A decade late with cheaper product, Nintendo is finally online

A woman walks past a large scale figurine of Nintendo Co.'s Mario video game character at the 'Nintendo Check In' game experience area at Terminal 1 of the Kansai International Airport in Izumisano, Osaka Prefecture, Japan, on Thursday, July 26, 2018. Nintendo is scheduled to report first-quarter earnings figures on July 31. Photographer: Buddhika Weerasinghe/Bloomberg

Good things come to those who wait. Except, maybe, for Nintendo Co gamers. 

The company that created Super Mario and Zelda is finally embracing online gaming with the debut of its first online subscription service, charging US$20 a year for users of its Switch console to play each other across the Web. The move comes more than a decade after rivals Sony Corp and Microsoft Corp started similar products that today generate billions of dollars in subscription fees. 

But Nintendo’s late arrival is being met with jeers, not cheers, by large swathes of the gaming community. Users have had 18 months to trial the service for free and the response has been decidedly negative. Lacking must-have features for today’s multiplayer titles, such as in-game chat, consumers are slamming the platform as frustrating to use, susceptible to cheating and prone to connectivity issues. With the all-important holiday season riding on the success of online brawler Super Smash Bros Ultimate, analysts say improving the network is more critical than ever. 

“Nintendo is at least five years behind, probably more,” compared with Sony and Microsoft, said Piers Harding-Rolls, head of games research at IHS Markit. “It works, but it is the minimum you would expect from an online service.” 

The paid service officially kicked off on Sept 19. Nintendo declined to comment for this story or respond to criticisms of the Switch Online service. A company spokesman said it’s monitoring the situation and referred questions to the company previous statements. 

In June, Nintendo’s US chief Reggie Fils-Aime said the company is still “learning about the technical infrastructure” and gameplay design. He promised the issues would be ironed out before the official launch. 

“You have to expect some challenges when you do that. When we launch the game, it’s going to perform,” Fils-Aime said at the time. 

Nintendo has long ignored online gaming, for philosophical and financial reasons. The company became a powerhouse through titles designed to be played alone, such as Zelda and Metroid, or face-to-face with friends in Mario Kart. There has also been concern that strangers could use the Internet to reach children playing its family-focused titles. 

Another factor is the cost of building online networks for a company that has traditionally been financially conservative. But with multiplayer gaming now a huge part of the US$138bil (RM570.97bil) games industry, the Kyoto-based company had little choice but to embrace online. 

To replicate the type of platform used by Sony requires investing in servers around the world and constantly upgrading the network to ensure speeds keep up with game development and user growth. 

Sony’s PlayStation network has evolved since it was launched in 2000 and in the past five years it has spent aggressively to build its network assets. That includes investing in servers to enable cloud-based gaming on its PlayStation Now service that was unveiled in 2014 as well as a web-based TV service. In the last financial year, it’s network business generated more than US$9bil (RM37.23bil) of revenue. 

Nintendo eschewed the dedicated server approach, and instead embraced a cheaper design called peer-to-peer. 

“With P2P, because players are essentially connected to each other, the speed of the game is restricted to the slowest player’s connection. So if they have a bad internet connection the entire gameplay scenario will run slow,” said Penny de Byl, founder of online games education provider Holistic3d. “If Nintendo want to address the needs of their gamers, then they will have to consider providing dedicated servers or players will just go elsewhere.” 

A key advantage of using P2P is that it’s cheaper to build and maintain, a key reason why Nintendo’s online service is charging about one third the price of Sony and Microsoft’s. 

Users are also questioning other features, or the lack of them. Nintendo’s system doesn’t come with built-in voice and text chat, instead forcing users to access a smartphone app. Its process for matching gamers to each other is rigid while players have also cited an archaic code system for adding friends. Gamers also don’t get the ability to browse the Web or watch videos, a key attraction for those used to viewing contests on services such as Twitch. 

Most recently, users have lashed out because in-game progress isn’t automatically backed up to the cloud for all titles, meaning if a player lost or damaged their Switch, all their hours of play could be lost. 

“You can see online isn’t really in Nintendo’s DNA,” said Serkan Toto, founder of Tokyo-based game consultancy Kantan Games Inc. 

Despite the criticism, gamers are using the online service. Digital sales through the platform jumped 68% from a year ago in the latest quarter, helping the company top earnings estimates. Ending the free trial may upset gamers, but it is a necessary first step, according to IHS’s Harding-Rolls. The recurring revenue stream will let Nintendo fund further development and address concerns raised by players. “This is why Nintendo has to start charging,” he said. 

For a company that has traditionally been able to keep gamers on its side, Nintendo’s challenge will be maintaining goodwill and appeasing critics. 

Earlier this year, a player frustrated with rampant online cheating on the flagship Splatoon 2 game hacked their way to the top of the game’s leaderboards in July and added the simple message “Please Add Anti Cheat”. 

Embarrassed by the incident, Nintendo banned the user and removed the message. Since then, multiple outlets have reported that the company has quietly implemented measures to try to solve the cheating issue. Nintendo declined to comment on any efforts to stamp out cheats. 

After this week’s start of paid subscriptions, the next big test will be on Dec 7 with the release of Super Smash Bros. Ultimate, the latest instalment in the decades-old fighting series. A botched launch wouldn’t just hurt sales of this year’s biggest game, but increase pressure from short-sellers who have raised scepticism over Switch’s long-term viability. 

“I’ll consider it when we see what Smash online is like but there’s no way I’m purchasing it any time soon,” said Bryce Knox, a gamer from North Carolina who spent about 10 hours a week playing online titles on the Switch. Comparing Sony’s online offering to Nintendo’s, he said “It feels like an iPhone to a flip phone.” – Bloomberg

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