Why Nintendo’s decision to halt the NES Classic may herald a new era in retro gaming

Nintendo’s recent statement to IGN that it’s ending production on the NES Classic may have come as a shock to many. After all, the system has to date sold as many as 1.5 million units according to Nintendo’s figures, being a particularly blockbusting success in North America. Nintendo has pointed to the fact that they only ever intended the NES Classic to be a limited edition product and did not anticipate the high level of demand for the console (illustrated by it being incredibly hard to get hold of for the vast majority of its shelf-life since release in November of last year). Nintendo also points out that the initial production run was extended to cope with the extra demand they encountered. 

“But doesn’t Nintendo like making money?” you may well ask. And it’s a fair question. Disregarding the company’s recent success with the Switch (which hadn’t yet been released when the NES Classic launched, and was surely a risky proposition), Nintendo’s recent hardware record has been patchy. The Wii U, in particular, was close to a complete disaster for the company. You’d be forgiven for thinking that they’d like to hold on to such a bona fide financial success as the NES Classic for a little longer. After all, everything’s in place for manufacturing it. Surely continuing to push for more production is the logical course of action when the resulting product is a guaranteed seller?
Well, there’s many reasons why some feel that Nintendo released the NES Classic in the first place, and why it may not have been the absolute success that it may at first appear. Looking at it logically, it seems an obvious move. There’s always been a nostalgia-driven demand for Nintendo’s huge back catalog of games, the licenses of which the company guards fervently. It’s an opposite approach to that of Nintendo’s former enemy in the console wars, SEGA, which hands its licenses to third party manufacturers seemingly indiscriminately, resulting in dozens of NES Classic-type products that contain Genesis and Master System games in their hundreds. Although Nintendo may argue that its approach keeps all the profits going their way, rather than split between some third parties, it also keeps all the production costs (and the risks) on their side of the bargain, too. Many have speculated that the actual profit Nintendo makes from the sale of each NES Classic is actually pretty low, and this, coupled with the problems maintaining production, have led to its eventual discontinuation.

Whatever the pros and cons of each side of the debate, most would agree that, at least in principle, the logic of releasing a retro console is sound. So why, then, has Nintendo waited so long to do it? Sure, it doesn’t necessarily need to recoup money from its back catalogue in the same way as SEGA (Nintendo’s strong financial position, even despite the less-than-ideal Wii U situation, has been well documented), but wouldn’t it at least like a piece of that action, especially from licenses that are entirely Nintendo-owned, and are potentially doing nothing? Last year it decided it would. But why then? And why for such a relatively short space of time?

One explanation is that the NES Classic was a preliminary move, prepping the ground for an all-out assault on our retro senses with a much improved, more up to date Virtual Console. And this makes sense to me.

Nintendo’s previous versions of its Virtual Console digital distribution model have all been deeply flawed in comparison to similar systems in place on other platforms mainly due to a single factor: purchases are linked to the console they’re bought on, not to a user’s Nintendo account. This lags behind what Sony have in place with their Playstation Store/Network, and Microsoft’s Xbox Live, which not only now includes your library of backward compatible Xbox and Xbox 360 games but also features cross compatibility with PCs with its Play Anywhere initiative. With ecosystems which carry your purchases indefinitely and across multiple devices now being the norm, Nintendo simply has to implement this more sophisticated system. And I think now is the time for that to happen.

The NES Classic tested the waters, but its time is up, not just because its presence would hurt sales of digital titles on Nintendo’s new ‘Virtual Console 2.0’ (though this certainly would be the case), but also because selling piecemeal, expensive to produce hardware will never be enough to satisfy the demand for retro gaming. For Nintendo to fully mine that profitable vein of nostalgia, they must have a robust, all-encompassing digital delivery system. Many couldn’t believe Nintendo would release the Switch without an element of online store functionality to speak of, but I think the reason is that they’re thinking bigger than they ever have before. They’ve already announced they’re moving to a subscription based model for online functionality, finally bringing them in line with the others, and showing that they’re taking online seriously for the first time. Surely user purchases linked to an online profile, rather than the hardware they’re bought on, will follow.

But what of the Famicom Classic Mini, the NES Classic’s Japanese sister console? In a similar announcement to the NES Classic, Nintendo said is plans to halt production of the Famicom Mini too. But with one key difference: this stoppage is being talked about as temporary. Nintendo probably feel that the presence of an improved Virtual Console system in the US will remove the need for the NES Classic. Collectors will of course still want to get their hands on the hardware, but Nintendo would probably rather this relatively small demand be satisfied by imports of the still-in-production Famicom Mini, making this more of the niche product it was always intended to be, and cutting down on expensive production costs.

Although Nintendo has been slow to adapt to the increasingly connected nature of modern gaming, and undoubtedly should’ve revamped their online offering a long time ago (those who buy a new copy of their favorite classic Mario game every time a new Nintendo console is released will be especially in agreement of this), this move into the future is a universally positive one. Their cultivation of a true digital ecosystem will be a great thing for retro fans, and (as Microsoft and Sony have found) will keep those players buying Nintendo’s consoles in the future, too. Nintendo can look forward their fans’ loyalty becoming rooted in something tangible (or at least, digital), and this could take some of the rollercoaster-ride out of the company’s console fortunes, creating a legacy that is based on gamers who have bought into their ecosystem, and will continue to do so for years to come. Nintendo can already boast millions of fans worldwide. Now, it’s finally time for them to take advantage of that fact. And there certainly won’t be many complaints.