Nintendo seems to be in deep denial over mobile games, still thinks the iPhone is off limits, still thinks the 3DS is the future of mobile

Nintendo’s President is insisting that the company won’t get into the iphone development game, instead focusing on producing content for their own hardware platform. After saying that development for iphone was absolutely not under consideration, Iwata said:

“If we did this, Nintendo would cease to be Nintendo. Having a hardware development team in-house is a major strength. It’s the duty of management to make use of those strengths. It’s probably the correct decision in the sense that the moment we started to release games on smartphones we’d make profits. However, I believe my responsibility is not to short term profits, but to Nintendo’s mid and long term competitive strength.”

As some background, Nintendo recently released the 3DS, they’ve already had to drop the price once because of lackluster sales, and still the system is expected to miss sales targets. As more background, Nintendo has been very slow to get with the new world of games – whereas hardware makers like Microsoft and Sony are encouraging lower price point games on their Live Arcade and PSN networks respectively, and whereas game developers are increasingly tapping that low price point market (see Electronic Arts purchasing social game companies like Popcap and Zynga purchasing mobile companies like Newtoy), Nintendo is still running a business model that looks a lot like what they did in 2000, trying to push their own hardware with limited internet connectivity out, hoping their creativity in first-person development is enough to sell the systems.

And look at that middle sentence in the quote from Iwata – Nintendo knows they would make profits on games released for iphone. Apparently Itawa thinks that development for iphone would only boost short-term profits though, and not mid and long term strengths. This is ridiculous in my mind – maybe 3DS sales would be hurt if every game was released concurrently with an iphone version (ok, they would definitely be hurt if that happened), but sales of games on the rest of Nintendo’s hardware would only be helped. The Wii U is coming out next year, and being the only major hardware company with a huge first-party game development team that cranks out instant classics is a huge strength compared to the other hardware makers, but maximizing that strength depends on Nintendo getting into the iphone market now.

Here’s what I envision being the best case for Nintendo – 3DS sales are mediocre (yep, that’s the best case), and resources shift to Wii U at and around launch. Nintendo takes advantage of their in-house development strengths by releasing games for the Wii U concurrently with iphone games that extend the experience to mobile and impact the console versions, a direction many console developers are already moving in. Nintendo, because of the strengths Iwata notes, is uniquely positioned to take advantage of a market where a console game and a mobile game interact – they have the developer prowess and some of the best IP (Mario, Starfox, Kirby, Zelda, etc.) on the planet to make it happen. The Wii U already has a damn ipad/iphone for a controller – let your hardware geniuses figure out how to match the controller up to interact with the user similarly to how an iphone interacts with the user, and then release mini-games for the iphone that report back to the game (maybe even grab a hot patent on that, while they are at it! Or pay Intellectual Ventures if they already have one…).

Let me put it another way: If you were Nintendo’s President and Apple came to you and said “we really want to release a phone that looks exactly like your console’s controller – we are going to manufacture it, get the wireless providers onboard, sell it in our stores, and foster a huge game development community for it, and all we want from you is to put some of your mini-games on it for our millions of customers to buy, are you in?”, would you say no? So far Nintendo has said no. Because they want to support their own in-house hardware team, and don’t want to give up on mobile. Seems like a huge missed opportunity.

There’s some larger context here in terms of Sega’s transformation into a third-party developer, and Nintendo not wanting to go that route (being the only purely-gaming company left to make hardware). And I LOVE Nintendo, but they need to unchain their game development from their hardware development if they are going to make it past this next console cycle. If they don’t, I predict the Wii U to be the last console release for the company. I’ll be glad to eat those words if I’m wrong, because I’ve been waiting for the next Smash Bros for years.