Techland and Kotaku on the Nintendo Difference: Past, Present and Future

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Last week, the fine folks at TechHeads asked yours truly and Kotaku’s Stephen Totilo to talk about the current status of Nintendo and gaming topics. You can see Stephen and me jaw it up below, but there were other points I didn’t have a chance to make that I wanted to add to the discussion:

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• Nintendo doesn’t bring loss-leader consoles to market

The video games industry generally operates on the onerous razor-and-blades business model. That’s when the razor gets sold below what it actually costs to make, with the idea that customers will come back again and again to buy the blades. All of a sudden, it makes sense why a four-pack of blades costs $20, eh?

For example, when the PS3 launched its baseline version at $500 in 2006, Sony was actually losing approximately $300 per unit. The lure of Blu-ray and a growing library of games was going to be what helped Sony recoup those losses. Microsoft endured a similar shortfall with the launches of both the original Xbox and the Xbox 360.

(MORE: Nintendo’s Wii U: Gimmicky, Practical, Fascinating)

Nintendo’s never conducted itself that way. They generally don’t take the onus of R&D upon themselves, preferring to use already extant technology in innovative ways. Nintendo global president Satoru Iwata says they see themselves as a software company first:

“The point is not necessarily the limit of the technologies, but rather we should think in terms of the software, whether or not we would be able to come up with a new great software idea is the key.

At Nintendo, it’s very different. The poor guys in hardware development always have to ask the software developers, ‘Is this the year that you are likely needing new hardware?’ [Laughter]

Of course there are some people who really love high-tech at Nintendo and I have to admit that some of them must be sometimes frustrated. I will say, however, that everybody at Nintendo is pretty much aware that it’s not hardware nor is it software alone, but it’s the experience which matters and the experience delivered to consumers can be only realized by a perfect combination of the hardware and software.”

Even the Wii U controller—which isn’t due out for another year—appears to have more moderate specs for its touchscreen, with Nintendo opting for a resistive option rather than a capacitive one. This strategy keeps costs down and ensures that every console turns a profit. But there’s a downside to using tech that’s already out in the wild.

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