Tuesday, October 7, 2008

Hilfe Medic! Nintendo Killed Me!

As I mentioned in this week’s podcast, Nintendo is releasing the DSi this holiday season in Japan with North American plans for sometime next year.  Aside from some of the bigger updates to system in the forms of camera and size, one of the biggest draws would be downloadable games and the SD Card slot.

I have openly said that I modify my consoles – the ones that are mod-able anyway – and my Nintendo DS is also one of them.  I use a M3 device on mine to enable ROM playability, which essentially allows me to play homebrew and other region games.  Currently, all the Nintendo DS games are region free.  So if you visit Asia and buy that new Rockman World, it will work on your North American DS.

Nintendo has been very active during this console generation in trying to kill piracy on their multiple systems and with their latest attempt by epoxy gluing the ROM chips on the Nintendo Wii, it comes with no surprise that they will be region-locking their downloadable games for the new DSi and the DS Download store.  This is also very accepted practice in home consoles and it was always a surprise to me why they were not implemented in handheld devices.  Nintendo’s DS system is currently the best selling gaming platform worldwide, only to be followed closely by the Wii and with a distant 3rd held by Microsoft’s Xbox 360.  As we all know, hardware sales are only a means to an end.  Similarly to how cell phone providers will give you a greater discount for every extra year you extend you contract agreement, console hardware is sold on the basis of attracting platform loyalty and increasing their attach rates.  This is why manufactures such as Sony and Microsoft would be willing to sell their consoles at a loss in order to increase market share.  Because the chances are if you own a XBOX 360 or a PS3, you will likely be buying XBOX 360 and PS3 games.

Nintendo realizes that with the largest market share in their handheld console, the piracy market seriously hampers their attach rate and software sales.  By limiting software compatibility in the form of region lock, they automatically create multiple markets that do not require worldwide competition.  Asian markets can compete locally, while North American markets can retain their own strategy.  By also moving distribution to the “cloud” and following suit with other digital distribution models, they effectively cut out the middleman and are able to retain a greater portion of the revenue from each sale.

What they haven’t announced, and I will bet is true, is that the new DSi will also kill off any Slot 1 modding device.  Given the built in SD Card slot, there is still hope that hackers will find a way to enable its function to run ROMs directly off of the native SD Card but the hardware manufacturers of these Slot 1 devices will also be put out of business.

This is quite uncharacteristic for Nintendo as they have been relatively quiet on the piracy front and as a company on a whole.  This could spell a pretty interesting next generation battle for pirates VS. hardware manufacturers.  With Nintendo’s track record, no one will know what’s going on until it happens.  However, being someone that is using a slot 1 device, I’m sure going to be hanging on to my current DS even if I decide to upgrade.

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