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We're not going to enter into the Internet gaming scene lightly, says Nintendo, because it's not profitable. And in the same breath the company releases niche titles like Pikmin into the market. A contradiction of business philosophy, no?
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Setting aside the issue of whether Nintendo should go online or not, I don't think this is a valid point. For one thing, it is known that Pikmin has sold over 1 million units between the USA and Japan alone. Not bad for a "niche" title. For another thing, although I don't know all the details, you can be pretty sure that Pikmin didn't cost as much to develop as an online plan would have been.
Should Nintendo go online anyway? I don't know. Only time will tell.
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Look no further than The Legend of Zelda. Nintendo showed the most incredible recreation of its Zelda franchise at Space World 2000, and to a delighted, cheering crowd. So what does the company do? Come back with a totally transformed version of the game that features a cartoon-styled, child Link and an all-too-cute Zelda universe -- the exact opposite of the direction the marketplace seems headed. For perhaps the first time in a Miyamoto presentation ever, the cheers were quieted. And yet, development on the title continued.
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I think Matt is exaggerating the effect of both presentations of Zelda here. Yes, Nintendo has riled a lot of people by showing a traditionally rendered video and then turning around and cel-shading it. But on the other hand, how many people saw the Spaceworld 2000 video? To your average casual gamer, Zelda: The Wind Waker has always been cel-shaded.
This is not to say that I think the game will be well-received. In fact, although the game has been selling quite well in Japan, I will be surprised to see it do as well in the U.S. as Ocarina of Time.
I think Nintendo's major weakness and their biggest mistakes have been in their public relations and marketing. It's a mess, at least in the U.S. Aside from there just being fewer Nintendo ads, their quality hasn't been as good. There have also been little things like using purple as the color of choice for marketing (never mind that 50% of the consoles are black). If Nintendo had done a better job of marketing, I can imagine that many of GameCube's problems would be lessened or disappear altogether.
For the rest, well, there's just no predicting what's going to happen in the industry.