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Nintendo's Fils-Aime: Low-Priced Mobile Games Among 'Biggest Risks' To Industry
Nintendo's Fils-Aime: Low-Priced Mobile Games Among 'Biggest Risks' To Industry
February 4, 2011 | By Kyle Orland

February 4, 2011 | By Kyle Orland
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    41 comments
More: Console/PC



With retail titles for the upcoming Nintendo 3DS expected in the $35 to $45 range, Nintendo of America President Reggie Fils-Aime actually thinks it's cheap, $1 and $2 mobile games that are "one of the biggest risks today in our gaming industry."

Speaking to Geoff Keighley in the latest episode of GameTrailers TV, Fils-Aime contrasted "full-fledged" 3DS games like Steel Diver with a flood of cheap games on mobile devices like the iPhone that are "disposable from a consumer standpoint."

"Angry Birds is a great piece of experience," he said, "but that is one compared to thousands of other pieces of content that for one or two dollars I think create a mentality for the consumer that a piece of gaming content should only be $2."

Taking one last dig at the mobile competition, Fils-Aime added that he "think[s] some of those games are actually overpriced at $1 or $2, but that's a different story."

While Nintendo 3DS, like the DSi before it, will eventually include an online shop for downloading free and cheap titles, the company seems to be continuing its focus on full-priced retail titles for the bulk of the new portable's software.

Fils-Aime previously addressed competition from free and cheap digital downloads and social games last month in an interview with CNBC, where he said Nintendo's "great franchises really motivate consumers to buy the software."

With many developers expressing concerns about the cost of developing 3D games for Nintendo's new portable, company president Satoru Iwata said last May that those costs depend largely on how developers implement the feature.

"If you try to make something that's not in a 3D world into 3D, you'll probably have some cost," Iwata said. "There's still no foundation, and it's an area that requires trial and error. It is that trial and error alone that could see an increase in development cost."


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Comments


Lo Pan
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Mr. Fils-Aime, may I humbly suggest not releasing a portable every couple years at $200+ with games that are $20+. This might work. Platform cost at $149 with $9.99 games.

Lo Pan
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I do dig at Nintendo. :-)

@Dragos, yes talking about those.



My dig was that the 3DS is essentially a sup'ed up DSI asking for a premium price of $250 in down economic times. Reggie wonders what the problem is. Problem is there are kick ass .99 and $2.99 games being made that kids and struggling parents can afford.

Carlo Delallana
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I'm not sure why he believes they are disposable when you have Angry Birds' retention rate at 80%. This is achieved by updates to the core experience. Now they have In-App Purchase items like the Eagle that gives the game a bit of a small twist.



While not everything is "Angry Birds", mobile developers are looking into In-App Purchase to extend the longevity and to continually engage players beyond the initial purchase. He's either ignoring or is unaware of this side of the mobile game business.

Todd Kinsley
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Fils-Aime is saying what anyone in his situation would have to say. If you're going to charge people $35 - $45 for games on your portable system, you pretty much HAVE to "dismiss" much lower priced portable games as being inferior. He doesn't really have a choice. I tend to agree with Carlo though... Not all inexpensive portable games are "disposable". There is definitely money to be made there, and people are doing just that every day.

Georg Gruber
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Well said on the part that Reggie talks the corporate talk of Nintendo of course. But it's good to see that Nintendo takes the threat of iDevices seriously.



Also (absolutely my personal opinion) prices for games should be way lower on Nintendo handhelds. 249 USD for 3DS seems expensive to me for a handheld when I can buy for the same money or less a full feature HD "living room" console... though.

DanielThomas MacInnes
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"Angry Birds is a great piece of experience," he said, "but that is one compared to thousands of other pieces of content that for one or two dollars I think create a mentality for the consumer that a piece of gaming content should only be $2."



And this is bad, why?



Oh, and since we have Reggie's attention, could somebody ask him if Nintendo is ever going to bother making another Nintendo Wii game? I'd probably trade mine in for a Sega Dreamcast, but Just Dance 2 is still a lot of fun, and I need the exercise.

Carl Chavez
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Because, well, he's basically saying that if Angry Birds is one great piece of experience, and thousands of others at the same price point are crap, it still creates an expectation that all games should be as cheap as Angry Birds, even though it is clear that at that price point, most developers can't make high-quality games. If most developers are making low-quality games due to consumer expectations on price, that is a bad market situation. It's a valid argument to me.

Mark Kilborn
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+1. Carl's nailed it.

Keith Fuller
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I'm no economist so I'm really asking questions here, not taking a stance.



If the market floods with $2 games that are crummy (as per your description, Carl) then wouldn't one of the following happen?

1) The consumer detects that the quality isn't there and eventually stops purchasing $2 games. Then $2 low-quality games stop being made because no developer can make money off of it due to low demand.

2) The consumer is actually OK with crummy $2 games and keeps buying them, meaning some developers somewhere make enough money to keep producing said games. Some devs don't make enough and leave the arena. So the strong survive and the consumer remains at least moderately happy. Isn't that how open markets are supposed to work?



Maybe I'm misunderstanding your point, though. Are you saying that scenario #2 is inherently bad because $2 games are still being made, albeit at lower volumes?



Despite Profesor Baghierieh's best efforts, I barely made it through Econ 101 so please forgive me if I'm failing to grasp the situation properly.

Stephen Chin
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On two, the issue comes in when products are bad, demand is low, yet people still buy because it's cheap. It's easier for people to drop 2 bucks on 10 games versus 20 bucks on 2 games even though the overall benefit may be the same.



This forces out bigger budget games because sales aren't there. More 2 buck games get made to compensate but this also starts slowly stealing parts of the pie (at some point, everyone has a limit on impulse and 2 dollar buys). And at some point, if there really is a bunch of poor experiences buying games/playing games/getting value out of 2 dollar games, people will stop buying 2 dollar games causing more desperation.



Platforms (or games) that struggle with poor titles tend never to recover very well. While we might not ever see apps go away as a platform, I think it's in our best interests to put out a decent product rather than try to cash in on what is likely the tail end of the golden age of Apps.

Emperador Alencio
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You are have an obsession for the Dreamcast right? The Dreamcast is dead, move on.

Brad Borne
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Same thing that happened with WWII / futuristic shooters on the consoles. The market gets flooded and 3rd parties have a hard time getting decent funding for anything else.



It's like any other market fad, like over processed auto-tuned teeny bopper pop stars, or tickle-me-elmos, or CGI movies, or cheap, terribly animated kids cartoons.



It's not so much that the market is okay with them as it is a self fulfilling prophecy. That's where the money goes, so that's what's advertised, that's what's hyped and talked about, and that's what's sold.



And depressing of all, let's not forget how much of an idiot the average kid is about buying awful movie licensed video games...

Nathan Miller
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Brad I think you are absolutletly right.



It's a complete misunderstanding of the market. People who buy console or PC games, are still going to buy those games, and they will likely buy $2 App throw away games too. I know I own angry birds, it's cheap and fill voids of boredom waiting in lines and such.



The app games also bring in money from people who would never buy an actual console or PC game...like my wife, she loves bejeweled and its on her phone...she would never buy any other kind of "real" game.



So ya the cheapo app games are the new "it" niche in the gaming world, but it will never be a real threat to the overall gaming market...it's the bean counters following the $$. It's a fad, it'll always be there but it doesn't have any kind of real future.

Ian Uniacke
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I thought the point he was making was more of a psychological effect similar to how everyone now compares the price of a hamburger to mcdonalds 2$ hamburgers. Whereas people are happy to buy a steak for 15$ or more because there is no McSteakburgers family restaurant chain selling steaks (albeit crappy steaks) for 2$. But more often than not it is a much harder sell selling a hamburger for 15$ even if it's a great hamburger. I know I'm talking about meat but I hope my analogy makes sense.

John Giordano
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The problem is that the iTunes store is a small percentage of semi-interesting content and a large percentage of throw-away experiences. When a game is produced with the expectation of selling for 1 or 2 dollars, you can expect those throw-away experiences to flood the market while much of the more substantial content gets lost.



With Nintendo's retail market, at least they can have staple games that are plainly visible and not buried under mounds of bad games. And if it so happens that people DO want those 1-10 dollar games, they will have that covered with the eShop. I think they at least have a wider range of options to choose from.

Jacob Pederson
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Let me just point out that Nintendo's Wii market IS buried under mounds of bad games, and that's at a $30-$50 price point.

John Giordano
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@Jacob,

Still, it easier in the retail market to make good content stand out and be noticed by consumers, while the "mounds" of bad games often go into a bin and are marked down to $5-10 anyways.

Andrew Dobbs
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These mobile games clearly don't have the depth of Wii games...

Leon T
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They sure don't. Games like GoldenEye 007, Super Mario Galaxy, BoomBlox, and many others blow mobile games away.



Hell show me a mobile game with very little depth that sold as much as Wii Play.



I'm 100% positive that the 360, PSP, PS3, and DS have tons of games with more depth too.



Anyway Carl pretty much nailed Reggie's point.

R G
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Ever heard of *insert word here*Ville? The games are shallow (to me at least), and they make a crazy amount of money. Plus, they can be played on the go.



On a side note, Infinity Blade pretty much beats out everything you listed minus Galaxy and Wii Play. GoldenEye failed and BoomBlox was a critical success, but didn't sell as well as it should of (disappointed me actually that it didn't). If Wii Play is you're definition of depth, than so be it.



And we're not talking about the 360, PS3, or really the Wii to an extent. Notice the theme is mobile games?

Stephen Chin
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They're not suppose to. A game designed to be played in 5 minutes is going to have a very different direction versus one designed to be played over 60 hours. That doesn't really make an argument unless you're trying to imply that such a thing means an inherent inferiority.

Leon T
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@ Robert



I listed GoldenEye and BoomBlox as games that have more depth. Neither failed by the way. BoomBlox sold well enough for EA to make BoomBlox 2 and Activision stated that GoldenEye was selling to their expectations.



I figured that Andrew wanted to know. I mentioned the sales of Wii Play more as a joke. The theme is more what was Reggie's point about mobile games.

R G
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Ah, got your point now. Still...GoldenEye is not a very good example of depth.

R G
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Now, couldn't you make the same argument that if games are priced at 35-40 dollars (speaking of the DS) a pop, they should all be equal in quality than?



You can make quality games for one to two bucks. As indies, I know we are. I can understand Nintendo not, but saying that and than looking at their 3rd party support (which you can compare to " with a flood of cheap games on mobile devices like the iPhone that are 'disposable from a consumer standpoint.' "



Now replace iPhone with DS or Wii.





My, this IS a tasty burger.

Mathieu MarquisBolduc
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Now how many recent 20$+ games on the DS offer a better experience than 2$ angry birds? Most DS releases arent even reviewed anymore.

Sebastian Cardoso
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Nintendo will need to adjust to Apple's model. It will only take a few years until we start seeing $5 games on the iPhone with superior quality to that of a fully fledged NDS game. And that day, other than the occasional Nintendo IP, there will be no more reason for NDS gamers to stick to that platform.

Luis Guimaraes
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There have been FREE games, good and bad ones, for a long time, long before the apps came, before facebook, and before wii... and 'the industry' is alive and kicking...

Sting Newman
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As if Regi should talk the quality of games coming out of Nintendo have been all over the map.

Ulrich Haar
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For traditional platforms only a fraction of a game's price goes into actually producing the game.

For sure Nintendo and it's traditional partner the evil retail/marketing empire see it as a risk if other platforms use a more efficient distribution model that finally successfully cuts out the retailers.

Apart from limited hardware and user interface capabilities, games with similiar production value could become available on smartphones for much lower prices.

John Gordon
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Nothing wrong with having games at $1 - $2. But the iDevices are too high priced. Mobile devices in general should come down in price.

Steve Peterson
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Granting Reggie's point that $1 games are a threat to $40 games... what's he plan to do about it? The iOS game market exists, and the 3DS has to position itself against it somehow. Few people will likely expect the same experience from a $1 game that they expect from a $40 game... the real issue here, I think, is the pricing of old NES games on eShop. Can Nintendo really get $5 for them when people look at what's available on smartphones?

Steven Chung
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Did anyone else on the Related News section of this page, "Super Mario Galaxy 2 Sells 6.15M Worldwide, Wii Sports Series Passes 102M"?

Dan MacDonald
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A huge part of why Nintendo (3)DS games cost what they do is that they are sold at retail and carry in their price all the overhead of physical distribution. Nintendo could compete if they switched over to digital distribution, people would pay a premium (relative to the app store) for brands they love as Reggie says.



In short, the (retail) mobile games market isn't "at risk" it's just being challenged by distribution channels with less friction.

Rey Samonte
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I'm probably going off topic here, but I think the game industry is still going through its transitionary phase now that mobile devices have become more powerful with accessible tools available for developers. We see open source libraries that developers can take advantage of that lowers the cost of development that allows these bite sized games to be easily developed and released. Games like Angry Birds benefited from the use of Box2D which didn't require any kind of license to release a game on.



The model that existed between publishers and developers has branched off into its own thing that gives developers with low budgets and resources to still be successful without having to spend thousands of dollars on devkits, licensing and marketing. I also believe that the past few years have almost forced developers to branch off and do their own thing through all the studio closures and layoffs. From what I understood about the indie scene, it was primarily hobbyists whereas now, there's a saturation of experienced developers who couldn't find jobs but decided to take matters into their own hands and used whatever resources they had to start something for themselves. I think we're starting to see the results of this.

Joe McGinn
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Very well said Rey, that's a good summary of the situation. It's why I am worried about the 3DS. The quality of iPhone apps is rising month by month because of all those experienced game devs working in the field. And while I am sure Reggie has right that this has created a dangerous precedent on what people expect to pay for mobile games, what of it? That genies is out of the bottle. This is the environment you now have to compete in.

A W
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Getting an iDevice runs in the range of 300 to 600 US dollars. The average cost of a app game is in the range of 2 to 5 US dollars. The percentage Apple takes off the top of apps sold is around 30 percent. If you factor in the cost of a movie or an album on the iTunes store compared to the cost of a game bought on the app store, you can see a grand difference in how one market is treated over the other.



I translate his point to be that if a company gets away with selling their product for well under price of the development it may make consumers think that 2 dollars and no more than that should be the pricing point for many different kinds of games, and that may damage the market overall. If movies and music sold on iTunes can come in at a 10 to 15 dollar price point, surely quality title games can cost just as much or even a little more on the app store. It is the monopoly argument. To much undercutting the price of your product can be harmful to the overall market structure of the products your selling.

Carlo Delallana
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Or it could give birth to new models. I think the savvy developers out there realize that the initial point-of-sale isn't the only means of reaping profits from your game. Supporting content with DLC, In-App Purchases are ways to continually profit from the initial development but also keep developers connected to their engaged audience.

David Peterson
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Here's the thing with the $1 game price - I've spent more on the App Store in the last 12 months than I have on console games, in $1-$5 segments. Why? Because at that price, it is pretty much no-risk to try something out. If it looks interesting, I'll try it. And it adds up.



But every time I buy a console game for $60-$100 (Australian), I need to weigh it up. Will I enjoy it? Will I get $80 of value out of it? Do I want this game, or should I save the cash for this other one coming out in a few weeks instead? And more often than not these days, I decide not to buy.



The App Store provides instant gratification with almost no price barrier. Sure, there are lots of limitations, particularly with controls (I hate 'virtual' joysticks...), but guess what? There's still lots of fun to be had, and people are somehow making a pretty good living at $1 a pop.

Kim Pallister
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>$1 and $2 mobile games that are "one of the biggest risks today in our gaming industry."



If by "our" he means "we at Nintendo", then ya, it's a big risk to you Reggie!



If you can't clearly articulate why your $35-45 games are better than $1-2 games, then ya, you've got a problem.

Joe McGinn
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Well said Kim. This release was actually an unusual stumble for Nintendo. Of course it is a risk and of course they are worried about it, but what is the benefit of admitting it? At best nothing changes; at worst some 3DS-development projects get a reality check: can they make money?

Matt Hackett
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The recent article by the 2dboy guys mentions that a decrease in price was an increase in revenue for them. While that's not the same thing as gross, their point was that their games get to more gamers that way AND more money is coming in. It's win for everyone involved.



A $2 price point signifies a change in the industry, to be sure, but I'd think that Nintendo of all companies would see this as an exciting opportunity to reach that mass market they've been seeking. Their target market seems to be kids, and they could afford $5-10 games with their allowances alone. (Back in the day my allowance was $2/week so do the math to figure out how long it took me to buy Gauntlet for NES priced at $40.)



Digital stores, online MP and free-to-play are exciting. Nintendo has traditionally been great at innovating with hardware but severely lagging behind in these other areas. Time to evolve.


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