Objection, Sustain

The games-following media went all a-flutter for a moment last week when, for the first time since Nintendogs went on sale, a real piece of bad news came to light regarding Nintendo. Nintendo’s share price tumbled 12 per cent following a one-third cut of its full year net income forecast, and industry watchers, keen for anything to break the monotony of weekly hardware sales charts, greedily snapped it up.

While the children of the Iwata and Miyamoto households definitely won’t be going hungry this year, it marks the second time that Nintendo has reduced its profit expectations for fiscal 2008 – something inevitable given the miserable state of the world economy and the ludicrous strength of the yen compared to the dollar, but also something that has had industry watchers casting glances at the Wii’s performance, especially in its homeland.

After three years on the market, a position of dominance and the stellar domestic sales of the DS, the Wii’s performance in its home market leaves something to be desired. Iwata admitted as much, ” title=”” target=”_blank”>to a worrying 13% decline in the videogames market in Japan last year.

The Japanese games market had been shrinking since the halcyon days of 1997 when Final Fantasy VII launched, and it’s certainly difficult to imagine almost any console title selling more than 2 million copies on its first three days on sale as FFVII did back in the day. These days, Japanese developers are paralyzed in fear, knowing that any game green lit now will be released two to three years later in a radically different market, or perhaps even on an entirely different machine. This fear itself is manifesting itself in the ultra-safe titles that are hitting the market, appealing to a dwindling number of “core” gamers.

Taking their place at the top of the market has been the remarkably successful handheld machines. Fully half of the top-ten selling titles in Japan last year were on portables (all the rest were Wii games). While the release of Dragon Quest IX and GTA: Chinatown Wars will pair up nicely to ensure the DS is the must-have machine in both Japan and the West next month, take the DS and the Monster Hunter-powered PSP out of the equation, and the Japanese market starts to look fairly dull.

The nasty nationalism that infects the industry in all quarters no doubt means that this news will have certain sections of the market jumping for joy, and others claiming their superiority. But Japan’s apparent rejection of “next-gen” gaming may not be a trend isolated to one country. After all, it would not be the first global gaming trend to start in Japan, and Nintendo’s little patch of bad news follows in the wake of massive job cuts by both Sony and Microsoft, and worrying trends with both of their lead machines.

Sony continues to struggle for that one must-have title, while stubbornly refusing the price cut its machine desperately needs. As a result the company is on its way to posting its first loss annual in 14 years. Meanwhile either the coffers at Microsoft have dried up or timing has been poor, as the console has so few big-name exclusives coming up that downloadable content for GTA4 is the 360’s biggest title of the first six months.

If the Wii bubble were to burst, the nice multi-billion-dollar figures that the industry likes to throw out at the end of every year – usually with a catchy proclamation about how gaming is now bigger than Hollywood, music, or Jesus – would suddenly look a lot less healthy. While the din of “core” gamers may wish for the industry to retreat to the days before the Wii and the DS brought in those commoners, that would be a disaster for this industry. The rising cost of development means this industry needs every potential customer it can get, including those scary plebs we foolishly write off as “casual”. Ironically for all those who resent Nintendo’s success, that would ultimately mean less confidence in third party publishers, less money being pumped into developers, and less quality games arriving on all consoles.

Just like Obama, the industry needs to grasp the once-in-a-generation possibilities presented by the worldwide recession in order to secure a sustainable future. Repeat the mistakes of the past, and it may be the last time we do so. The state of the Japanese market is a wake-up call, a demonstration that the console market is in need of new ideas. Yes, the Japanese software market is in a rut, but Western gamers will not play the same FPSs forever, just as they would not play the same racing games, fighters and cartoon-themed platformers.

Already inside the industry one can feel the trepidation of developers and publishers unsure that if the project they start now will even have a market when it’s complete two to three years down the line. A three-year software cycle in a five-year hardware cycle is blatantly unsustainable. Yet Sony’s necessity-driven repetition of its “ten-year cycle” mantra aside, it’s curious that so few voices speak out about it. While other media industries like television and music are bombarded by calls to reform their antiquated business practices, the silence in the games industry is deafening.

But there are many developers out there whose budgets and resources are being spread thinner than they were ever intended to be by the cost of current-gen development – and who have gone bust as a result. And there are even more consumers tired of the obsolescence that new machinery automatically brings to old machines (imagine the outcry if you were unable to buy new music from the iTunes store for your old machine anytime Apple released a new iPod).

Ultimately these are the factors that are contributing to the malaise in the Japanese market – an affliction which, as a gamer, I can only hope is temporary but which, as a realist, I fear is a sign of things to come. But the harder we make it for developers to develop – and the more diminishing the returns are for the end user of the supposedly cutting-edge hardware – the more we invite this condition to spread.

Christian Ward works for a major publisher, and often hopes he is wrong.