This is part two of a two-part article. In part one, I talked about how Nintendo\’s 3rd party troubles are their own \”fault\” – that is, they are the natural outcome of Nintendo\’s \”blue ocean\” strategy, which they employed with the Nintendo DS and Nintendo Wii.

Alright, so Nintendo\’s choices brought them where they are with 3rd party support. How is this \”good for everyone\”?

Because sometimes, the new big, blue ocean becomes so appealing that 3rd party publishers will throw themselves headfirst into it, willing to re-learn the business as they go. And that\’s if the 1st party (in this case Nintendo) hasn\’t already taught them how to do the new job.

Look at the Nintendo DS. A hardware environment that was once ridiculed for being different (\”What do you need two screens for? And who even cares about touch screens, they are inaccurate!\”) was now the portable platform with most growth, easily providing more financially sound investments than the more powerful Playstation Portable. Suddenly, there was Nintendogs, and then there was Petz, and Imagine Babies.

Similarly, as the Wii moved forward from it\’s ridiculed premise, we Nintendo fans were fortunate to witness the 180 degree turn most 3rd parties made after they realized Nintendo\’s no-longer-imaginary elderly, family-based, and female audience actually existed, and were buying the Wii (and DS) like canned soups before a hurricane; Suddenly, there was Wii Fit, and then there was Jillian Michaels Fitness Ultimatum, and Just Dance.

It\’s fair to recognize that, as the Wii reached its full maturity (the DS was already on its death throes by this point), its largest audiences began to disappear, seemingly heading toward the smartphone market. Meanwhile, because motion controls were ultimately unable to lay down a wide avenue for traditional games to grow in interesting ways (Red Steel 2, Skyward Sword, and IR aiming in Wii FPS games were not enough, unfortunately) and in a way that attracted a traditional core audience, 3rd parties retreated back to their \”safe\” AAA investments.

However, this does not mean that both platforms didn\’t influence the industry. First of all, the penetration of touchscreens and motion controls as user interfaces could be said to have influenced the design of the same smartphones that were now taking Wii\’s expanded audience: Without the Nintendo DS and the Nintendo Wii to prove touchscreens, accelerometers, and gyroscopes as viable user interface devices, maybe there would be no iPhone. Maybe there would only be the good old Blackberry.

If only they thought of the pinch-zoom first…

Furthermore, when the expanded audience left for the smartphone, many 3rd parties opted to follow them and applied the touchscreen and motion control experience they had acquired on the DS and Wii to make games on the smartphone. Here, the experimentation of game design and business opportunities would continue. Business models such as free-to-play games and in-game microtransactions were no doubt refined most quickly in the smartphone platform, and have since been applied in more and more console and PC games as well.

But where does that leave Nintendo, and what happens next?

I mentioned before that, unfortunately, the motion controls of the Wii (and later adopted in a way by Sony and Microsoft with the Move and the Kinect) had failed to provide a wide avenue for traditional videogames to grow in innovative ways, prompting 3rd parties to return to the \”safe\” investments of hardcore AAA games. The 3rd parties that were surviving the generation, at least – over 150 studios had closed between 2006 and 2012. Maybe I would need to look more carefully at the data to make an accurate assessment, but to me this doesn\’t look like a sustainable environment, let alone one for \”safe\” investments.

So there\’s the Wii U: it\’s got a 480p touchscreen, dual-screen capabilities, gyroscopes, accelerometers, a front-facing camera, speakers, infrared sensors, NFC capabilities, Off-TV play, and traditional dual analog controls. It also has no audience and no 3rd party support, and a vicious cycle of negativity where one blames the other for its shortcomings. It would truly be nice, very nice indeed, if the Wii U could be the platform to bring the sustainable innovation and freshness required to both bring new audiences to the gaming industry, and to keep the existing fans interested in it to begin with. But it isn\’t, and the way things are going, it probably won\’t be.

And why can\’t I play Call of Duty: Ghosts with this yet?

The story doesn\’t have to end there, however.

Let\’s go back to a different time, a braver time, for an important lesson: back in the first generation of videogame consoles, games were sold as their own consoles. Consumers had to buy a dedicated machine whose only purpose in Life was to play one game, for example, Pong (with minor variations enabled by the use of screen overlays and swappable custom cartridges). They had no other choice: it was either this, or go to the arcades every time they wanted to play Pong. Still, this was a great success – for a while, until people got tired of single-videogame consoles and stopped buying them altogether.

Then came Fairchild, with the Channel F, the first videogame console to accept generic ROM cartridges, among other features such as having a built-in microprocessor. This changed the dynamic for the 1st party, who could now produce a variety of games comparatively cheaply and sell them to an audience through retail stores; and it changed the dynamic for consumers, who now had to buy only a single expensive console, and one comparably cheap cartridge for each game they wanted to play, as opposed to having to buy one expensive console for each game they wanted to play.

Ultimately, the Channel F was not very successful, but it was influential: Atari went on to use the same business model with the Atari 2600.

Behold: Progress.

The Channel F and the Atari 2600 were important enough to be called \”2nd generation\” videogame consoles, separating them from every console and coin-operated machine that had come before. Specifically, the Atari 2600 was such a good machine for Atari, who used the ROM cartridges to quickly produce a large variety of games, that it allowed them to eventually recover from the videogame crash of 1977, and helped them ride it out until the next, more well-known videogame crash of 1983.

Keeping that in mind, I think that even if the Wii U turns out to fail in the exact same way that Fairchild\’s Channel F \”failed\”, that will still give room for a later gaming platform to refine those concepts and create a better, sustainable environment for both expanding audiences and traditional gamers.

But, like Activision I also don\’t think that we should be counting Nintendo out yet. The Wii U is only two years into its life, and Nintendo\’s wizards are hard at work trying to prove the system\’s worth. Nothing\’s unsalvageable.

Consider Valve. When Valve introduced the Steam platform for PC, the PC game market was in a steady decline. Valve set up shop, and used their 1st party games and proprietary engine to lay the foundation for online-centric games, and account-based game libraries that could be downloaded from anywhere in the world (even while introducing a new form of Digital Rights Management). Since then, they have fostered rapid growth of this new market environment with a variety of tactics such as aggressive sales, monetized in-game accessory markets (Team Fortress 2 hats) and achievements (trading cards), and crowdsourced the entire game licensing process, busting the doors wide open for indie developers, with further plans to crowdsource the entire store organization later; furthermore, they are opening a new market for Steam Machines, gaming-centric (but still quite capable) devices that run Valve\’s own Operating System and use Valve\’s own gaming controller.

\”Are you the new emperor of PC and console gaming?\”

Yeah, Valve is insane. Better keep an eye on them.

The question, then, becomes: can Nintendo do like Valve, and take advantage of the unique position they are in, using their wealth of excellent 1st party games and interesting hardware to foster an environment of innovation that is both sustainable and interesting to both an expanding audience and traditional gamers? Maybe not yet, but it\’s not like they\’re out of ideas and backed against the wall.

If we look in the direction of Nvidia\’s Shield tablet, we see a portable system that has graphical capabilities comparable to the Playstation 3 and Xbox 360, at the price of $300. In a couple of years, either that price will be lower, or the graphical capabilities of such a system will be higher.

What happens, then, if Nintendo creates a portable-console hybrid system that is not only more powerful than a Wii U, but also debuts at a comparable price, while maintaining both portability and all the kooky features Nintendo\’s late systems have (accelerometer, gyroscope, magnetometer, touch screen, dual screen gaming, IR sensors, speakers, camera, and support for old and new peripherals)? We\’re talking about the kind of system that can be used to play Zelda U in one\’s home 1080p screen and surround sound system, or in the train while you commute to work; a sort of fully portable Wii U that, once Nintendo has consolidated their operating systems (expressed here, in question 5), can play any 3DS, Wii U, or virtual console game in existence. Maybe at this point, even Nintendo\’s 1st party-centric audience is large enough that it can\’t be ignored by 3rd parties, and results in a boom of innovation as 3rd parties seek to differentiate themselves by making creative use of the system\’s unique capabilities – even more so if Nintendo has already taken the bull by the horns and showcased how these features can be used through the Wii U\’s gamepad.

Ultimately, there is a lot of wishful thinking in this article. But it comes out of concern for the industry at large. Where would we be, if we were part of a gaming industry in which publishers never made risks with unconventional, unproven platforms? We\’d be nowhere. Markets crash without leaders to bravely venture forth and claim new territory, new business ground on which to start new empires. Whether that role is to be claimed by Nintendo, Valve, someone else, or all of the above, we\’ll have to wait to find out.

But it definitely needs to be claimed. As long as 3rd parties don\’t find the most innovative system appealing, and instead choose to hold their ground on consoles that are not very different from the last, they will perpetuate that strange famine that has already claimed many beloved publishers and developers (alas, those are the prohibitive costs of modern AAA development). Actually, I wouldn\’t know if we are at risk of oversaturating the narrow \”multiplatform\” market, or of having so few safe, \”blockbuster\” products on it, that eventually people will stop buying those games altogether, the same way they did back when Atari were kings and released the horrendous ET.

A brave archaeologist holds the mythical artifact said to have brought despair and ruination upon the Atarian empire.

Change is risky and sometimes even terrifying, but that\’s how it goes: familiarity and short-term profitability get caught in the cleansing fire that restores the soil, and allows for innovation and long-term business sustainability to spring anew. And the result, for we gamers? Lots of fresh, new experiences unlike everything that came before.

Written by Alex Balderas

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