The NES Classic proves Nintendo still makes toys, not tech

Were you looking to pick up an NES Classic this year?  Well, too bad! This retro console has been high on the wishlist of practically every gamer in existence, and yet it’s also been sold out of stores everywhere. It doesn’t matter if you camp out at retail outlets or dive into holiday rushes like Arnold Schwarzenegger trying to get a Turbo Man doll, Nintendo just didn’t produce the stock needed to fulfill the demand for the NES Classic, especially considering its holiday release timing.

Some fans like to put on tinfoil hats and craft conspiracy theories about how Nintendo is being anti-consumer, or how they are artificially driving up demand by creating product scarcity. But Nintendo isn’t actually run by comic book villains. They are, for better and for worse, run by toy makers.

How Nintendo saved video games

I understand if mentioning video games and toys in the same sentence put a bad taste in your mouth. For many adult gamers, video games have been warring for legitimate acceptance as an art-form and/or sport since their inception. But that same lack of legitimacy that came with the label of “toy” saved the gaming market once, and we have Nintendo to thank for it.

It’s a story told a million times over, the story of the Video Game Crash of ’83 (or as Japan calls it the “Atari Shock.” which is a much cooler name). At the time, video games were dying, victims of their own prosperity. Everyone wanted a video game console, so everyone made a video game console. Older gamers may remember the war between Atari and Intellivision and the popularity of the Commodore 64, but few will remember that Mattel, Sears, and Radioshack all had their own consoles as well, many of which played competing console games.

Along with the flood of hardware came a flood of software, and bad software at that. Video Game IP law was still young in those days, and hardware developers had next to no publishing control. So anyone with a little bit of programming experience attempted to rush out a game cartridge to make a quick buck. If you are frustrated by the glut of unfinished games on Steam these days, you have an idea of what all of gaming was like back in the eighties.

And then there was the failing arcade scene. With the increasing costs of technology and maintenance coupled with good old inflation, most arcades could no longer afford to price their games at 25 cents a play. Many popular games were increased to 50 cents, which doesn’t sound like much until you realize the price literally doubled. Unfortunately, this increase in price did not lead to gamers bringing more money into arcades. Instead they brought the same money they always did and played fewer games. This pattern would continue into the future with more advanced games being charged at a dollar or more per play, and fewer and fewer gamers going to arcades.

What had been the big new craze had quickly become financial poison. Nobody had the money to buy every console on the market, and unless you were a particularly informed consumer (which was difficult in a pre-internet age) simply picking up one of the consoles had a chance of seriously burning you. What if it didn’t play the games you wanted? What if it just stopped working? Was it really worth the hefty monetary investment?

Here comes the part of the story you already know. Nintendo, the crafty marketers that they are, managed to keep the video-game industry alive by not really marketing their products as “video games.” More specifically, they did not market their new console, the NES (or Famicom in Japan) as a tech item or a computer. Rather, they marketed it as a toy, the next big plastic doohickey that your kid is going to want this holiday season. They bundled it with R.O.B. the Robotic Operating Buddy, a giant plastic robot that looked fairly similar to the action figures and models that were also sold as toys.

And it worked. Nintendo found a new market willing to buy its product. Parents would happily impulse buy the console for kids, who would then ask for more and more cartridges. This was the beginning of the era of “games as toys,” and its effects have been felt ever since.

Tech vs. Toys

But time has moved on, and games aren’t really seen as toys anymore. Video games have gone back to marketing themselves as pieces of advanced technology. Your PS4 doesn’t just play games, it streams Netflix, posts to Facebook, and lets you manage your pictures and music. It’s a quality of life machine.

And it’s important to note that tech and toys have to be marketed in completely different ways. New tech innovations are rolled out in waves. Despite all their marketing, they usually come out to a primarily skeptical audience. The first people to pick up any piece of tech are the early adopters, consumers who have resources to spare. If the product ends up being a bomb, these people don’t particularly care. They just want to try the newest and best on the market.

If the product strikes it big with early adopters, then trend setters will soon follow. These are people with fewer resources but who speak to a larger base of listeners. Think about the time your favorite YouTuber tried a new game, or when a celebrity mentioned that they just got an iPhone. These trend setters give their endorsement to a new piece of tech, and since you trust their opinion you trust that the new piece of tech is worth your money. This, incidentally, is the current stage of consumer virtual reality.

What follows is general adoption by the populace. This is when you start seeing your friend Steve walking down the street with a new Nintendo 3DS. At this point the product has become very close and intimate for many people in the general market. Skeptical buyers will now have a chance to try out the piece of tech first hand to see whether or not it’s worth a purchase.

Tech companies have to make sure that they have stock to meet all the demands of each stage of interest. Their marketing platform is largely based on momentum, a chain of recommendations slowly spreading out among the populace until they finally reach their desired user-base.

Toys are marketed very differently. There aren’t very many early adopters when it comes to children’s toys. You don’t see a whole lot of people purchasing new Barbie dolls on day one and giving skeptical buyers extensive reviews. This is largely because the primary market for toys, children, are not informed consumers. They don’t spend hours researching the next toy they want like adults do with new pieces of tech.

Rather, toy buying is all about impulse. The image of the toy gets out to the market so that as many children as possible can see it. Then, a small stock of the toy is put on store shelves to see if it catches on. If it does, the toy will sell out, and the toy company will repeat the process. Market the toy again, ship a bigger stock, and continue until the fad slows down. Toy marketing is less based on a slow build of momentum and more based on spontaneous marketing blitzes, creating instant demands at controllable points in time.

Seem familiar? While Sony and Microsoft were giving out consoles to reviewers and trend setters, and showing how pro-gamers, celebrities, and important cultural influencers like their product, Nintendo marketed the NES classic as a toy. They created a marketing blitz, proudced a certain amount of stock, and waited to see if it caught on.

It did. And now you can’t find one anywhere. 

Why does Nintendo do this? 

Is this the best way to go about marketing new gaming products? Is this the best way for Nintendo to serve its fanbase and, more importantly, are they maximizing their profit this way?

On one hand, taking this conservative stance toward game marketing and production has aided them well in the past. It actually helps Nintendo avoid gross over expenditures when their latest game product doesn’t catch on. Yes, the Wii U’s launch could have been even more catastrophic, believe it or not. This buys the company some safety but can, if you squint really hard, be looked at as anti-consumer. Nintendo is willing to allow for product scarcity in order to buy themselves financial safety, regardless of whether or not this means all of their loyal fans get to purchase their products in a timely manner. As long as the buzz keeps up, this is a win-win for them.

But that’s a pretty big “if” to be banking on.

Nintendo’s attitude toward “toy making” has shaped its business practice for some time. Just look at its consoles. It’s not interested in giving you cutting-edge hardware specs (as a tech developer would be), but rather in giving you cool things to play with. Strip away all of the games and the PS4 and Xbox One are practically the same thing (neither much different from a PC), while Nintendo consoles offering interesting features and functionality ranging from odd input devices to strange services that let you survey other gamers. In fact, looking at games as toys is a fantastic way to be an innovator, and if Nintendo is anything, it’s that.

So I’m not saying that being a toy maker is inherently a bad thing. But there is a reason that Nintendo is falling behind in the gaming console world. Mediocre toys don’t sell very well. You are either a hit or you aren’t. Mediocre pieces of tech, on the other hand, can sell on future promise. The launch lineups for the PS4 and Xbox One weren’t all that interesting. Windows 10 launched with several bugs and missing features. The Samsung Galaxy Note 7 literally exploded. But all of these products still sold because of future promise. The bugs can be fixed. New software can come out. The phone might…stop exploding one day?

Okay, maybe that last one was a bad example.

The point is, buying a piece of technology is an investment. You purchase a rather expensive piece of tech in the hopes that it keeps improving and giving you new experiences. Buying a toy is not an investment. It’s a singular purchase meant for an experience at this point and time. You purchase your toy, you play with it, and you are done.

Perhaps this is why Nintendo has such a hard time looking into the future when developing their technology. Many people like to make fun of friend-codes, but they are symptomatic of the “toy-maker” philosophy. Toys aren’t played with over the internet. The only thing you have to do to play with a friend’s toy is go over to his house. This also explains Nintendo’s commitment to offline multiplayer.

What does this mean for Nintendo’s future?

Is Nintendo failing? Yes, the Wii U failed and yes, they have make some bad business decisions in recent years, but at the same time they would have to catastrophically fail eight times over before they begin to see financial trouble. Maybe they continue to create “toys” because they can, and because it works for them more often than not.

Nintendo’s devotion to creating “cool things to play around with” has given us so many innovations in gaming. Toys have gimmicks, and Nintendo is the master of the gimmick. Vibration in controllers, the analog stick, motion controls, 3D platforming…at one time, these were all gimmicks.

And someone has to do that. Someone has to create the next new nifty gimmick because the ones that stick end up becoming standards in game development. Where would we be without the analog stick today?

So it’s possible that Nintendo isn’t failing in general, but rather, it’s just failing you. You didn’t want to buy the Wii U. You, the hardcore gamer, really want an NES Classic because it harkens back to a simpler time. A happier time. A time when the NES was your favorite toy. And you’re frustrated that Nintendo doesn’t seem to understand or care how many fans out there really really wanted an NES Classic. 

Nintendo actually isn’t failing you. You just aren’t their primary market.

But can gaming survive without the hardcore, tech-savvy market these days? ESA Survey data shows that more and more gamers are becoming “hardcore.” Once casual gamers are now playing heavier titles on their PCs. Hardcore gaming is going more mainstream. Will these hardcore gamers reject Nintendo’s toys? Or will Nintendo shift their focus, as it appears they may be doing with the Nintendo Switch? We will have to wait and see.

For now, just know that the shortage of the NES Classic is no different than the shortage of the Tickle Me Elmo, or of Beanie Babies. There’s hype for it now, and I’d put good money on the buzz sticking around post-holiday season, undaunted by the supply issues or frustrations of consumers.

After all, Nintendo does know how to make a good toy.