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Nintendo on Nintendo (part two)

Andrew Pfister

Nintendo on Nintendo (part two) Nintendo's Perrin Kaplan and Tom Harlin discuss behind closed doors online plans and the possible threat of the PSP.

For our recent cover feature Courage Under Fire, we conducted a lengthy interview with Perrin Kaplan, Vice President of Marketing and Corporate Affairs, as well as Tom Harlin, Manager of Public Relations. Since a lot of the interview content didn't make it into that feature, we decided to put the whole thing online.

Check out part one of the interview if you haven't already and then come back here to see Nintendo discuss their behind closed doors online plans and a lot more.

GMR: Let's say you could re-launch GameCube. What would the GameCube look like, and what games would it have at launch?

Kaplan: I can't tell you what it would look like, because I think the lesson's learned out of everything, and I think we'll just have to wait for the next console. But I can tell you that fundamentally we probably would have spent a little bit more time being louder about the third party games, because we had them all, and having our first party games launch more closely together. But in terms of everything else we've done and staying very focused on gaming and not talking about things outside of that, that very much continues to work for Nintendo. I mean, it's very, very likely we'll be the last ones standing because of our direct focus.

GMR: What's the plan to fix what's wrong going forward?

Kaplan: Hey, you didn't let me finish telling you what we did well!

GMR: Oh, sorry!

Kaplan: I think our price point was decent at the start. I think that the continued diligence towards having quality first party games...people might say that they're tired of Mario, but millions of people aren't, and I can guarantee you that if either of those Was launching the GameCube with Luigi's Mansion the best move for Nintendo? companies had the chance to buy that character, they'd snap it up in a minute. And the fact that we have that foundation is a phenomenal thing for us, because that's been done well. We just needed more of it. I think those are the main things that we've done right. I think the Nintendo name continues to have a lot of strength to it, and I think our challenge now is to make sure that people know we do have games for everyone. And there are actually a lot of things that we're doing that lead to your next question. Have you been watching stuff about our Fusion Tour?

GMR: Yeah, you seem to be partnering with a lot of cooler stuff these days.

Kaplan: Yeah, that's historically not what Nintendo has spent a lot of time on...

GMR: You're getting a bit extreme over there!

Kaplan: It's part of realizing that while we have games that are of interest to everybody, we just weren't getting the message out. Doing the Fusion tour rather than sponsoring somebody else's tour was a very conscientious decision to make sure that people of a certain age set equated us with "cool." Evanescence is a really cool band. That stuff has always been a part of who were; we just haven't talked about it or done anything with it.

GMR: We're getting a picture here of a Nintendo that's starting to reach out a little more...

Kaplan: That's true. We're traditional about how we've done our marketing. We've made some switches last year -- a lot more grassroots. Some things that we've started that nobody had done until we did it, and now a lot of companies are doing it, like our Street Team -- folks going out that have the systems attached to their bodies, going out to different venues where people have a chance to try out the product.

GMR: What do you feel that Sony does so well, that allows them to have this dominant position in the market?

Kaplan: I think probably, Sony, one thing is that they launched before everybody, and Nintendo is determined not to let that happen again. They had quite a bit of lead time, which makes the race very difficult in terms of catching up.

GMR: They actually bungled their launch a little bit, but still got away with it...

Kaplan: ...because they were so far ahead. But now if you look at their sales, they're starting to be on the downside. The apex of their system's lifecycle is now on the downside, so they're having to work really hard to keep their sales up, because they're now a year ahead of where we all are. We're still on the upside; they're starting on the downside. But I think Sony has something that Microsoft also has, and that is a big brand name. Who doesn't have a Sony Walkman? Who doesn't have a Sony TV? That's something a little bit different to compete against. So when they entered the market, they instantly had an image of quality and value, and a little hip factor. All their products were hip when they came out, and they did a good job of marketing that.

GMR: Is there a sense with people that Sony's a safe bet for them? That the things they buy from Sony will work with other Sony things...

Kaplan: You'd find very few people that would argue that Sony's products aren't good quality across the board. So that gave them a leg up, and I also think that they're very smart about making sure they have a quantity of games, and some of them good.

GMR: Their first party stuff has gotten better over the years...

Kaplan: If we all launched at the same time, I think it might have ended up a little bit different.

GMR: There's an impression that we're all getting that the big franchises -- the Tekkens and Final Fantasies and so on -- that their days aren't numbered exactly, but the market is going to be looking for something new. Would you say that's where Nintendo could fit in very well, as these solid-gold franchises that have been around since PlayStation One begin to repeat themselves?

Kaplan: I think so. I think that people's playing time is more limited, and they want stuff that's new and unique. They still want that same good stuff like Final Fantasy and all that, but I think that people have been around long enough -- the business has been around long enough -- that they really want something new. It's no different from the movie industry. You know, a movie is a movie is a movie. It's a sad movie, it's a funny movie, it's a good movie; it's fine. But you gotta go extreme like The Matrix. You have to do something really different.

GMR: Do you think going forward, you know obviously Nintendo is a profit-minded company, and you don't do anything unless you can make it work financially for you, which as you've said sets you apart from Microsoft at this point in the game as they're trying to establish a beachhead in the console business and quite prepared to lose their shirt on this console...

Kaplan: Prepared to? They are losing their shirt.

GMR: And Bill's as well, probably. But we're sure he's got plenty of shirts. But going forward, do you think that it's important maybe to, for example with online, to step out there and maybe lose a little bit just to get the perception out there that you're on it, and that's somewhere people can find you. Instead of just waiting for it to be a profitable market before you jump in, are you not in danger of leaving it to people who could absolutely own it, and then it's going to be very hard for you to come in?

Kaplan: I suppose there's something to be said for the perception, and that's why we have a lot of internal discussions about it. But to venture into something that will cause you to lose a lot of money still doesn't make sense for Nintendo. I don't know how long Microsoft or Sony can continue doing online. I don't know how long it's going to take for them to make profit. Broadband's not where it needs to be in America yet...I know it's probably frustrating perception-wise to hear that Nintendo won't do it unless it's viable business.

GMR: Right, but the worry is that when it is a viable business, you might not have a chance to do it, because these guys who have been around so long will be the ones who are trusted to do it, and are the ones third parties trust to go with.

Kaplan: And I don't necessarily agree with that because I think that Nintendo still has quality attached to its name. And at the time when we do something, you can be certain that it will be done in an A+ manner, whether it's this system or the next system.

GMR: We would agree with that, but we'd also challenge you a little bit on that, and say that from our experience over the years, online has a learning curve. And that it might be quite difficult for Nintendo, when they finally commit, to come out of the gate with all lessons learned...

Kaplan: You're making the assumption that behind closed doors we're doing nothing.


GMR: We suppose we are!

Kaplan: We have a huge R&D group, and they pay close attention to everything, all the time. There's a lot of work that continues to go on in every fashion, wireless and everything.

GMR: Specifically, Nintendo behind closed doors is knowledgeable, working on online ideas and they're just waiting for it to become profitable? In other words, you're prepared?

Kaplan: I'd say that we continue to work on all aspects of it on a constant basis, yes. Always. Just as you can assume that the minute we launch a console, we're working on the next one. The minute we launch a portable system, we're working on the next one. Nintendo's just very quiet about it; that's the nature and Pikmin was one of GameCube's early critical successes. personality of this company. It's kind of like cancer research or something. You know, we don't start working on it when it becomes an epidemic.

GMR: Right, we'll know about it when you have a cure.

Harlin: With the online question, we always get asked "why isn't Nintendo more innovative or willing to take chances." I think if you look at the company's history, we've always taken chances. Some have worked really well and some haven't. But we're also the company that since the GC has launched, has received awards for innovation for games like Pikmin and Animal Crossing. Taking chances with Eternal Darkness to make a more in-depth and cinema-like story. It's kind of hard to sit here at Nintendo and hear people ask us "why aren't you innovative" and "why don't you take chances," when in terms of development and ideas, we do it all the time.

Kaplan: I'd have to say that Microsoft's biggest challenge is to be innovative.

GMR: We'd agree with that. It's funny, if we were having this interview with Microsoft, we'd be asking many of the same questions. We're not saying at all, by the way, that Xbox had done a great job at launch. They've had their problems too.

Kaplan: You are looking at three very different companies, and I think that our differences in personality and business style have to be respected. People say "why don't you do such and such thing that Microsoft does?" Well, that's never been Nintendo, and it never will be Nintendo. There are a lot of things we do that are special and unique and that consumers love, that other companies wouldn't be able to do.

GMR: R&D is going on behind closed doors for the next GBA, no doubt with all sorts of bells and whistles. But Sony's come out of the gate with a powerful processor, allegedly. They have these high specs, something that will play movies...obviously it's quite a flexible system, and from what we've seen of your dominance of the market, there doesn't seem to be a lot of room. Whereas the console market might be able to support two or three players, isn't it possible that the handheld market can only support one dominant player, and therefore this is a bigger threat perhaps than the other consoles for Nintendo?

Harlin: Have you guys seen a price point for PSP?

GMR: We're hearing now that they're going to try to make it $100, rumor-wise. There's more players out there like Tapwave and Nokia, but we think only PSP is the real threat to the GBA.

Kaplan: Why do you say it's a threat?

GMR: Probably for the same reason that they were a huge threat to you with the PlayStation. If we rolled back the clock eight or nine years and talked about Sony launching a videogame system, I'm sure we wouldn't think they were a threat either. But history has proven they can be quite a threat. We're wondering that it must be a worry, something that you're looking closely at -- how seriously Nintendo is taking the PSP?

Kaplan: We always take competitors seriously. We do. But with a 98% market share, the challenge is theirs. Not to say that we can sit and rest on our laurels -- we can't and we are very well aware and always take it seriously. You say "what is Nintendo going to do about it?" Conversely, I'd say we own 98% of the market. What's Sony going to do about it?

GMR: Well, Sony's pretty much told us what they're going to do about it. They're going to offer something with great graphics, a back catalog of games, and connectivity and compatibility with other Sony products, which again goes to this rather compelling argument for people buying Sony in the first place where everything works together and things have multiple uses.

Kaplan: I think what Nintendo has not done well on the console end is what we've done extremely well on the portable end. And you've got millions and millions of gamers who'd agree. We can't make enough of the product. We've had plenty of competitors who have tried to enter. Not to say that we're untouchable; we need to work very hard to protect the foundation of what we have. But Sony has to get the magic ingredients in the equation right, and that's going to be their challenge. Price point is critical. Library is critical. Portability is critical. Battery life is critical. Size is critical. There's a lot to it, and if they come out with a system that does eight different things, you're talking about two different products then, not apples to apples.

GMR: We'd agree with you, but then we look back to the PS2 launch and the DVD player being quite a key driver in the early stages of their sales...does the fact that it does something extra and "cool" come into play here?

Kaplan: I can't predict the future. It depends on what Sony is going to do. It depends on what we're going to put in our next system. But what I can tell you is that the magic of what makes it successful, Nintendo has pretty right, right now. When we merge with the next system, our intent is to continue with doing what's right. We want to continue to own that 98%. I'm not saying we're ignoring them, because they're a very valid competitor. But it's an area where we're pretty secure in knowing what we're doing. We just have to continue doing that.

GMR: What the hell happened to Rare? Didn't they used to be good?

Kaplan: We thought they were at one point.

GMR: Microsoft paid a lot for them. What's going on over there?

Kaplan: When I saw them at E3 on Microsoft's behalf, [I thought] they would have shown more. What that did -- not showing a Grabbed by the Ghoulies is Rare's first game for Xbox -- it was originally planned for GameCube. lot of Rare stuff -- sort of reaffirmed that we made the right decision not to purchase them. As much as we respect them individually as artists -- they are quite good -- the flow of product just wasn't fast enough. When we sat down and saw what percentage of the total they were to us, we couldn't justify a purchase.

GMR: How much would you say Nintendo worked closely with Rare? With games like Goldeneye and such, how much of that was Rare, and how much of that was Rare and Nintendo working together?

Kaplan: We worked with them on a constant daily basis. But I would tell you that they're fine enough artists that they were good enough to create a lot of their own product with some input from Nintendo. Ours was more about trying to urge them to stay on a timeline. And that's Microsoft's challenge now.

GMR: When you guys set out to do a first-party game, you drill down what the concept is, and you really work it and make it great before you put it out. We get the sense from Rare that without that laser-like focus, they seem to be all over the place. That's just an observation of some of their games now.

Kaplan: That's your opinion on that.

GMR: Anything else you guys want to let us know about?

Kaplan: We're challenged between a company that's very profitable and continues to be very strong, and a perception battle that we're very aware of, and we're working hard on that, and that sales do continue strong. We're a company that in the first part of last year made $550 million in profit. So there's this real battle between being a very healthy company in terms of our sales and a perception that we think is starting to get better, but we're looking very hard at all the different segments to make sure we can continue with that.

GMR: One more question. Do you feel that the challenge for Nintendo with regard to Pokemon -- one of your most profitable franchises -- do you feel that there's a challenge to make sure it remains a profitable question, or are you looking for the next Pokemon? That big spike a few years ago has passed, and is there a challenge to keep Pokemon going as a Mario-level franchise?

Kaplan: We're always looking for the next Pokemon, because that's what Nintendo does. While people might not talk about Pokemon, it continues to be incredibly popular and the sales are incredibly strong. We keep breaking all the house records. We amaze ourselves with it. We're always looking for the next Pokemon, because that's how we got the first one!

Copyright © 2004 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in GMR Magazine.

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