Former Nintendo Executive Dan Adelman Discusses Nintendo’s Culture, Third Party Support, Virtual Console, And More

Dan Adelman

Former Nintendo executive Dan Adelman worked at the company for almost nine years from 2005 through 2014. He helped launch and manage digital distribution platforms such as WiiWare, DSiWare, and the 3DS/Wii U eShop services. Furthermore, he negotiated deals for technologies like Unity (Wii U) and discovered many critically acclaimed titles such as World of Goo, the BIT. TRIP series, Shovel Knight, and Super Meat Boy. Before working at Nintendo, Adelman helped Microsoft score multiple third party deals including Star Wars: Knights of the Old Republic with LucasArts and WWF Raw (and Raw 2) with THQ. At Microsoft’s Xbox division, he worked with a talented team to launch the groundbreaking Xbox Live Arcade service.

Last year, Dan Adelman left his job at Nintendo of America to become a freelance consultant for independent developers. He works with developers early in the development cycle all the way through post launch. His business services include: providing game feedback, developing a marketing plan, putting together a Kickstarter campaign, maximizing press coverage, determining how to budget resources, and developing a post-launch strategy. Adelman is currently working on “Axiom Verge”, an intriguing PlayStation exclusive Metroidvania with an amazing art direction. You can visit Dan Adelman at his official website by clicking here and you can follow him on Twitter at @Dan_Adelman.

We would like to thank Dan Adelman for taking some time out of his busy schedule to do this interview.


 

Interview

Most people know you as “the indie guy”, but when you worked for Microsoft, you negotiated Xbox contracts with major third party publishers such as LucasArts, Activision, THQ, and Midway. You also worked on major Xbox deals involving Sega and Electronic Arts. At Nintendo of America, you built business relationships with small developers and worked closely with Nintendo of America’s licensing department.

What do you personally believe caused Wii U’s third party support to collapse and fall apart? I’m talking specifically big publishers like EA, Take Two, etc. If Nintendo had asked for your advice on how to fix these third party relationships, what advice would you have offered?

Adelman: It really comes down to the business case for these publishers. Nintendo consumers buy Nintendo systems primarily for the first party content. There’s a bit of a self-fulfilling prophesy in that publishers feel that they can’t compete with Nintendo first party, so they choose not to invest in making high quality products for the platform. There are some notable exceptions to this over the years like Rayman Legends but many times third party publishers set low sales projections for their games, and then decide a development budget based on that. I can’t say outright that they’re wrong either.

There have been cases where companies decided to pull out the stops and make a great game for Nintendo platforms only to find that consumers weren’t interested. And it could be because consumers have been burnt by third party games on Nintendo platforms before.

For Nintendo to break this cycle, I think they need to invest and absorb some of the risk for third parties who try to embrace the features of Nintendo platforms and help communicate to consumers which games are on par with Nintendo first party games in terms of quality. Sony and Microsoft spend a lot of money securing exclusives – or at least exclusive features – on the top games and since Nintendo doesn’t really do that, third parties focus on the other systems. I’m not sure about Sony, but I know Microsoft also has a team of technical people that will go work with a studio for a few weeks or even months to help them make their games as good as they can be on those platforms.

If Nintendo doesn’t want to be a first-party-only system, they may need to be more aggressive in securing those games and making sure that they’re high quality.


I know you can’t speak for other employees, but was there ever a feeling at Nintendo of America’s licensing department of: “Man, it would be so much easier to convince third party companies to support these platforms if we had more powerful hardware.”

Did you personally wish Wii U and 3DS had been more powerful? For example: The 3DS doesn’t currently support Unity and Web Framework, which makes it difficult to attract more indie developers to that platform.

Adelman: I think it would definitely be easier to get third party support if only because publishers wouldn’t need to set up a separate team specifically for the Wii U or 3DS version. If you ask any developer what they want, they’ll always say, more RAM, faster CPU, faster GPU – just more power. That’s always the case for any system – even PS4 and Xbox One, and they’re only a little more than a year old at this point. And of course I would have loved to have Unity working on 3DS, since there are so many great indie games that were developed using that technology.


Why did so many big third party publishers skip DLC for the Wii U versions of their games? Due to Wii U’s small install base, was it difficult to make money from DLC if you weren’t a big Nintendo title like Mario Kart 8, Smash Bros, or Hyrule Warriors?

Adelman: As a rule, I’ve found that DLC attaches at a fixed rate to active players. That rate will vary from game to game, but within a game, it remains fairly constant. So if, say, 8% of active players will buy the DLC, then as time goes on and the number of people still actively playing your game declines, so do the sales of the DLC – in a very proportional way. You’d have to talk to the third party publishers themselves of course, but my guess is that there was a simple cost-benefit analysis done at many of these publishers. Given the install base of the Wii U x their expected attach to that install base x their historical DLC attach, they can come up with a decent projection of sales potential.

If there are significant incremental costs to creating a Wii U version, then publishers may conclude it’s just not worth it. There are many publishers out there who use one engine and team for the PS4 and Xbox One versions of their game and a completely separate team for the Wii U version due to the differences in the technologies. This adds to the explanation of why it may not be as simple as just porting the content over. The fact that the Wii U is very different from the other consoles is a double edged sword. On the one hand, there are many experiences that could only be created on the Wii U. On the other, work that was done for one platform may not be easily replicated for the Wii U.


In many interviews, you’ve spoken publicly about how difficult it was to pass policies and get things done at Nintendo. For example, in your Kotaku interview you said, “I absolutely did try to fight internally to change whatever I could.” In your IndieGamerchick interview, you said, “Unfortunately, it was hard to get the changes I needed because no one could hear me over the ringing of all the cash registers.”

But why was it so difficult to get things done at Nintendo?

Is there a lot of bureaucracy, additional layers of management, and red tape? 

Is it because NOA offices are not very autonomous, and you need to always report to Japan (NCL)? 

Adelman: Nintendo is not only a Japanese company, it is a Kyoto-based company. For people who aren’t familiar, Kyoto-based are to Japanese companies as Japanese companies are to US companies. They’re very traditional, and very focused on hierarchy and group decision making. Unfortunately, that creates a culture where everyone is an advisor and no one is a decision maker – but almost everyone has veto power.

Even Mr. Iwata is often loathe to make a decision that will alienate one of the executives in Japan, so to get anything done, it requires laying a lot of groundwork: talking to the different groups, securing their buy-in, and using that buy-in to get others on board. At the subsidiary level, this is even more pronounced, since people have to go through this process first at NOA or NOE (or sometimes both) and then all over again with headquarters. All of this is not necessarily a bad thing, though it can be very inefficient and time consuming. The biggest risk is that at any step in that process, if someone flat out says no, the proposal is as good as dead. So in general, bolder ideas don’t get through the process unless they originate at the top.

There are two other problems that come to mind. First, at the risk of sounding ageist, because of the hierarchical nature of Japanese companies, it winds up being that the most senior executives at the company cut their teeth during NES and Super NES days and do not really understand modern gaming, so adopting things like online gaming, account systems, friends lists, as well as understanding the rise of PC gaming has been very slow. Ideas often get shut down prematurely just because some people with the power to veto an idea simply don’t understand it.

The last problem is that there is very little reason to try and push these ideas. Risk taking is generally not really rewarded. Long-term loyalty is ultimately what gets rewarded, so the easiest path is simply to stay the course. I’d love to see Nintendo make a more concerted effort to encourage people at all levels of the company to feel empowered to push through ambitious proposals, and then get rewarded for doing so.


There was a report in 2013 that game demos will cut your sales in half. When you worked at Nintendo, did the games with demos typically sell better or worse than the games without demos?

Do you recommend that more eShop developers make demos for their games?

Adelman: For the longest time during WiiWare, our policy was that we didn’t allow demos, period. This was definitely flying in the face of conventional wisdom at the time, but I think the feeling was that people would just spend their time jumping from demo to demo without buying anything. This has since been backed up by more data that say that more often than not, demos in fact hurt sales, but not necessarily because people are just playing demos all the time. Instead, people who have some curiosity about a game, who would otherwise have to buy the game to check it out, are able to satisfy that curiosity with just the demo.

The real goal of demos should be to help consumers figure out whether they might like the game before they buy it. Back in the early days of WiiWare, there was no easy way for people to figure that out – just a title, a couple screenshots, and a short description. Now that user comments and ratings are a much bigger part of every digital storefront, the usefulness of demos has diminished.

Whether eShop developers should make demos really depends on the nature of their game. Some games just lend themselves better to demos than others. For example, RPGs are really hard to make demos for, since there is so much story involved. More action-oriented games could demo better, as long as the demo showcases some promise of gameplay variety in the full version. Overall, though, given the additional work relative to the potential for increased sales, I’d generally recommend developers allocate their limited resources elsewhere.


One month after you left Nintendo of America, the company revealed that 93% of eShop users were male and only 7% were female.  What is your opinion of this gender split, and how can Nintendo get more females to visit the eShop?

Adelman: I wish I had a good answer for you on this. Nintendo consoles have traditionally had a much more balanced male-female ratio than other consoles. I think a lot of that is due to the family-friendly nature of Nintendo’s first party lineup. So it’s all the more surprising that the eShop would be so imbalanced. I haven’t seen any market research on this, so it would be purely blind speculation on my part, but if I had to venture an explanation it would be that Nintendo’s first party games are readily available in traditional retail stores. The games that can only be gotten on the eShop – primarily the indie games – may not appeal as broadly to women.

I’m a little concerned that speculating further than that would rely on some pretty outdated notions about women gamers, such as the stereotypes that they are only interested in casual games or that they only like games with cutesy graphics. I think the best thing to do would be for Nintendo to look at the games that have the best male-female ratio and see if they can spot some underlying trends. I would also recommend getting some feedback from women gamers on the user interface of the eShop. If the eShop UI is unappealing or intimidating in some way, that should be rectified.


In North America, many indie games like “Percy’s Predicament” and “Turtle Tale” have never been featured (with a small banner) on the Wii U eShop’s front page.

When you worked at Nintendo, how did they decide on what indie games should or shouldn’t appear on the front page of the eShop?  Is it based on whether a game receives critical acclaim, or how much press coverage it receives?  Is it based on whether you’re in the WarioWorld program or another program?

Adelman: During the WiiWare and DSiWare generation, there was very limited opportunity for us to feature anything. The UI was designed in such a way that the shop was laid out algorithmically based on sales. Of course, this became a self-fulfilling prophesy. If a game could establish itself as the top seller, it was the first game that people saw, and therefore the most likely to be bought, and so on. And if you weren’t one of the top 5 or a newly released game, you could sink to the bottom of the shop pretty quickly, and it was difficult for people to find those games. I’ve heard stories of people who knew what game they wanted and still struggled to find it in the Wii Shop because they may not have known the exact spelling or even where the search functionality was.

During the 3DS and Wii U generations, a new team was set up that handled the layout. This team didn’t report to me, so there was often some disagreement about what should be featured. That team was very focused on driving revenue, and Nintendo’s first party games are the ones that drive the most revenue, so for a long time that was all you saw in the eShop. I think that situation is getting better now, but it’s got a ways to go.

For me, the main criteria about which games I tried to pull into different marketing opportunities, whether it’s recommending them for a prime spot on the eShop store page or including them in a booth at E3, were a combination of innovation and quality. Innovation is a very overused term, but I often thought about it in terms of people deliberately trying to do something new. Some of these experiments may not succeed, but I always wanted to support their efforts. Probably the best example of a game like this is Spin the Bottle: Bumpie’s Party by KnapNok Games. It’s hard to remember this far back, but World of Goo and the BIT.TRIP series were in a similar category during the WiiWare days.


Nintendo Life wrote a lengthy article in July about how the Wii U eShop is raising tough questions on quality control. They mentioned Nintendo Web Framework for the increase in low quality games coming to the eShop. Do you feel that Nintendo Web Framework is living up to its full potential, and does making the eShop “too accessible” lead to a flood of shovelware and poor games? Should consoles have higher standards of quality control than mobile?

Adelman: This is a really tough issue, and one I personally go back and forth on a lot. On the one hand, because barriers to entry are so low, it’s making it really hard for consumers to sift through all of the crap to get to the best games. As I already mentioned, Nintendo – and all platforms for their respective digital storefronts – have a role in helping consumers find those games. In addition, there is a not insignificant cost associated with running each of these games through the process, so Nintendo loses money on games that don’t sell well. On the other hand, there is a very real question of who decides what games are good enough? Depending on how high or low you make the bar, you could still wind up letting in lots of shovelware or you could wind up rejecting a gem. Minecraft is a great example of this. I have to admit the first time I played Minecraft, I didn’t get it. It was still early and there weren’t many YouTube videos out for it or tutorials, so I would just fire up a game, gather some resources, and then a monster would come out of nowhere to eat me! If I had been in charge of greenlighting games, there’s a very real chance that I might have declined it.

Ultimately, it comes down to discoverability. If the eShop – or any other platform – can make it easy for people to find the games that they like, then there is no problem with letting in lots of crap because people won’t even see it. The problem is that that technology doesn’t exist. Valve is really trying to tackle this problem head on with some interesting experiments like the Steam Curators and online forums, but it is pretty evident that they haven’t solved it yet. Probably the most obvious sign of this is that the biggest factor in driving sales is still price discounts. If people didn’t feel that they were taking a big risk every time they bought something, there wouldn’t be as big of a need for 90% off discounts.


From what I understand, you were involved with the Wii’s Virtual Console service in the early years. In a previous interview, you mentioned how you did market research to figure out the ideal pricing policy for the Virtual Console on the Wii. 

Can you talk about how you and Nintendo of America came up with these prices? Why did you choose to price VC games with a flat-rate by console? For example, I think we can agree that not all NES games are the same quality as something like Super Mario Bros 3.

Five years from now, do you predict that it will become more difficult to sell old retro games at those current prices?  Example: Will consumers always be willing to pay $5 for Ice Climber?  

Adelman: First we got a sense from market research about what platforms people were interested in. We had pretty much every classic system on the list, and these were the ones that stood out as the heavy favorites. We also did some market research on people’s willingness to pay, and came up with these prices accordingly. There was a lot of debate about whether to charge more for Super Mario Bros. 3 as opposed to Ice Climbers, and we ultimately decided on a fixed price per platform for a couple reasons. First, it’s simpler to manage from an internal processing perspective. If each game had a separate price, there would be lots of opinions about each game, and consolidating all of that feedback would be very time consuming. Second, there was a little feeling of holding people’s childhood hostage if we priced certain games higher than others. To take an absurd example, let’s say we charged $50 for Super Mario Bros. There would be some people who really have strong nostalgia for that game who would begrudgingly pay it. But they’d probably feel cheated and exploited.

Nintendo understands its importance to a lot of people’s childhoods, so they really want to avoid undoing that goodwill. Finally, everyone has a game that, for them, was their biggest memory as a child. I remember I probably put in over 100 hours on Nobunaga’s Ambition with my brothers. For other people, that game might be Ice Climbers. I haven’t seen any research on this, but I suspect the majority of sales on Virtual Console are from people who have already played the game as a child. I’m sure there are some cases of people going back and playing games they missed, but if I had to guess, I’d say that’s around 25% of the market. The other 75% are people reliving memories.

It’s hard to say whether the old prices will stay in the long run. My gut says that demand overall is not very price sensitive. Even $10 for N64 games is not going to break the bank for anyone. I think the bigger factor is fatigue. A lot of people have scratched that nostalgia itch, so they may not feel a need to play those games again.


I read that you were a big supporter of the “drip-feed” business model for the Virtual Console.  In a Nintendo World Report podcast, you mentioned that Nintendo had the sales data to back it up.

From a business position, could you provide an argument on why the drip-feed approach was (and still currently is) the best way to release Virtual Console games?

Adelman: It’s actually not really worth debating the pros and cons, because the fact is, it’s the only way to do it. I think a lot of people underestimate the amount of work that goes into getting these Virtual Console games ready, so it’s not like Nintendo is just sitting on a bunch of games and doling them out slowly. All of that said, the drip-feed approach also had some marketing benefits. It gave people a reason to come back every week and see what was new. It also gave people some time to consider each game individually. If Nintendo were to dump 300 games on the eShop today, there might be a classic from your childhood that you had simply forgotten about and didn’t even think of sifting through all of the games to look for. If there is a small number of games each week, there’s a greater likelihood that people will notice the games and resurface their old memories.


I wanted to ask you about “Bob’s Game” from independent developer Robert Pelloni. In 2008, he was rejected from becoming a developer for Nintendo’s platforms because he didn’t meet a certain amount of requirements.  Then, Pelloni tried to make Nintendo look like a corporate bully by staging a protest and locking himself in his room for 100 days until Nintendo provided him with a software development kit. This was a big enough story that even Reggie Fils-Aime had to eventually comment on it.

Back in 2008, what was going through your mind when you first read about Bob’s Game and Robert Pelloni’s meltdowns/protests?

Adelman: I actually never spoke with Robert Pelloni. The closest I got to that mess was that I was added to a long list of people being cc’ed on his emails. I think this was around the holidays when lots of people were out of the office, so he would send an email to someone, see their out of office message directing them to get in touch with someone else, and so on until he had about 30 people on the email. My feeling at the time was that he probably had emotional or psychiatric problems. I’m not a doctor and couldn’t diagnose anyone based just on those news stories, but that was the impression I got.

Unfortunately, that’s not rare in the indie games world. Highly creative people work in isolation for years at a time without knowing if they’ll ever finish their game or whether their game is even any good. There have been a lot of good open talks at Game Developer’s Conference that discuss this. One of my favorites was Matt Gilgenbach’s post mortem on Retro/Grade where he discussed how his OCD led him down a dark, downward spiral. It’s definitely a good thing that people are openly discussing this stuff so that developers realize they’re not alone.

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