Bryan Cashman is the founder of Callvention, a service enabling phonecalls with game developers.
Third-party support for Nintendo platforms is dramatically lower than prior Nintendo platforms, calling into question the company’s ability to succeed as a third-party platform business.
As the manufacturer of video game consoles, Nintendo earns licensing revenue for every game sold on the platform that is created by external developers. Nintendo is witnessing woefully less externally developed releases than during this generation of hardware platforms than the last.
Third-party Support for Nintendo 3DS.
Nintendo’s concluding fiscal year of the 3DS in North America had less than a quarter of the number of games released than was seen on Nintendo’s prior handheld platform, Nintendo DS, in its fourth fiscal year on the market.
Third-Party 3DS Releases
As the number one selling hardware platform of 2013, the 3DS should have seen strong support from third-party developers, and the lacking number of third-party SKUs may indicate wider structural issues for the company. The widespread adoption of smartphones and tablets by Nintendo DS’s core audience of children and casual-playing adults may have driven developers exclusively to mobile platforms, and away from Nintendo’s own closed platforms.
Winning Back Developers for Nintendo 3DS
In a discussion with investors, Nintendo President Satoru Iwata noted Nintendo 3DS may finally be at an inflection point to win back developers from other platforms.
“The worldwide hardware sales of Nintendo 3DS have reached 42.74 million units, a sufficient size to expand this platform business,” said Iwata.
With a wider customer base, successful mobile games like like Puzzles & Dragons and Angry Birds are finding success on the platform, said Iwata.
“To symbolize this, “Puzzle & Dragons,” which has been successful using an entirely different business model as a game on smart devices, has also appeared on Nintendo 3DS as the packaged software “Puzzle & Dragons Z” and sold over one million units in no less than one month since its debut in the Japanese market,” said Iwata.
“Now that they [third-party developers] have observed the success of “Puzzle & Dragons Z,” the number of companies who have approached Nintendo with an offer to provide Nintendo 3DS with the titles which they originally designed for and grew on smart devices has been increasing,” said Iwata. “As this example illustrates, the Nintendo 3DS platform has already reached a scale with enough business potential for not only the titles invented for game devices but also the ones originally made for other platforms.”
“The fact that Nintendo 3DS has now sold over 10 million units in both the U.S. and Europe seems to be news for third-party publishers, and we have recently been receiving more proposals from third-party publishers,” said Iwata. “However, as many overseas software publishers are specialized in developing games for high-end home consoles, while they are very interested in Nintendo 3DS, it appears that they are currently investigating what they want to develop on our platform.
Third-Party Support for Wii U
Nintendo’s home console Wii U also continues to struggle with third-party support, but the platform’s gap when compared to the number of third-party Wii releases at this point in its lifespan is slightly better than 3DS’s, at 28%.
Third-Party Wii U Releases
However, without strong unit sales numbers for the Wii U console itself, third-party support is unlikely to catch up to what was seen on Wii.
“With regard to Wii U, we first need to create a strong foundation in areas Nintendo excels at and achieve a sufficient sales volume,” said Iwata. “If we manage to do so, those publishers in the overseas markets who are currently not interested in Wii U will be attracted to the Wii U platform, as they were to Nintendo 3DS.”
Some third-parties are finding success on the platform, with benefits specifically for games targeted at children and families.
“Software publishers that develop content that has great affinity with audiences that Nintendo has historically been strong with, namely children and families, are still very active supporters of Wii U, and their enthusiasm for Wii U can also been seen from the fact that they have even reached out to us to help people upgrade from Wii to Wii U,” said Iwata. “On the other hand, software publishers are not necessarily keen on making games in genres that have weaker affinity with audiences that Nintendo has not been as strong with, where making a huge investment does not guarantee a sufficient return.”
Source: Nintendo’s Corporate Management Policy Briefing for Fiscal Year Ending March 2014, 1/30/14
Note: Nintendo still has one more quarter left for the remaining fiscal year, but the trend discussed above is expected to remain consistent.