How game industry power can backfire: the case of Nintendos Wii U

Name: Thomas van Manen Student number: 3555038 Course: Gamestudies Instructor: David Nieborg Assignment: essay Words: 1645 Date: June 13th 2011

How game industry power can backfire: the case of Nintendos Wii U
The annual game conference Electronic Entertainment Expo, better known as E3, is known for three things: releases, announcements and demos. One of the main events at this years E3 convention was the unveiling of Nintendos next generation hardware. The gaming giant dubbed the next generation console Wii U and added a revolutionary controller with a build-in 6.2-inch touch screen that can display high-quality images, adding a second screen to the gaming experience. Surprisingly, the day after the Wii U was presented Bloomberg Businessweek announced that the Nintendo Corporation shares fell to the lowest in more than five years.1 Nintendo tumbled 5.7 percent to 16,930 yen at the close of trading in Osaka. More than 2.2 million shares changed hands, compared with a six-month daily average of about 720,000 (Yasu & Edwards, 2011). This is strange for a well-known and leading company that presents his latest hardware; think of Apple shares that rise enormously after Steve Jobs reveals his latest game changer. So what happened? The announcement of a brand-new gaming console is the sort of thing that is supposed to excite consumers, which in turn excites shareholders, which naturally pushes share prices up, even if only temporarily. In this article I will provide an answer to this question deriving form the discourse on the ecosystem of the game industry (game publishers and developers) and media (game journalists and other gaming media). I will focus on the mechanics that are at place here. After I have established some ground rules for this case, I will focus on the build up to the announcement of the Wii U and present a case wherein game industry power over game journalists can backfire. The Game Industry Vicious Circle To grasp where my argument is heading we must first understand the relationship between the game journalists although there is much discussion on this term; whether or not game journalists are actually journalists or that they should be considered enthusiast press not carrying out traditional journalist principles such as independence and objectivity (Carlson 2009, 6). Either way this discussion does not contribute to my argument, so from here on when I refer to game journalists I mean those who report about games and the game industry professionally or as free labour and the game industry. We can consider game journalists and game developers as part of a vicious circle. I will briefly explain this using the example of the recently announced Microsoft game Halo 4 (343 Industries, 2012). Microsoft needs the game journalists to generate publicity and create gamers anticipation, or
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Bloomberg Businessweek is a weekly business magazine formerly known as Businessweek. The magazine is published by Bloomberg L.P.; a privately held financial software, media and data company.

buzz to speak in marketing terms on the other hand game journalists need Microsoft to provide them with screenshots, moving images and other types of information of the new Halo 4 game so they can inform their audience and distinguish themselves from competing media. Game magazines and websites can therefore be perceived as extensions of the industrys marketing channels. We can trace this editorial marketing practice back to the contents of the magazine Nintendo Power. Although it consisted of editorial content it was actually an extended advertisement for Nintendo products and service (Sheff 1994, 178). At this point the division of power might look in balance or maybe even slightly leaning towards the game journalists as a crucial shackle between game publishers and their target groups, however, if we further examine the industry mechanics we can see how this is a false perception.
Industry Mechanics Game journalists are, like other journalists, gatekeepers of knowledge. However the same can be said about game publishers. They too can be seen as gatekeepers of knowledge; knowledge in this case consists of game data such as stills, descriptions and code. We can appropriate this to the notion of gaming capital by Mia Consolvo, an Associate Professor of Telecommunications at Ohio University and currently holding a position as a visiting Associate Professor in the Comparative Media Studies program at MIT. Game capital can be perceived as a fluid and always changing currency held by those who hold knowledge on games and game culture and are able to distribute their experience to others (Consalvo, 2007). Consalvos notion can therefore be perceived as a conceptual framework to what I have described in the above paragraph. The question is: who holds more valuable knowledge? The answer is the industry. The most valuable sources for game capital, access to game code and yet unknown insider information, are held by the industry. On top of that the industry also keeps a trick up their sleeves regarding advertising. This is also well argued by Nieborg and Sivhonen using the carrot and stick-metaphor; the carrot used to maintain industry dependence is exclusive access to game contents, the stick being the practice of blackballing; threats of or actual withdrawing of valuable advertisements investments in game publications (Nieborg & Sivhonen 2009, 4). At this point we can conclude that the industry is on top of the knowledge-chain and therefore holds power over game journalists. But as we can see in the case study of Nintendos Wii U, this power might backfire.

The case of Nintendo Wii U So at this point it is time to get back to fallen Nintendo Shares. The question remains: what happened? Did they not use their game capital to create enough buzz to get consumers and therefore shareholders excited? Actually they did. The real reason of the fallen shares is: they overplayed their game capital as analyst Yusuke Tsunoda at Tokai Tokyo Securities Co. points out to Bloomberg Businessweek: There were high expectations from the new version of the Wii and this fell far short. People had expected to see something more at a big event like the E3, but there wasnt really anything more than whats already reported.2 This explanation was enough reason for me to dive into the build up prior to this years E3 using the internets most excessive archive: Google. First I will provide a short timeline of the new hardware system using search results from Google as an indicator of content containing buzz about the new hardware, second I will examine the roll of game capital. Rumors of a next generation console started popping up after the E3 of 2009, three years after the release of Nintendo Wii. Since there was no known codename or productname speculation about new Nintendo hardware, speculations embraced the term Wii 2.3 There was a constant buzz throughout 2010 on the web about this new platform with a total of 17.000 search results on Google. The graphic below shows a chronological visualization of this using Google Timeline.4

Image 1: Google search results for Wii 2 over 2010. Source: Google.

Yasu, Mariko, and Cliff Edwards. " Bloomberg Nintendo Shares Fall After Unveiling Wii Player Successor." <http://www.businessweek.com/news/201106-08/nintendo-shares-fall-after-unveiling-wii-player-successor.html> 3 Nicknaming projects is a common Nintendo practice: the Nintendo 64 (Project Reality), GameCube (Project Dolphin), DS (Project Nitro) and Wii (Project Revolution) did all have a project nickname. 4 Google Timeline is a tool that graphically displays Google search results in a chronological order. I used this tool not to show exact numbers of buzz, but to graphically display the increase in volume of publications on this term as representational for buzz deriving on the following principle; the more publications, the more eyeballs, the more eyeballs the bigger the buzz.
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In the two months prior to the E3 all game capital was either released or leaked. On April 15th the codename (Project Cafe) and some details were published on a French technology publication and the information was quickly picked up by publications as IGN.56 We can also see the increase of web publications rise from zero in March to over 700 publications in April and May in Googles search results.

Image 2: Google search results for Nintendo project cafe. Source: Google.

A few days after the project name leaked, detailed images (mock-ups) of the new controller circulated around the web and a huge amount of detailed information was published by IGN on April 20th.7 Based on the kind of information (pricing, hardware, design and release information) it is widely assumed that this information was provided by someone working for or with Nintendo on this project. A few days after the post on IGN Nintendo officially announced the project on April 25th. According to sources Nintendo was already showing publishers the system in an effort to get them interested and allow them plenty of time to start developing titles in anticipation of the system's reported late 2012 launch.8 At this point all information, we now have confirmed at E3, was already out in the open on the web, except we did not see actual footage of the hardware. Then on May 20th a video starts going viral on game publications. Someone attending a Nintendo event (probably a event for third-party developers) recorded a Nintendo employee while presenting the hardware and controller and uploaded the video to YouTube. So a little over two weeks before the actual announcement of the new hardware all information is out in the open, waiting to be confirmed at E3. People that should not be leaking at all published some of the information,
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"Project Caf : toutes les infos sur la Wii 2 de Nintendo." <http://www.01net.com/editorial/531660/project-cafe-la-wii-2-de-nintendoaura-une-tablette-pour-manette/>. 6 Reilly, Jim. 'Wii 2' Codenamed 'Project Cafe'. <http://uk.wii.ign.com/articles/116/1162045p1.html> 7 Lowe, Scott. Project Cafe: The Tech Behind Nintendo's Next Console <http://uk.gear.ign.com/articles/116/1163325p1.html> 8 Matthew, Kato. Multiple sources confirm New Nintendo HD console < http://www.gameinformer.com/b/news/archive/2011/04/14/new-nintendoconsole-at-e3.aspx>

some of it was almost certainly intentionally leaked to create buzz for a new product. They used up game capital to create buzz. Conclusion I have provided a brief notion on how the game industrys ecosystem works. Game publishers and game journalists are part of a vicious circle. Publishers need the game journalists to generate publicity and create gamers anticipation or buzz to speak in marketing terms , on the other hand game journalists need publishers to provide them with screenshots, moving images and other types of information so they can inform their audience and distinguish themselves from competing media. I have established this circle as being part of gaming capital in which publishers hold power over game journalists because they hold exclusive information. In the case of Nintendo this power backfired. As the analyst told Bloomberg: Nintendo could not show any groundbreaking new stuff at E3 because all information was already accidentally or purposely leaked. Their aim to build a buzz caused a situation that the presentation of new hardware led to a tumbling of Nintendo shares to the worst level in five years. What the presented case clearly shows is that game industry power over media can backfire when you dont hold on to some game capital to present at the moment suprme. Just ask Nintendos financial department.

Literature Carlson, R. (2009). "Too Human versus the enthusiast press: Video Game Journalists as Mediators of Commodity Value." Transformative Works and Cultures 2(1):http://journal.transformativeworks.org/index.php/twc/article/vie w/98/93. 1-14. Consalvo, Mia. Cheating: gaining advantage in videogames. Cambridge, Mass.: MIT Press, 2007. Print. Matthew, Kato. " Multiple Sources Confirm New Nintendo HD Console - News - www.GameInformer.com ."Home - GameInformer.com . N.p., 14 Apr. 2011. Web. 13 June 2011. <http://www.gameinformer.com/b/news/archive/2011/04/14/new-nintendoconsole-at-e3.aspx>. Lowe, Scott. "Project Cafe: The Tech Behind Nintendo's Next Console - Gear News at IGN." IGN. N.p., 21 Apr. 2011. Web. 10 June 2011. <http://uk.gear.ign.com/articles/116/1163325p1.html>. Nieborg, D. B. and. Tanja Sihvonen (2009). The new gatekeepers? On the occupational ideology of game journalism. DiGRA 2009 - Breaking New Ground: Innovation in Games, Play, Practice and Theory. Brunel University, West London. Available: http://www.gamespace.nl/content/NieborgSihvonen09_TheNewGat ekeepers.pdf. 1-9. "Project Caf : toutes les infos sur la Wii 2 de Nintendo ."01net informatique high-tech : actu, produits, tlchargement logiciels et jeux. N.p., 15 Apr. 2011. Web. 10 June 2011. <http://www.01net.com/editorial/531660/projectcafe-la-wii-2-de-nintendo-aura-une-tablette-pour-manette/>. Reilly, Jim. "'Wii 2' Codenamed 'Project Cafe' - Wii News at IGN ." IGN. N.p., 15 Apr. 2011. Web. 10 June 2011. < http://uk.wii.ign.com/articles/116/1162045p1.html>. Sheff, David. 1994. Game over: How Nintendo conquered the world. New York: Vintage. Yasu, Mariko, and Cliff Edwards. " Bloomberg Nintendo Shares Fall After Unveiling Wii Player Successor." Bloomberg Businessweek. N.p., 8 June 2011. Web. 10 June 2011. <www.businessweek.com/news/2011-06-08/nintendoshares-fall-after-unveiling-wii-player-successor.html>. Kato, Matthew. Multiple sources confirm New Nintendo HD console