Google+

Monday, February 8, 2010

The Third Party Conundrum: Is Nintendo In Trouble?

We're not so naive to believe that there are no problems with the Nintendo Wii. Online play is a mess. WiiWare is undersupported and underutilized. The system itself isn't as powerful as its current counterparts. However, another problem comes up among many people: The lack of third-party support. Is it a big deal for Nintendo? Does it really sound the death knell for their far-reaching empire? In order to answer these questions, we have to ask: What's the point of a third-party developer?

During the NES, Genesis and Super NES days, a third-party publisher's role was simple: Make decent games, keep the wheels greased so that there was always something coming down the turnpike for the system's users, and keep people in the habit of buying games until we (either Nintendo or Sega) release a big release. Sometimes, those third-party developers would strike gold and make a AAA title, but they would mostly stick to the background and play a supporting role.

This system worked out great for the console makers. They would have a steady stream of games, keep buzz alive for their system, and get some hefty licensing fees out of the game makers. It didn't work out so well for the developers, since they had to actually pay those licensing fees and deal with the demands and whims of companies far more powerful than their own. For instance, if Nintendo wanted Mortal Kombat censored, then censored it must be. In order to keep making money, those companies had to bow to the whims of their console overlords. Nintendo and Sega could do it, because they were both hardware and software companies. To put it another way: Nintendo and Sega were both equally good at making hardware and software.

Sony decided to change the game with the launch of the Playstation. First, they made the cost of making a game much cheaper buy using disc-based media rather than the old fuddy-duddy cartridge media, but they also loosened the restrictions on making games. They built mutually beneficial relationships with a variety of third-parties and started including them in the process, treating them almost as equals.

Thus emboldened, third parties have stretched their influence far and wide in gaming. Activision and EA are heavy hitters now, and are able to dictate to some of the other companies. Just look at how bold Bobby Kotick was in talking about console price cuts this past year. They now feel that they're an equal part of the video game process, just as important as Microsoft or Sony. They worked long and hard to exert such a powerful influence over the industry and are now multi-billion dollar companies. They're not going to bow to anybody.

In fact, it's gotten to the point that Microsoft and Sony (but mostly Microsoft) are leaning almost exclusively on other companies to make games for their system. If all the third parties walked away from the 360, it would collapse. Sounds a little harsh? Just a review of Metacritic will show the truth.

We're not necessarily judging these lists on the quality and depth of the library, but rather how many games are made by the console manufacturers themselves. First, here are the top ten games for the 360 according to Metacritic:

1 Grand Theft Auto IV
2 BioShock
3 Orange Box, The
4 Mass Effect 2
5 Gears of War
6 Elder Scrolls IV: Oblivion, The
7 Call of Duty 4: Modern Warfare
8 Halo 3
9 Call of Duty: Modern Warfare 2
10 Braid

We'll note that only two of these games are made by Microsoft. Here's the Nintendo list:

1 Super Mario Galaxy
2 Legend of Zelda: Twilight Princess, The
3 World of Goo
4 Super Smash Bros. Brawl
5 Rock Band 2
6 Metroid Prime Trilogy
7 Resident Evil 4 Wii Edition
8 Okami
9 Metroid Prime 3: Corruption
10 No More Heroes 2: Desperate Struggle

On this list, five games are made by Nintendo. If we go even deeper, we'll find out some more interesting stuff. Let's find the top ten games made by Microsoft on the 360.

5 Gears of War
8 Halo 3
13 Gears of War 2
16 Forza Motorsport 3
27 Forza Motorsport 2
33 Fable II
49 Project Gotham Racing 3
66 Project Gotham Racing 4
85 Viva Pinata
106 Crackdown

You have to go through 106 games on the system (out of a total of 812) before you find 10 quality releases by Microsoft. Of those, four are shooters and four are racing games. Let's contrast this with Nintendo:

1 Super Mario Galaxy
2 Legend of Zelda: Twilight Princess, The
4 Super Smash Bros. Brawl
6 Metroid Prime Trilogy
9 Metroid Prime 3: Corruption
15 New Super Mario Bros. Wii
21 Punch-Out!!
27 Super Paper Mario
32 New Play Control! Pikmin 2
37 WarioWare: Smooth Moves

We go through 37 (out of a possible 540) before we get 10 quality releases from Nintendo. Out of these games, two are platformers, two are RPG-ish, two are fighting games, and two are shooters.

In other words, Nintendo is still treating third parties the way that they used to: Using them to fill in the gaps between major releases while not depending on them. The major players in the industry don't like that. Activision and EA don't want to be relegated to a role of subservience. They're multibillion dollar companies and don't want to beg like Oliver Twist. With Microsoft and Sony, they have all the power. Once again, if all the third parties quit on Microsoft today, the 360 would die. There would be no games for the system. If Nintendo's third parties ceased to exist, it would still get along reasonably well. Third parties exert far fewer control over Nintendo than they would like.

So, if you're a third party and you want to keep your position as a power broker in the industry, would you put copious amounts of money into your Nintendo software? No, not really. With Microsoft and Sony, you have the power. With Nintendo, they have the power, and multi-billion dollar companies don't like groveling to anyone.

The easy solution would be for Nintendo to cede power to the major third parties, but why would they? Nintendo's empire is booming. They're raking in money hand over fist. Nintendo went begging, hat in hand, for third-party support during the lean N64 and Gamecube years because they were in trouble. Now, they have their hat back on their head and have no need to dump their hard-earned money in someone else's lap. Plus, giving the third parties that much control means that they can complain and ask for new features that Nintendo is not willing to provide. Nintendo wants to move at their own pace with things like online gaming and storage. They're not willing to devote a huge chunk of money policing an online gaming system like Microsoft does. They're not willing to put a hard drive in a system if it's going to drive the price up. Those are the sort of demands a third party will make, and Nintendo doesn't want anyone telling them what to do.

It could be argued that it's in Nintendo's best interests to loosen up. In fact, I'll argue that right now. It's in Nintendo's best interests to do so. Nintendo has always had a prickly relationship with third parties going back to the NES/SNES days. Remember how upset Midway was that Nintendo wanted Mortal Kombat censored? Remember the stringent restrictions on how many games a company could make a year? As soon as those publishers could find the open arms of a different company, they went running.

As soon as Sony started creating a more open, less restrictive environment for third parties, countless companies jumped ship. By the end of the N64 years, Nintendo's stable of third parties was a barren wasteland. They made overtures to third parties during the Gamecube years, but they did very little to overcome the frustration of developers in the long run. Now, of course, they don't need the third parties so they're ignoring them again.

Here's the problem: Lean times will come again. They're bound to. Forging good relationships with other companies will help immensely. Look at Sony. They were deferential and accommodating to other companies while they were on top, and now that they're struggling the third parties are still working with them, giving them exclusive content and trying to bolster their market position. However, for Nintendo to accomplish this means they would have to change their entire corporate culture AND drop the protective Japanese mindset that makes them so hyper-independent. It opens them up to more leaks and rumors, which Nintendo can't stand. If you were Nintendo, would you risk it?

There are notable gaps in the Wii's library. 2008 was a vast wasteland, as party games stunk up the system. I even contemplated buying Carnival Games at one point. That's how low things got. If there was more third-party support, those gaps would never appear. There would always be something on the horizon, meaning that people would always have the pump primed to buy more Wii games. That could only help Wii system and game sales.

But is Nintendo to blame for the third-partypocalypse that everyone seems to be predicting these days? Not exactly. There are fatal flaws in a lot of the third-party games that have flopped at retail. Let's take a look:

MadWorld: Repetitive gameplay, so-so reviews.
Dead Space: Extraction: Rail shooter, awful box art, not a widely known series.
House of the Dead Overkill: Rail shooter, poorly promoted.
Little King's Story: Awful box art, poorly promoted.
Muramasa: Confusing box art, 2-D, poorly promoted, needs a bit of familiarity with Japanese mythology.
The Conduit: Awful box art.
    You see the problems? Most of the time, we're dealing with messed-up box art or a lack of promotion. Both of those can be laid at the feet of the 3rd party developers. Now, you may think that box art doesn't matter, but it really does. Good-selling games have good box art. Poor-selling games do not. Find me a game that has bad box art but sold a mint. Phalanx for the Super Nintendo doesn't count.

    Plus, just because a game is well-known among "gamers" doesn't mean that it will be well-known among game buyers. Those are a completely different animal, and those people depend on things like marketing, brand recognition, and other factors that affect people every day in their purchases.

    Nintendo can't help with the box art problem. They can help with the promotion, but some companies don't need the help. For instance, Sega, Activision, and EA have oodles of dollars to spend on this stuff. If they want to spend the money, they'll spend it. Other companies, like Atlus or Marvelous, aren't so lucky. Those are the perfect publishers for Nintendo to cozy up with. They're in a weak position, so they're willing to accept certain demands from Nintendo. They're also purveyors of high-quality content, which is exactly what Nintendo needs.

    So Nintendo doesn't necessarily want or need the interference of major third parties like Activision. They want to be left alone to make what they want to make, but having third parties who are willing to work with you is still a nice thing to have. Nintendo shouldn't put their focus on companies that are unwilling to spend the money to make their games successful, but they could and should help support smaller companies that could use the boost. It'll forge a good relationship for the present, will most definitely help smooth out the rough patches in the Wii's release schedule, and will help position them for future success.