Why Nintendo Failed at E3

Let’s get the disclaimer out of the way from the start: Nintendo’s presentation blew me away. The 3DS announcement has me more excited about a console than I’ve been for a long time, and the list of games that Nintendo rolled out will keep me occupied for a long, long time.

But at the same time I am concerned that Nintendo has failed at E3 in understanding the games industry, by failing to acknowledging that the industry is changing, and failing make any move to address those changes.

That change is the slow but steady move from retail-based gaming to online. Just about every major publisher has recognised the shift: EA, acquiring social networking vendor Playfish last year, was very candid that it was reducing the number of retail games it would publish, while hoping to substantially build its online presence. Square Enix, too, has been steadily developing its iPhone capabilities, and it too has turned its eyes towards social networking games.

On the console vendor front, Sony has long invested in its online and digital download mediums. Indeed, the development to its PlayStation 3 online network was the most impressive part of its presentation. There is the feeling that Sony is keen to do away with retail entirely, and between the work-in-progress that is the PSPgo, and the capabilities of the PlayStation Plus, it has set itself up to do just that.

Microsoft, for its part, is expanding its online service into nine new territories, showing the vendor is serious about building its global online presence.

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Finally, there is a potential new entrant to the industry, one that all three major vendors should be watching closely. OnLive, the subscription-based project, has a set-top box option, essentially creating a fourth console for consumers to choose.

Even if digital download games and online play doesn’t fully replace the need for retail, it will be a cornerstone for the industry in the near future. Nintendo has been slow in the past to adopt online play – ignoring it at a time where Sega and Sony were taking their first tentative steps with the Dreamcast and the PlayStation 2. In the current generation, the Wii and DSi’s online capabilities are severely inhibited by unnecessary policies and unpopular restrictions, such as friend codes and stringent restrictions on the size of games developed for both consoles.

It was important for Nintendo to announce some kind of firm online strategy going forward, but it didn’t. Other than a casual mention that the WiFi capabilities of the 3DS would be somewhat enhanced over the DSi, there was no other details laid out. Nothing about what shape the 3DS’s online services would take, no news on additional services beyond online play and a games shop, and no suggestion of a premium service.

My concern is that Nintendo is simply not investing enough R & D money on creating a great online experience for consumers. As wonderful as the 3DS looks to be, if Nintendo ends up in a position where it has missed the online boat completely, it will find itself back in the era of the Gamecube, where it was struggling to find any kind of voice at all.

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