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Retail involvement key to 3DS, Wii U digital strategy
Retail involvement key to 3DS, Wii U digital strategy
April 27, 2012 | By Eric Caoili

April 27, 2012 | By Eric Caoili
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    16 comments
More: Console/PC, Business/Marketing



Nintendo will take an unconventional approach to selling packaged 3DS and Wii U software as downloadable games -- one that will rely on retailers to help expand its digital business.

Though Nintendo has lagged behind its competitors when it comes to offering downloadable versions of packaged games on its systems, it revealed a retail strategy that could help the company catch up, and hasten the adoption of downloadadable games for consumers.

Starting with New Super Mario Bros. 2's release this August, consumers will be able to purchase digital versions of packaged 3DS games either through the system's built-in eShop service or at retail outlets/websites (consumers receive a code that they can redeem in their 3DS for the downloadable game).

"It seems that, in general, digital distribution of the software available today is mainly aiming at no involvement from retailers," said the company's CEO Satoru Iwata. "Nintendo has decided to choose an approach in which we will ask our retailers to be proactively involved."

Retailers will be able to set the price of the codes as they see fit. They will also be able to provide a more direct option (as opposed to buying a Nintendo Points card) for consumers who want to buy a downloadable game but don't have a credit card or don't want to use one for privacy/security purposes.

The publisher notes that there are several advantages with this arrangement, such as limiting losses from excess inventory, retailers being able to sell games even if they run out of physical stock, and retailers shouldering billing and settlement costs instead of Nintendo.

"Furthermore, we recognize that one of the biggest hurdles for the expansion of our digital business is the limited methods to expose digitally downloadable products to potential consumers," said Iwata. "This recognition is one of the reasons why we are taking this sort of approach."

Though the percentage of 3DS systems connecting online and accessing the eShop at are an all-time high for Nintendo handhelds (70 percent in the U.S. and Japan), the company says retailers will need to play an important role in letting consumers know they can download packaged 3DS games.

"If only the consumers who proactively visit the Nintendo eShop are aware of the digital download software that we deploy, there is no chance that our digital business can drastically expand," the executive noted. "Asking our retailers to be proactively involved not only increases consumers' exposure to our digital download products but also will make sense in other ways."

Nintendo expects to pursue the same strategy with its packaged and downloadable software for Wii U when the home console launches during the holiday season this year. It has already begun experimenting with selling downloadable games through retailers by offering codes for 3D Classics: Kid Icarus at GameStop.


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Comments


Jonathan Murphy
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External HDDs aren't reliable with 1080. I backed up some of my DVD movies and played them off my external. It would lag/freeze. I couldn't run it for very long, it would time out. An external HDD is made for back up of data. Otherwise you get read/write errors because it's run through USB, not SATA/ATA.

How many people will use the external HDD? 1 million, 2 million Wii U owners in 2 years? How many of them will pirate games? 25%? 15%? They could remove the HDD before a firmware, get the latest patch from a PC then replug it in. This is a disaster on every level. I hope it's a rumor. This feels a lot like the self check outs at stores. Make the customers do the work and let them rob you blind if they want by cheating the machine. Increased storage has ALWAYS been the key to supremacy since the PS1.

Joe Zachery
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Not sure what your talking about this has nothing to do with storage.

Jonathan Murphy
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Nintendo said users will have to purchase an external HDD. Without a HDD how effective can a digital store possibly be?

Nicholas MacDonald
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What exactly is your concern? That Nintendo's external storage solution won't work? And where are these statistics coming from?

Kale Menges
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To comment on the actual topic at hand in this article, I personally question putting trust in brick & mortar retailers to expand digital sales. That doesn't make any business sense. Retail has been in a downward spiral for some time now BECAUSE OF DIGITAL storefronts competing for software sales...

Ian Uniacke
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I think a SMART retailer would be working with companies (like Nintendo) on ways to remain relevant as long as possible. Any other action is the equivalent of burying your head in the sand.

Bob Johnson
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Welcome to 2012 Nintendo! Consumers have had the option to purchase digital good through retailers for years now.

Yeah and I question how eagerly Gamestop will promote digital purchases when their business is selling used copies of your physical games.

Still nice to have the option although the price should still be lower. NIntendo did say retailers can set these digital prices...

so maybe we will see lower pricing on digital goods through the retailer. Makes sense since even at retail since codes would take up a lot less space, be easier to stock and if they are just codes on receipts then there would be no stock and no running out of stock as they alluded to.

Kind of interesting that they will be selling codes to specific games and not generic point cards from the sound of it or at least in addition to generic point cards.





Joe Zachery
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You know Nintendo has been selling games digital since 2006 when the Wii launched. So they haven't been behind as much as people want to claim.


"Yeah and I question how eagerly Gamestop will promote digital purchases when their business is selling used copies of your physical games."

The problem with the industry is that the industry is fighting the people who are selling their games. Gamers buy their games at gaming specific stores like Gamestop. So called casual gamers go to places like Gamestop to buy their games. Have you tried to buy a game at Toys R Us, Walmart, and Target. They have no one there familiar with the product, and never have the product on time. Nintendo understands if you work with people like Gamestop you can make it work towards your advantage. Noticing the Circle Pro Pad, and Xenoblade exclusive deals that have been recently done. Do you really think stores like Gamestop are going to carry PS4, and Xbox720 if they go the route of not playing used games. Gamestop doesn't make money on hardware, but the sell it because it plays the games they sell. Unless both Sony, and Microsoft plan to open stores like Apple. Which I seriously doubt they will lose one of the prime retailers for gaming there is. Nintendo would rather keep their enemy close I say it's a smarter move.

Jeremy Glazman
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They've also been offering digital DS downloads at retail kiosks since before the Wii even came out. This is not a new strategy.

Ray Beez
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Silly strategy. Nintendo is obviously afraid of neglecting their hardware sales channels, but have they not bothered looking into such stores lately? The Wii games section of most big electronics retailers these days is pathetically dismal. And old classics from nintendo are still priced at exhorbitant prices. Cut the cord Nintendo! Gamers want what they want instantly. It is a shrinking minority who bother walking into stores for media entertainment. We browse online, we stream and we download. And we are getting increasingly used to "try before you buy" (demos and freemium).

I'm afraid the iPad will have already eaten Wii U's lunch before it even launches.

Eric Geer
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The problem with ^your strategy is that it cuts out at least 25% of the population of the US-as they are Not online or connected--Not sure what the stats are worldwide--but why would you willingly cut out a large chunk of the population--when it is just as easy to include them?

Eric Geer
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PS--I buy about 85% of my games in hard/physical copy. About 50% of the time its going into a store to buy it.--otherwise I order online and have it shipped.

Merc Hoffner
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I hope digital copies aren't going to be an absolute requirement for 3DS software going forwards as ROM != NAND Flash.

As far as I understand it (though please do correct me if I'm wrong), the pre-formatted read-only Mask-ROM inside 3DS (and just about all prior) solid state cartridges has much faster access times and read speeds than user-fragmented read/writable flash can typically deliver. This shouldn't make a difference for most modern games as flash is plenty fast for ROM loading of the typical sizes of these things (and far faster than optical), but I was rather hoping some/any developer would take advantage of a unique technical opportunity on the 3DS:
Basically, the ROM space should access so fast that it can act like a very slow RAM or cache space for slower loading assets (such as geometry/texture data that isn't yet but may soon be in view), freeing up the real RAM for more intense detail on what's immediately observable, and extending this virtual RAM space to the size of the whole ROM.

The 3DS is at a surprisingly unique technical juncture because all prior solid-state ROM based devices either haven't had hardware MMUs for dealing with the loading, or the ROM has been too small relative to RAM to make it worth bothering, or both. Modern phones and the PSVita are both out because of the aforementioned limits of user-writable flash memory (AFAIK Sony mandates digital availability of all Vita software), plus the RAM on mobile devices typically dwarfs the game ROM (due to download restrictions) making the advantage moot.

So, am I barking up some funny tree or am I onto something? And who's up for trying it?

PS, on the Wii-U side, just as with the PS3, doesn't digital availability conflict with the potential of 50GB bluray games?

Cordero W
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Didn't they make use of this technology in Ocarina of Time 3D?

Ronaldo Fernandes
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Actually, this is a pretty smart strategy. Perhaps unlike most posters in Gamasutra, most games are still being brought from outlets instead of being downloaded. By giving a cut to the vendors, Nintendo is assuring their alliances to push their products, which might give them an edge in relation to Sony and Microsoft offerings.

Digital distribution will be the king in a near future, but rushing it could be a poor strategy.

JB Vorderkunz
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I think that Ronaldo has a good point: a total guess, but I nevertheless guesstimate that the average Gama reader and her/his circle of friends is at the Early Adapter end of the adoption continuum whereas the average consumer, by definition, is not.


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