Yuji Naka's Sonic the Hedgehog

Going Third-Party Didn’t Fix Sega, Will it Fix a Third-Party Nintendo?

If Nintendo becomes a third-party and sells games on competing video game consoles, will a third-party Nintendo see stronger sales? History tells us the bump in business may not be as strong as some think.

After poor sales and stronger competition from other consoles, Sega became a third-party publisher in 2001, releasing games across a range of platforms and eventually abandoning the company’s last home console, Dreamcast. By moving the company’s esteemed brands to PlayStation 2, Xbox and GameCube, Sega hoped to boost software sales significantly by leveraging the larger install base of other consoles.

Analysts today say Nintendo should release software on Microsoft and Sony’s consoles to take advantage of their larger install-base, as Nintendo continues to struggle to sell consoles of the new Wii U platform. After two holiday seasons, the Wii U only sold just 4.3 million consoles globally. By comparison, the still-active Xbox 360 has over 80 million consoles in the wild, and the new Xbox One console already sold 3 million consoles since its launch last November.

Having a small install-base for Wii U is significantly damaging Nintendo’s ability to sell console games. Last week the company halved its annual sales target for Wii U software, from 38 million to 19 million units.

CONSULGAMER believes releasing games on multiple platforms will bring a short-term boost to Nintendo’s console game sales, but performance will eventually slump due to the more competitive environment on other consoles. The biggest hits on Nintendo’s consoles are traditionally games made by Nintendo. Nintendo’s first-party success is due to the high quality of their games, the exclusive marketing grip they have over their platforms, and the lack of high quality third-party content on their consoles. By releasing games on Xbox and PlayStation platforms, Nintendo will have to compete with a full library of AAA games that were never released on Nintendo’s consoles. Further, while Nintendo currently benefits from exclusive marketing for Nintendo games on Nintendo platforms, the company will be forced to compete with mindshare of games by Sony, Microsoft and larger publishers for any release on Xbox or PlayStation consoles.

If Sonic Couldn’t Make It, Can Mario?

Sega’s experience with bringing Sonic the Hedgehog, their top franchise, to other consoles is a telling story of what could happen to premiere Nintendo franchises like Mario. If Nintendo becomes a third-party publisher for other consoles, Mario will certainly see an initial sales spike on other platforms, but the brand and its content may slowly become commoditized as existing Nintendo consumers opt for other games from other publishers.

Mulit-platform Sonic Sales Figures
Mulit-Platform Sales Figures for the Sonic the Hedgehog Series

As shown, above, Sonic sales doubled after initially launching on other consoles. While the first Sonic Adventure sold 1.26 million units on Dreamcast in North America, a multi-platform release boosted total units sold to 2.13 million. However, after multiple iterations, the game’s sales performance dropped steadily. By the time Sega rebooted the franchise with 2006’s Sonic the Hedgehog, the franchise was selling less units across all systems than it originally sold on Dreamcast alone. Sega would later see restored sales among some future Sonic games, such as Sonic Unleashed, but the Sonic brand never returned as a system selling AAA franchise, as it once was when on Sega consoles.

Ports of Back-Catalogs May Not Sell

Nintendo has a range of GameCube and Wii games that could easily be remastered in HD and released for Xbox and PlayStation platforms, but based on the performance of Sega’s Crazy Taxi franchise, consumers may not be willing buyers for game ports. Crazy Taxi sold one million copies on Dreamcast, and the sequel performed even better, at 2.5 million units sold. However, success on Dreamcast did not translate into sales on other consoles, as the game only saw a fraction of its success on other consoles. By the time of the Xbox-exclusive release of Crazy Taxi 3, the franchise had lost its charm, selling only 140,000 units.

Multi-Platform Sales Figures of Crazy Taxi
Multi-Platform Sales Figures of Crazy Taxi

Annual Demand Remains Unchanged on More Competitive Platforms

While Sonic and Crazy Taxi’s performance may be due to quality issues within franchise releases, the annual releases of well reviewed games in the NBA 2K and NFL 2K clearly illustrate that Nintendo may not receive a boost in sales when releasing games on other consoles.

Multi-platform Sales Figures of the NBA 2K Series
Multi-Platform Sales Figures of the NBA 2K Series

A view of the performance of the NBA 2K series and the NFL 2K series shows that demand did increase annually for Sega’s sports series, but not by a significant multiplier. On Dreamcast, Sega’s sports series did not have to compete with EA Sports releases, but once moved to other platforms, Sega did not see significant sales boosts due to the far more competitive environment as a third-party publisher.

Multi-platform Sales Figures of the NFL 2K Series
Multi-Platform Sales Figures of the NFL 2K Series

After being acquired by Take 2, the 2K sports series did see a sales boost for their ESPN 2K5 releases, but the boost is more a result of the games’ $20 retail price, hinting further at the level of commoditization pushed on the games by a more competitive multi-platform environment with EA Sports titles on Xbox and Playstation.

A Third-Party Nintendo Could Still Succeed

Still, Nintendo’s experience going third-party may not mirror Sega’s. Nintendo’s franchises are among the most well-known in the world, and may see sustained demand on other platforms due to the caliber of their quality and brand power.

Further, given the Wii U only has a global install base of 4.3 million consoles compared to Dreamcast’s 10.6 million, Nintendo may see larger sales boosts than Sega due to Wii U’s extremely limited install base.

Finally, Nintendo’s third-party opportunities outside of consoles are far greater than Sega’s in 2001. With the massive adoption of mobile devices running on iOS and Android, Nintendo has the opportunity to sell content to a new set of consumers.  While other consoles are already saturated with console game experiences, mobile devices are not.  Mobile devices also have proven demand for classic Nintendo games, as evident by existing demand for emulators across mobile devices.

If anything, comparisons to Dreamcast should indicate that going multi-platform on consoles is not a clear winning strategy for Nintendo. Sales may increase initially, but the company will have to focus on more than just a multi-platform console strategy to succeed.

Give us your thoughts on Nintendo’s future in the comments section below. We value your thoughts and will respond. This feature includes contributions from CONSULGAMER research analyst Eric Gustafsson. Today’s data is based on North American sales figures, as compiled via VGChartz and Gaming Age archives. VGChartz sales data isn’t perfectly accurate, but it is a strong representative data source of sales performance.

5 thoughts on “Going Third-Party Didn’t Fix Sega, Will it Fix a Third-Party Nintendo?”

  1. What’s the source for the Sega games North America sales data?
    For instance Crazy Taxi 2 DC figures seems wrong …

  2. Ah, I’ve seen the sources only later.
    CT2 DC sales are definitely an error (244K != 2.44M).
    Using VGC data isn’t something I would recommend but overall the points you made in the article are valid.
    Nintendo benefits greatly from being a platform owner.
    More than to think how to go third-party (not that the management have ever take that option for a moment), they should focus on how to made their next products more successful (WiiU is hopeless, they just need to maximize profits out of it).

    By the way Dreamcast LTD is 9.13M (shipment data provided by Sega in their financial reports).

  3. Thank you for the comments, you are spot on.

    The CT2 # is incorrect and I will look into have it corrected to 244k.

    Where did you find the Dreamcast LTD numbers? I read through Sega’s financials pretty thoroughly during the transition years and did not see a final figure. I’m happy to update to 9.13 if you can point me to which report calls it out?

    And you’re spot on with Nintendo – with amiibo and DLC packages they seem focused on getting as much revenue as possible out of each existing platform owner, instead of getting a huge mainstream audience. We’ll see what happens for the next round…

    1. It’s basically LTD until FY 2001 plus the remaining inventory which Sega was dumping into the market at fire sales prices in FY 2002:
      HW = 8.20 + 0.93 = 9.13M
      SW = 51.63 + 7.58 = 58.21M

      https://www.segasammy.co.jp/japanese/ir/library/pdf/printing_archive/2001/sega/sega_annual_tuuki_2001.pdf
      https://www.segasammy.co.jp/english/ir/release/pdf/past/sega/2002/20011030.pdf

      More Sega consoles LTD courtesy of CESA (which reported Sega shipment data):
      http://i.imgur.com/Wl1BCwY.jpg

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