Dan Adelman on third-parties, Nintendo culture, demos, eShop quality control, Virtual Console
Dromble published a fantastic interview with Dan Adelman today. Adelman worked at Nintendo of America for several years and ended up leading the company’s indie efforts, though he departed last year.
Dromble’s interview touches on several topics – third-parties, culture at Nintendo, demos, eShop quality control, and the Virtual Console. You can find excerpts below, and the full discussion here.
On what Adelman believes caused the collapse of third-party support on Wii U…
Adelman: It really comes down to the business case for these publishers. Nintendo consumers buy Nintendo systems primarily for the first party content. There’s a bit of a self-fulfilling prophesy in that publishers feel that they can’t compete with Nintendo first party, so they choose not to invest in making high quality products for the platform. There are some notable exceptions to this over the years like Rayman Legends but many times third party publishers set low sales projections for their games, and then decide a development budget based on that. I can’t say outright that they’re wrong either.
There have been cases where companies decided to pull out the stops and make a great game for Nintendo platforms only to find that consumers weren’t interested. And it could be because consumers have been burnt by third party games on Nintendo platforms before.
For Nintendo to break this cycle, I think they need to invest and absorb some of the risk for third parties who try to embrace the features of Nintendo platforms and help communicate to consumers which games are on par with Nintendo first party games in terms of quality. Sony and Microsoft spend a lot of money securing exclusives – or at least exclusive features – on the top games and since Nintendo doesn’t really do that, third parties focus on the other systems. I’m not sure about Sony, but I know Microsoft also has a team of technical people that will go work with a studio for a few weeks or even months to help them make their games as good as they can be on those platforms.
If Nintendo doesn’t want to be a first-party-only system, they may need to be more aggressive in securing those games and making sure that they’re high quality.
On why big third-party publishers skipped DLC on Wii U…
Adelman: As a rule, I’ve found that DLC attaches at a fixed rate to active players. That rate will vary from game to game, but within a game, it remains fairly constant. So if, say, 8% of active players will buy the DLC, then as time goes on and the number of people still actively playing your game declines, so do the sales of the DLC – in a very proportional way. You’d have to talk to the third party publishers themselves of course, but my guess is that there was a simple cost-benefit analysis done at many of these publishers. Given the install base of the Wii U x their expected attach to that install base x their historical DLC attach, they can come up with a decent projection of sales potential.
If there are significant incremental costs to creating a Wii U version, then publishers may conclude it’s just not worth it. There are many publishers out there who use one engine and team for the PS4 and Xbox One versions of their game and a completely separate team for the Wii U version due to the differences in the technologies. This adds to the explanation of why it may not be as simple as just porting the content over. The fact that the Wii U is very different from the other consoles is a double edged sword. On the one hand, there are many experiences that could only be created on the Wii U. On the other, work that was done for one platform may not be easily replicated for the Wii U.
On the difficulty in getting certain things done at Nintendo…
Adelman: Nintendo is not only a Japanese company, it is a Kyoto-based company. For people who aren’t familiar, Kyoto-based are to Japanese companies as Japanese companies are to US companies. They’re very traditional, and very focused on hierarchy and group decision making. Unfortunately, that creates a culture where everyone is an advisor and no one is a decision maker – but almost everyone has veto power.
Even Mr. Iwata is often loathe to make a decision that will alienate one of the executives in Japan, so to get anything done, it requires laying a lot of groundwork: talking to the different groups, securing their buy-in, and using that buy-in to get others on board. At the subsidiary level, this is even more pronounced, since people have to go through this process first at NOA or NOE (or sometimes both) and then all over again with headquarters. All of this is not necessarily a bad thing, though it can be very inefficient and time consuming. The biggest risk is that at any step in that process, if someone flat out says no, the proposal is as good as dead. So in general, bolder ideas don’t get through the process unless they originate at the top.
There are two other problems that come to mind. First, at the risk of sounding ageist, because of the hierarchical nature of Japanese companies, it winds up being that the most senior executives at the company cut their teeth during NES and Super NES days and do not really understand modern gaming, so adopting things like online gaming, account systems, friends lists, as well as understanding the rise of PC gaming has been very slow. Ideas often get shut down prematurely just because some people with the power to veto an idea simply don’t understand it.
The last problem is that there is very little reason to try and push these ideas. Risk taking is generally not really rewarded. Long-term loyalty is ultimately what gets rewarded, so the easiest path is simply to stay the course. I’d love to see Nintendo make a more concerted effort to encourage people at all levels of the company to feel empowered to push through ambitious proposals, and then get rewarded for doing so.
On demos…
Adelman: For the longest time during WiiWare, our policy was that we didn’t allow demos, period. This was definitely flying in the face of conventional wisdom at the time, but I think the feeling was that people would just spend their time jumping from demo to demo without buying anything. This has since been backed up by more data that say that more often than not, demos in fact hurt sales, but not necessarily because people are just playing demos all the time. Instead, people who have some curiosity about a game, who would otherwise have to buy the game to check it out, are able to satisfy that curiosity with just the demo.
The real goal of demos should be to help consumers figure out whether they might like the game before they buy it. Back in the early days of WiiWare, there was no easy way for people to figure that out – just a title, a couple screenshots, and a short description. Now that user comments and ratings are a much bigger part of every digital storefront, the usefulness of demos has diminished.
Whether eShop developers should make demos really depends on the nature of their game. Some games just lend themselves better to demos than others. For example, RPGs are really hard to make demos for, since there is so much story involved. More action-oriented games could demo better, as long as the demo showcases some promise of gameplay variety in the full version. Overall, though, given the additional work relative to the potential for increased sales, I’d generally recommend developers allocate their limited resources elsewhere.
On games that are featured on the eShop…
Adelman: During the WiiWare and DSiWare generation, there was very limited opportunity for us to feature anything. The UI was designed in such a way that the shop was laid out algorithmically based on sales. Of course, this became a self-fulfilling prophesy. If a game could establish itself as the top seller, it was the first game that people saw, and therefore the most likely to be bought, and so on. And if you weren’t one of the top 5 or a newly released game, you could sink to the bottom of the shop pretty quickly, and it was difficult for people to find those games. I’ve heard stories of people who knew what game they wanted and still struggled to find it in the Wii Shop because they may not have known the exact spelling or even where the search functionality was.
During the 3DS and Wii U generations, a new team was set up that handled the layout. This team didn’t report to me, so there was often some disagreement about what should be featured. That team was very focused on driving revenue, and Nintendo’s first party games are the ones that drive the most revenue, so for a long time that was all you saw in the eShop. I think that situation is getting better now, but it’s got a ways to go.
For me, the main criteria about which games I tried to pull into different marketing opportunities, whether it’s recommending them for a prime spot on the eShop store page or including them in a booth at E3, were a combination of innovation and quality. Innovation is a very overused term, but I often thought about it in terms of people deliberately trying to do something new. Some of these experiments may not succeed, but I always wanted to support their efforts. Probably the best example of a game like this is Spin the Bottle: Bumpie’s Party by KnapNok Games. It’s hard to remember this far back, but World of Goo and the BIT.TRIP series were in a similar category during the WiiWare days.
On the thought that low quality games should or shouldn’t be allowed on the eShop…
Adelman: This is a really tough issue, and one I personally go back and forth on a lot. On the one hand, because barriers to entry are so low, it’s making it really hard for consumers to sift through all of the crap to get to the best games. As I already mentioned, Nintendo – and all platforms for their respective digital storefronts – have a role in helping consumers find those games. In addition, there is a not insignificant cost associated with running each of these games through the process, so Nintendo loses money on games that don’t sell well. On the other hand, there is a very real question of who decides what games are good enough? Depending on how high or low you make the bar, you could still wind up letting in lots of shovelware or you could wind up rejecting a gem. Minecraft is a great example of this. I have to admit the first time I played Minecraft, I didn’t get it. It was still early and there weren’t many YouTube videos out for it or tutorials, so I would just fire up a game, gather some resources, and then a monster would come out of nowhere to eat me! If I had been in charge of greenlighting games, there’s a very real chance that I might have declined it.
Ultimately, it comes down to discoverability. If the eShop – or any other platform – can make it easy for people to find the games that they like, then there is no problem with letting in lots of crap because people won’t even see it. The problem is that that technology doesn’t exist. Valve is really trying to tackle this problem head on with some interesting experiments like the Steam Curators and online forums, but it is pretty evident that they haven’t solved it yet. Probably the most obvious sign of this is that the biggest factor in driving sales is still price discounts. If people didn’t feel that they were taking a big risk every time they bought something, there wouldn’t be as big of a need for 90% off discounts.
On how Nintendo of America determined pricing for Virtual Consoles games on Wii…
Adelman: First we got a sense from market research about what platforms people were interested in. We had pretty much every classic system on the list, and these were the ones that stood out as the heavy favorites. We also did some market research on people’s willingness to pay, and came up with these prices accordingly. There was a lot of debate about whether to charge more for Super Mario Bros. 3 as opposed to Ice Climbers, and we ultimately decided on a fixed price per platform for a couple reasons. First, it’s simpler to manage from an internal processing perspective. If each game had a separate price, there would be lots of opinions about each game, and consolidating all of that feedback would be very time consuming. Second, there was a little feeling of holding people’s childhood hostage if we priced certain games higher than others. To take an absurd example, let’s say we charged $50 for Super Mario Bros. There would be some people who really have strong nostalgia for that game who would begrudgingly pay it. But they’d probably feel cheated and exploited.
Nintendo understands its importance to a lot of people’s childhoods, so they really want to avoid undoing that goodwill. Finally, everyone has a game that, for them, was their biggest memory as a child. I remember I probably put in over 100 hours on Nobunaga’s Ambition with my brothers. For other people, that game might be Ice Climbers. I haven’t seen any research on this, but I suspect the majority of sales on Virtual Console are from people who have already played the game as a child. I’m sure there are some cases of people going back and playing games they missed, but if I had to guess, I’d say that’s around 25% of the market. The other 75% are people reliving memories.
It’s hard to say whether the old prices will stay in the long run. My gut says that demand overall is not very price sensitive. Even $10 for N64 games is not going to break the bank for anyone. I think the bigger factor is fatigue. A lot of people have scratched that nostalgia itch, so they may not feel a need to play those games again.
On the “drip-feed” business model for the Virtual Console…
Adelman: It’s actually not really worth debating the pros and cons, because the fact is, it’s the only way to do it. I think a lot of people underestimate the amount of work that goes into getting these Virtual Console games ready, so it’s not like Nintendo is just sitting on a bunch of games and doling them out slowly. All of that said, the drip-feed approach also had some marketing benefits. It gave people a reason to come back every week and see what was new. It also gave people some time to consider each game individually. If Nintendo were to dump 300 games on the eShop today, there might be a classic from your childhood that you had simply forgotten about and didn’t even think of sifting through all of the games to look for. If there is a small number of games each week, there’s a greater likelihood that people will notice the games and resurface their old memories.
