The Wii U's slow start to 2013 was in part a tactical decision by Nintendo leadership made in response to the rising tide of low-cost titles and designed to give their developers time to polish their games, Nintendo president Satoru told analysts at a recent meeting.
"We originally planned to release a few first-party titles for Wii U during the first half of this year, but no big titles are scheduled for release before Pikmin 3 in July because we decided to take time to add the final touches to ensure that consumers fully feel that they are valuable titles," Iwata said. "The brand of a franchise would be completely degraded without customer satisfaction. This is why we delayed the release schedule of such games."
Iwata said the delay was also caused by the fact that Nintendo had to pull developers off of their games to get them to help finish the Wii U's release titles. Those launch games, he said, required more development resources than expected.
"In short, the development teams of Pikmin 3 and other future games were understaffed during that period," he said. "We do not simply have one easily identifiable bottleneck in software development. These days it is becoming increasingly challenging to determine the minimum development resources required for customer satisfaction."
Iwata's initial statement came in response to a question asked about news of his appointment to oversee North American operations. The analyst asked if Nintendo's shortage of game titles was because Iwata was already stretched too thin.
Iwata kicked off his answer by saying that this new structure would allow him to be informed about game development in a more timely way. He also noted said that the industry has had a a downturn for the past two years, specifically in the U.S.. He said he believes that's because of two things.
"These days it is becoming increasingly challenging to determine the minimum development resources required for customer satisfaction."
The fact that the PS3 and Xbox 360 are both nearing the end of their product cycles spurred lower sales in the entire video game market, Iwata said.
More significantly, though, is the impact caused by the glut of low-cost video games. Initially, that made it harder to convince gamers to spend the extra money for a console title. But ultimately, he said, the increase of low-cost games and the number of devices, like smartphones, that can play games, force developers to do a better job, "gradually setting the bar higher for us to encourage our consumers to pay a certain sum of money for software."
That's why Nintendo decided to reexamine their early 2013 games. Iwata said that strong sales for Tomodachi Collection and Animal Crossing: New Leaf recently reaffirmed the fact that "a delicately crafted game will never fail to appeal to consumers."
"In this way, what is happening cannot be accounted for by the idea that casual users playing games with smartphones will not buy games targeted at them for dedicated gaming systems," he said. "The reason why Fire Emblem Awakening and Luigi's Mansion: Dark Moon have been well received by consumers in the U.S. and European markets is that they still respect the value of games that have been carefully developed to take advantage of dedicated gaming machines. It is true that the overseas video game market has been in a downturn for the last two years, but we believe that there is a way to buck the trend."
"... a delicately crafted game will never fail to appeal to consumers."
Iwata later said that is is harder to meet the expectations of gamers who are willing to pay $50 to $60 for a title, but that when you do the potential payoff is much higher.
"Therefore, if we create more hit games, the software development business can still be very profitable," he said. "All games break even if they sell millions of copies worldwide, so we will continue to do our best to develop games which have high sales potential."
"Around the time when I first wrote a program for a home console game 30 years ago, two developers, including me, completed it in only three months," he said. "Things have changed dramatically since then, and we therefore need to expand the range of software developers."