Why Nintendo’s LP Crackdown might make business sense

On my first hunch, Nintendo banning monetization intuitively seems like it is a bad marketing idea, and others feel the same, too – You generate negative PR, at least in some social circles, some people don’t see your game, and the general consensus is they lose sales.  It’s suicide to do this as a small development group.

But Nintendo is a very large company. So things are a little different from their scale – why might they be doing this? Our emotional and kneejerk response is that they are losing out on tons of sales by snubbing the Youtube community – but, perhaps they’re not?

Let’s try to reason out from their point of view for a bit…

My guess is that:

Nintendo wants to discourage LPs of their game that are being monetized, not so Nintendo can get the money which is relatively pocket change for them, but so audiences will be driven to seek out other outlets that focus on previews – traditional reviews on websites, quick previews outside of Youtube – ones which give a quick taste of the game and a recommendation, but not enough in the way of a traditional demo.

The idea might be that they think, or have some data that suggests that LPs reduce sales in an analogous fashion to demos, i.e., people will tend to watch the videos, then decide they’ve seen enough, and not buy the game. This seems feasible enough to me, as I’ve heard that that for large companies, demos tend to hurt sales – large companies have large enough advertising budgets to not really need word of mouth and demos.

It’s just one idea, and whether or not it’s true, it’s important to remember the inherent differences in business operations between , Jon and I, and Nintendo, whenever we reason about one entity’s decision. The “game” of profiting between me and them are worlds apart.

The word of mouth from demos and LPs? Those might not matter when you have the budget to front page magazines, websites, and mail catalogs from the largest retail chains in the world. With that much advertising money,you might actually *gain* sales by lowering the number of LP videos, even though that would be an idiotic move for a small team. Remember, while Nintendo might be in it for making fun games, they’re still primarily in it for being a profitable business. Thus while they might snub the Youtube community, they don’t care, as long as it increases profits.

Am I pissed off? Certainly, I know a few people who make money off of the LPs. But before we label Nintendo as “stupid”, let’s remember that their means for existence are far different from that of smaller groups. If the data shows the right trends (which we don’t know), then Nintendo’s move can make sense from their standpoint.


One Comment on “Why Nintendo’s LP Crackdown might make business sense”

  1. Jon Kittaka says:

    Good thoughts, Sean. Maybe related is how so much of Nintendo’s output is based on releasing sequels to their core IPs, and much of the allure is the sense of excitement due to the power of those IPs and their place in people’s hearts. There’s very much a sense of “I wonder what they’ll do with Zelda this time!” or Mario or Metroid or whatever. You can see that very cynically, as them just cashing in on the same ideas over and over, but it also speaks to the strength of the IP and the way that it transcends any of the games themselves.

    However, I could definitely see that particular kind of allure being pretty squashed by LPs. In that sense, Nintendo’s move could make sense.

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