- Enter the third dimension. Nobody expects the experience of a handheld gaming platform to rival that of the latest console. Unfortunately for Nintendo, however, the market has irrevocably turned to 3D with at least the expectation of Dreamcast quality. The Game Boy Advance has roughly the power of a Super Nintendo, which is fine for side scrollers, but even dated 3D games such as Doom II and Crazy Taxi are plodding and grainy.
- Grow up. Game Boy retailers would do well to place software for the system at about three feet from the ground, because thats the eye level of the apparent target audience. The Game Boy library includes, for example, no less than 20 Disney-branded titles, and thats not even including the ones co-branded with Pixar. Theres also plenty of other Sponge Bob-set favorites, such as Yu-Gi-Oh, Mary Kate and Ashley, and of course, Pokemon. Nintendo continues to find the adult market elusive; its stabs at adult games have either turned into fantasy horror epics or toilet humor.
- Get sexy. Cost may be king for the handheld game market, but Nintendo remains reactionary in its refusal to embrace many new technologies. Just as its GameCube shies away from DVD playback or the online robustness of even the PlayStation 2, the Game Boy Advance fails to capitalize on the potential of wireless. This isnt to say that Nokias N-Gage has it right, but if Nintendo isnt going to figure out how wireless data can enhance a mobile game, some company will figure it out for them.
Nintendos current rallying cry of synergy between its market-leading Game Boy and XBox-battling GameCube holds less water than a Game Boy cartridge case. I dont know whats less appealing—projecting some monochrome game from the era of Dan Quayle jokes onto my TV through a $50 GameCube add-on or giving up the extra controls and convenience of a WaveBird for a next-generation PocketStation.
Theres no serious threat to Nintendos entrenched market of handheld games for younger hands. However, if it wants to capitalize on the rapidly expanding market for mobile games, its going to need a heck of a power-up.
Will Nintendo be crushed between the volume of cell phones and the marketing power of Sony or will it find a ray of Super Mario Sunshine? E-mail me.
Wireless Supersite Editor Ross Rubin is a senior analyst at eMarketer. He has researched wireless communications since 1994 and has been covering technology since 1989.
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