Nintendo Fears Today's Emphasis on Mobile and Social Games Is Dividing the Industry

Nintendo’s President Satoru Iwata kicked off the official opening of GDC with a keynote reflecting on the gaming industry turning 25 years old.

The title is “A Historical Perspective and Vision for the Future,” which is interesting given that on the same San Francisco city block at the same time, Apple, one of Nintendo’s biggest rivals, is expected to launch the second-generation iPad.

Follow us live here, or the Apple event here, as we have dueling liveblogs.

9:09 am: Sorry, a few technical problems, but now we are live at the GDC keynote.

Iwata is now reflecting on the past 25 years of the industry, saying they were originally “video caveman,” but now everything is bigger and better.

He kicked off by admitting that the world of gaming is indeed changing. “The business model has changed, but the primary need is content, and without content and innovation from everyone in this room today, there’s nothing.”

I think the folks over at Apple’s event today would beg to differ — that it’s not just the folks in the room today, but elsewhere that are driving the change.

9:12 am: Iwata is now talking about large scale surveys that Nintendo conducts around the world to find out more about the gamers.

He’s showing a chart of the active gaming population in the U.S. The number of active players are up significantly.

9:15 am: One of the big trends of the past quarter century is social networking, he says.

He says that a social network and social games are two different things, and that social games go back 50 years.

Space War was the first game to offer head-to-head competition. By the 1970s, people were playing on connected networks via computers.

The Atari 2600 launched in 1977 in the U.S. and two controllers were included, and so it was only natural for us to launch the original NES in Japan with two controllers.

9:17 am: As another example, he mentions that Nintendo Game Boy users were able to play Tetris head-to-head by connecting two devices with a cable.

I don’t want to seem that Nintendo is taking too much credit for social games…To be sure, the last few years Call of Duty has been really popular. He also gives Microsoft props for creating a community with Xbox Live.

9:19 am: He says that in America a lot of video-gaming motivation is driven by what consumers “must have,” and the desire to have the latest devices and games or else they are left behind.

He’s now addressing what drives the industry, is it new hardware, or can the games alone drive sales? He gives a shout out to the Angry Birds phenomena. Another example is World of Warcraft.

9:22 am: He says we must look at the most popular titles over the past 25 years and see why they were relevant in order to keep making hits.

One example is the Mario franchise. He says he’s remained popular because he always evolves.

9:24 am: Hmm, time for a break to wonder if this keynote will have any news, or if Nintendo is letting Apple steal the show completely. Maybe it doesn’t want to try and go head-to-head?

After all, what would he have to announce in order to be considered big news?

But he still hasn’t really mentioned its latest portable gaming device, the 3DS.

9:27 am: Iwata is still reflecting on the past, so I’m sure we’ll get to the 3DS in due time.

To be sure, the room is packed full of attendees, and I even saw a few people playing their DS game devices before the keynote kicked off. How cute, that’s like people using an iPad before the iPad 2 launch event.

9:29 am: Reflecting on his career, the process of game development is the same for everyone.

At Nintendo, it’s just as stressful and frustrating, and there’s never enough time or solutions. If there is a way to make it easy, we haven’t discovered it yet.

9:30 am: Here comes the futuristic comments, and some promotional comments about how great the 3DS is. He says it has the power to attract new gamers.

The device comes with three embedded games that will compel users to have social interactions with their friends, who will say, “you’ve got to see this.”

9:32 am: But Nintendo says it can do better in wireless communications and downloads. So, the 3DS has made specific improvements.

President of Nintendo of North America Reggie Fils-Aime gets on stage.

9:34 am: Reggie is on stage to talk about the American perspective, and asks the audience to consider two words: Content and location.

All content on the 3DS will look like no Nintendo content before, even when it’s in 2D.

He says you’ll be able to stream from Netflix, a partnership that will go live this summer.

He says that you’ll be able to start watching a TV show on your Netflix account on your big TV, and then when you walk away, you can pick up where you left off on the 3DS. Or, he jokes, the 3DS will allow your kids to stream TV in the living room, so you can reclaim your big TV for yourself.

9:37 am: There is also going to be a short-form video service on the 3DS that will include videos and other content that’s curated by Nintendo.

He says we’ll do the primary content selection so that users won’t have to do endless searches to find the best entertainment.

Another great promise of the 3DS is the ability to record 3D video on the device. But there’s no more details to announce now. “Stay tuned for an update, let’s just say we are enthused, too.”

9:39 am: More promotional talk on how great the 3DS is. This time, he’s talking about dramatically increasing remote connectivity to enable location-based services.

9:41 am: Today, I’m announcing that in late May, we’ll have over 10,000 WiFi hotspots as hubs for the Nintendo 3DS, giving access to a variety of airports, cafes and restaurants for connectivity to play games with others and download new content.

No details on the financials of the partnership, but it sounds free to the end-users.

9:44 am: As we’ve previously mentioned, not all features will be available out of the box (when it launches late this month in the U.S.). Many updates will come in late May, including the ability to transfer current DSi games. That’s also will the web browser will be added to the device.

9:46 am: Iwata is back on stage. He says we are anxious to see how people receive their latest hardware.

But with new hardware, it must have new software. They are working on a brand new Super Mario to incorporate the new 3D capabilities. They are also working on Zelda, which will be available in June.

9:48 am: Last year was the 25th anniversary of Mario, and this year is the 25th anniversary of Zelda, he says.

An update on the new Legend of Zelda for Wii. A short video clip of the upcoming game.

9:51 am: Iwata wants to close about the thoughts of the future.

There’s three concerns:

— Craftsmanship: This has been one of the major losses. Games are no longer the highest quality that they can be. This is because of the way the industry operates. No matter how much time, money or man power, the needed flexibility is not there. Small details are lost in large products.

— Talent Development: In the past, everyone was a generalist, and everyone could comprehend what everyone was doing. But this era of specialization makes it much more difficult for a single individual to judge the personality of a game. If people can not tell exactly what other team members are doing, it makes me wonder, where will the next master game creators will come from?

— And, finally, this is his biggest concern: The majority of people here are creating games for social and mobile. I fear our business is dividing, and that threatens the employment for those of us who make games for a living. The stress has always been high, but until now, there was always the ability to make a living. Will that be the case moving forward?

9:55 am: He says each console has hundreds to thousands of games. Some become hits, although huge investments don’t promise anything. But now tens of thousands of games are being downloaded, and game development is drowning. The downloadable games are less expensive to create, but what revenue will they generate?

Of the leading downloading services, he says 92 percent of the games were free and most software that was not free, was really cheap.

9:57 am: Iwata is being very critical of social and mobile gaming trends, and is practically scaring the audience into thinking that the social and mobile are not sustainable in terms of paying living wages.

Interesting argument, given that console games is very much a hit-driven business, as well.

9:58 am: These platforms have no motivation to maintain the high value of video game software, for “them” content is something created by someone else — Clearly, he’s talking about Apple here.

The value of games does not matter “to them,” he says it’s a volume business.

The fact is, what we produce is value, and we should protect that value.

Please understand, all is not lost. Games are diverse, and they all find audiences. Let me suggest a couple of considerations to help a game get noticed.

10:00 am: He says capture attention immediately. It must be quick and easy for people to describe the unique features of your games to others. Recommendations are much better than advertising.

Having said all of this, there is a single solution to this challenge. Innovation.

There are many definitions, so his definition at Nintendo is this: We ask ourselves the same question, is there something impossible that we might make possible?

For example, at one time, people only wanted to view one screen at the same time. But now people have TV and phone, and tablets all at the same time. And, we’ve sold about 150 million DS worldwide.

10:02 am: Keynote is about to end. Iwata never once names Apple, and rarely addresses increasing competition from tablets.

He ends with a quote from the CEO of Time Gate: “We always have a game concept that we are very excited about and then we validate it as a real business opportunity.”

If the job at GDC is to learn from each other, then I believe we can all learn from this. Trust your passion. Believe in your dream.

For 25 years, we’ve been making the impossible possible.

In conclusion, he asks:

Why would we stop now?

10:05 am: That’s the end folks.

Interesting thoughts by Nintendo, which challenges attendees this year to ask whether the popularity of building social and mobile games is smart. Is there business models behind these trends?

He argues these platforms have only driven down the quality and have created a free or low-cost gaming economy.

He almost goes as far as to scare the audience into thinking that their jobs will disappear if they continue emphasizing these two platforms.

What do you think?

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