What recently released entertainment icon cost more to make than
any motion picture this summer? It's the video game
Grand Theft Auto V
, which, at a production cost of $266 million, trumps nearly every
cinematic blockbuster made in the past few years.
The transformation of the video game from its humble roots in the
of the late 1970s into a lucrative entertainment business is thanks
to visionaries like Hiroshi Yamauchi. The video game executive, who
ran the Japanese gaming giant
(OTCMKTS:NTDOY) for a whopping 53 years, died last week. He was 85.
That Yamauchi should die within weeks of the hotly anticipated
Grand Theft Auto V
isn't lost on gaming aficionados. That's because the global video
game industry is at a crossroads. Mobile gaming, for example, is
exploding in popularity because handhelds will be sporting HTML5
browsers as soon as 2016. Plus, companies like
) are betting their platforms like the iPad will replace the
traditional "box" consoles from Nintendo and
). In fact, with 55 million iPads sold, Apple might soon overtake
entrenched gaming companies like Sony, with 62 million PS3 consoles
), with 65 million Xbox units sold.
There's very little difference between an Internet-enabled home
computer and recent versions of consoles like Sony's PlayStation
and Microsoft's XBox. Nintendo's Wii U, its latest Wii offering, is
more in line with the traditional game console model even though it
connects to online features. Nintendo's strategy has been to depend
less on the hardware and more on its jointly developed software.
For Nintendo, content has always been king.
That strategy grew out of the spectacular reign of Yamauchi. As a
young man he inherited his family's beleaguered playing-card
company in post-World War II Japan. After flirtations with board
games and other products, Nintendo built a small electronic console
that played cartridges whose subjects - like
- were unusual but nevertheless popular with children around the
Nintendo insists that new versions of its
Donkey Kong, Mario Brothers
Legend of Zelda
games will ensure that it attracts a new and loyal generation of
gamers. Yet there's nobody like Yamauchi (at least not at the
moment) in the traditional video game industry to introduce new and
innovate disruptions to what's become a mature market.
The global economic crisis is five years on, but one of the few
industries to buck the trend is video gaming. The video gaming
sector's 10% growth rate between 2005 and 2009 outpaced the US
economy's anemic 2%. The global research firm NPD Group estimates
that video gaming companies sold a total of 273 million units in
2009 alone, accounting for more than $10.5 billion in revenue.
That's nearly one gaming console for everyone in the United States.
Just as Yamauchi defined a new market for the easily affordable
Nintendo console, new gaming companies are offering online
subscriptions services that are rendering the older boxes obsolete.
"Interoperability" is what makes today's gaming consoles
successful. It's not unheard of for customers to buy a Sony
PlayStation only to use it to play Blu-ray DVDs. Those consoles are
also popular with role-playing smash hits like
and the aforementioned
Grand Theft Auto
series. Nintendo has positioned its Wii, on the other hand, to play
to a more physically active crowd. Child-friendly games like
promote exercise over more adult, shoot-'em-up roll-playing
Content might continue to be king. But the future of Nintendo could
very well rest with any number of wearable computing platforms that
will allow gamers to download games with crystal-clear graphics
onto a smartwatch with the flick of a wrist. Nintendo's DS handheld
device, which allows users to download hundreds of games, is
already one of its best-selling products.
With the passing of Yamauchi, there's no doubt that Nintendo is
asking itself if it still has the ability to transform what was
once a playing-card company into a gaming company that can stay one
step ahead of a fickle, global customer base.
Apple Episode 5S: The Empire Strikes Back
Facebook and Twitter Drop 'Social,' Become
Apple's iPhone Fingerprint Scanner Allegedly
Hacked: Do Investors Care?