The Long Tail is a theory that suggests a significant amount of money lies in niche markets, and smart companies of today are investigating ways to access those niche markets.
I think Nintendo is a smart company.
This isn't a solid thought, but I've never been a solid thinker, so take this all with a grain of salt -- it's categorized as rumour for a reason. It just smacked me in the face this morning and I think it's a worthwhile discussion.
Lets face it, Sony dominates the game market. To a large degree, Sony created the current game market. Nintendo saved it in the mid-eighties and helped people accept games, but in the mid-nineties Sony opened the doors to people who wouldn't otherwise bother. I think playing CDs exposed a lot of people to the market that wouldn't otherwise have bothered, and using optical media instead of cartridges was excellent.
Microsoft is going to give Sony a run for their money this generation. XBox Live bought MS a lot of credibility. A couple of decades ago Bill Gates started Microsoft with the vision "a computer on every desk and in every home" and he's very nearly reached that point. XBox 360's integration with XP Media Edition and streaming video and all that jazz (and oh yeah, video games) is going to lure some people away from the PS3.
Nintendo has spent two generations being relegated to the sidelines with their home consoles. The GameCube was far more succesful than the N64, but still, Nintendo's been hearing for a decade how lame they are and they've been told in their numbers that, while profitable and rock solid, they don't dominate the market any more.
Twenty years ago Nintendo saw that a flood of crappy games was ruining the industry, and instituted the Nintendo Seal of Quality and other practices to ensure that people who purchased games for their systems were at least getting something that worked. Lately Nintendo has been saying that they don't really like the direction gaming has taken. Huge and increasing budgets for major titles that dominate the market but aren't really fun. Publishers sinking millions upon millions of dollars into one title that needs to succeed or everyone involved loses their clothes and walks home in barrels. Development companies that devote 30 - 80 people for three years (and for 80 hours per week or more) to produce one title that gets an 8.5, the same as every other title, and ultimately doesn't add anything new to the field.
Miyamoto talks about things that might not be games but that might appeal to a wider audience. Using the DS to compete with seven friends to study for your tests, a little Japanese to English and Back translator, a pet dog, visual toys that form llamas given the right stimulus. Since Christmas, everything that's come from Nintendo has talked about attracting non-gamers, about parents walking past their kids who are playing and say "hey, that looks like fun" and tries for a few seconds before returning to other obligations. Or sticking around and playing for another decade.
And then Nintendo announces that they'll be working on making their back catalog available. Miyamoto doesn't know which games they'll make available, but everything can run. I can pretty much guarantee that the chance to play Dr. Mario on a big screen is going to sell my father a Revolution. Admittedly he's not necessarily your typical approaching 60-year old (he bought us our Intellivision and I'm convinced that it being "for the kids" was never an excuse he had to use) but instant access to a library that size is a compelling reason for a great many people.
For years people have been ripping off Nintendo's intellectual property. This past Christmas saw kiosks in every mall in North America filled with fake N64 controllers containing emulators with a library of older games, and they sold well. Nintendo emulators and ROMs have been available online for ages. There's an obvious demand there, and finally Nintendo's woken up and said "Hey, we want some of that."
And of course the press release for the Revolution with the hints at indie development. Everything Iwata and Miyamoto and Reggie and everyone else speaking for Nintendo has said involves a comment that developing for the Revolution will be as easy as developing for the GameCube, and while I have no idea how easy that is, I know that there's a lot of knowledge out there.
Nintendo looks to be taking advantage of the long tail in a couple of ways. By making their library available they're going to sell to people who want to play games from their youth (or as in my dad's case from their childrens' youth) and once there's a Revolution in the house they'll sell to the curious. I can think of dozens of titles I'd drop $5 to rent for a weekend or $10 or even $20 to keep on a memory card for whenever I want to play it. So what if they only sell a couple hundred copies of Super Mario Brothers 2 (though they'd sell more), at this point it's all profit.
On the other side of the coin, there are reams of indepependant developers out there who just can't write a console game. And I don't even mean someone sitting at home banging away on their keyboard. There are hundreds of small companies writing games for cell phones and online puzzle aggregator sites and releasing titles as shareware or selling online. There's a huge industry out there that is entirely niche. If Nintendo opens their console to these companies they don't need EA or Konami (though, you know, it would be nice). And if Nintendo builds a distribution network, then they make it even easier for these companies to deliver their software.
There's a long tail of consumers and a long tail of producers, and I think that next year Nintendo is going to introduce the two to each other in an entirely new way.