Did Nintendo Poison the Waterhole?

During a hot dusty summer a man realizes his friends have ruined him. They have made recommendations that did not work, or given out ideas that were purposefully damaging. Whenever the man did the opposite of what his friends said, he would prosper. In fact, he prospered so well that it would have been foolish to listen to them. Still, they continued to harass him to do things that would only benefit them.

This is when he decided to poison the water. They all lived in the same area, and the only known source of water was a well. All he had to do was place the poison, and not drink from the water. He spent time saving up water, and finding alternative sources from the waterhole before making the fateful step.

Finally, one night, he dropped the poison down the well. It was not a strong poison, but many of his friends had already been doing things to make themselves weak. As his friends drank the water, some of them actually got better, they worked hard to make it sound as if they were doing very well. It was a patient thing, and the man went through many struggles as he waited. His friends died, taking their work and craftsmanship with them. When they were all gone, the well was left to clear itself for a few years. Still the deed was done, the ruinous friends were dead.

Is it possible for organizations to poison waterholes? They take the poison, knowing it will hurt them, but be much worse for the opponent. To have a poisoned waterhole, there must be three things. The first is a supply of some kind. It can be metaphorical in this case. The second is a stockpile of some kind that you can use to your advantage. Finally, you must poison the water and get the opponent to drink it. When the others are defeated, there must be a prize to be won.

John Lucas in one of his final essays on the VG Chartz website brought up the concept up of a poisoned waterhole. The idea was that Nintendo had purposefully set things in a way that even if they started losing, both Sony and Microsoft would not be able to survive. In fact this was to win over 3rd party companies, not defeat either of the opponents.

Nintendo trapped these guys when they kickstarted the 8th generation.

Raw power didn't work against the SD-resolution Wii in the 7th gen.

Even in Wii's absence, both the PS3 & 360 are only around the 80 million mark in worldwide sales after 7 & 8 years on the market.

The Revolution from Wii caused Microsoft & Sony to come out with Kinect & Move yet these peripherals haven't quite captured the imagination like the Wiimote did & haven't really delivered any lasting oomph to their platforms.

Yet they can't let go Kinect & Move for fear of falling back into the shadow of the Wiimote under Wii U. What do they do?

Nintendo knew these guys didn't know where to go anymore. They don't fully understand what a console is & what it's supposed to be.

This was the situation Nintendo was trying to force. This was the market reality Nintendo was trying to force into being.

This ain't Blue Ocean Strategy anymore. Nintendo's poisoning the waters for the competition & wanting them to take a drink.

Blue Ocean Strategy is when a company decides to move out of the competition area. The basic premise is that when there is too much competition in an area, companies end up fighting for the last bits of users for their product. It will end up bloody, and difficult to work within. A blue ocean is the area outside of the competition, where the company seeks out new users, and new ideas.

So, the big three companies Sony, Microsoft, and Nintendo have been fighting over the same people at the same time. This was 10-30 year old males with disposable income. Nintendo decided to stop going for the market of over the top maleness, and promote a game for anyone. This product ended up being the Wii. It sold incredibly well, and was difficult for Sony or Microsoft to compete with. They tried mimicry, but also selling to the same original markets, or gimmicky games that never felt finished.

I say this as someone who wanted to love Kinect Disneyland. Saying hello to Mickey Mouse looked like so much fun. But with multiple players the kinect started to act wonky, and then the ‘rides’ were not all equally fun or easy to figure out. The worst was realizing that most games for the Kinect were about the same.

The reason why the supply is for 3rd party companies is because of the added revenue. They are the prize to be won. It is no secret that few companies wanted to, or even tried to release games for the Wii. Those that did seemed to fall into the same category as Kinect Disneyland, amazing but not quite there.

Nintendo decided to poison the waterhole to end any problems with Sony or Microsoft and getting quality 3rd party software. This will not be watered down ports, attempts at the 10-30 year old male market, or simply dropped diea. It will be ports for the audience that Nintendo views as important, and a raising of IP’s that work the same. This is the reward at the end of the game.

So, how did Nintendo poison the waterhole? They released early while still be the top selling system in the business. The Wii was the top selling system of last generation, and even other generations. There were points when a peripheral for the Wii was selling better than systems. Yet, they dropped the Wii to introduce the Wii U. Both Sony, and Microsoft quickly worked to release a new system as fast as they could.

It is Lucas’ theory that Microsoft and Sony could not afford to release new systems, or continue to maintain them. Even if they sold well, the companies would need amazing numbers to stay out of the red. In fact, with the markets around them closing, they would need profits or go under.

Nintendo has a supply to keep them relatively healthy while the water is poisoned. There is over ten billion dollars in the bank, and indie games.

Since the Wii was so successful, Nintendo has had a large supply in wealth to use. This means that although this is the third year of losses, the company still has $10 Billion in the bank. They have acted cautiously with spending this money, and thus have lost very little over the years. In fact, the Wii U is no longer selling at a loss. Still, this is a great deal of money for such a gambit.

The other supply is that of indie developers. Nintendo will hand out an entire game engine that can integrate with the Wii U. All a person has to do is sign up, and hit download to get that engine. The engine is specifically not the ones from companies that complained about the Wii not having enough power. It is also known for its ease of use. Heck, now I want to make a game. There may be a break in this blog to let me do that in fact.

During this same time, most devs intend to release for the PC. Yet, the indie teams who have released for the Wii U have praised it. Nintendo in response has made a web framework that can let developers easily release mobile games onto the Wii U.

In other words, Nintendo has a supply of water from an alternative area. It is enough to keep them strong during the difficult time. But the big question is, did Sony and Microsoft drink the poison?

This is a difficult matter, right now, Nintendo is in second place in system sales. This is with a year headstart.

However, it does appear that system sales have stopped for all last generation consoles.

Also, with the declaration that most companies are moving toward PC, or mobile it appears the PS4 and Xbox One may start to run out of games soon. They will have the big games, but not a lot of games after that. Nintendo can withstand those problems by making their own, and living off of those profits.

Still, with the third year of losses, Nintendo has begun doing things very differently. Games made just for the Japanese Culture are being released in the US. Toy/Games are now part of the plan for the Wii U. This has meant the inner turmoil with the losses do not appear to be as planned as expected.

For a company to be profitable, and have good 3rd Party support, the system has to have an audience of about 30 million. We know this because the Wii had those numbers, and the PS3 plus Xbox360 had those numbers.

So we know that for a company to do very well, they would need an audience of about 30 million. John Lucas believes that if Sony or Microsoft leave, the other will have to follow. The reason being that the 3rd party companies will be going more toward PC, or go under than making exclusives for one system. If your sales forecast was cut in half, you would make drastic moves as well.

Since the Wii U is not standardized like the Playstation or Xbox, it can survive on its own. So if Sony leaves, Microsoft will not get the games needed to compete, and thus have to go under as well. The PC, for as great as it is does not seem to have the amount of players to make up for the loss in marketshare.

Whether or not this is true has yet to be seen. Still, by the numbers it looks accurate enough. The poison seems accurate enough, get the companies to go to far into the red, and whichever one falls will drag the other with it.

But did Microsoft or Sony take the poison? Do they have stockpiles of their own? Both companies are not just videogame companies, and thus the money kept in the banks may not be used to continue the console battle. It does appear that the companies rushed the development of their systems.

The PS4 is about the same power as my 2 year old laptop. In fact, you can build a computer with better specs for the same price as a PS4. The consoles are not working faster or better than anything out there, and are barely profitable. There is an approximate $20 profit for every console sold. Ironically, Nintendo was the one forced to drop the price of their system, and take a loss. It appears that a part of the gambit still hurt Nintendo.

Sony and Microsoft do not appear to be able to have the big over the top fight like they did last generation. They set things for a profit, and hope game sales raise the system up. However, all the systems appear to be slowly flatlining, which means growth will not be easy.

It appears the third party companies have pushed away from the consoles for the moment, and are waiting for things to settle. In other words, they may the ones drinking from the poisoned well. The game sales for last gen have dropped quickly, and this gen is not building up fast enough.

For Nintendo to take the reward, they will have to survive while the others are no longer a problem. There could still be a PS4 or XboxOne, but they will be selling numbers so low it doesn’t matter. The companies have dropped support, and now everyone is trying to figure out what to do. During this same time, Nintendo has new companies from the world of Indies to work with, and raise the Wii U. It only has to make enough of a profit that investors have stopped worrying. The very next generation Nintendo has control of the market, and how it works. No one will compete against the Wii Did It because they are too weak.

To have properly poisoned the waterhole, Nintendo must have an end goal. This reward can be achievable, but it means that every company will take a loss. The one who poisoned the water must have a stockpile, and extra strength. In the end, only one person is standing, even though they need a post to stay up.

I was noticing that I still get hits about John Lucas. Since I was discussion Nintendo anyway, an essay on a thought Lucas brought up seemed appropriate. It is a fascinating idea of a company taking a loss knowing the loss will be worse for its competitors. I have no idea if this is what is really happening, or just a thought.

As for me, I am looking at the dev info for the Wii U. That free Unity is just too tempting.