October 21st 2002

Where's the third-party support?

Even before the e-Reader hit retail stores last September, gamers have had questions about the device's future. What are Nintendo's plans? What can we expect in terms of e-Card applications? But most of all: When will we see third-party developers and publishers get in on the action?

Regarding that last question, Nintendo has remained silent. Pokémon trading cards and NES games on e-Cards are very nice, but gamers who have already bought the e-Reader are anxiously waiting for more. No one can deny the fact that third-party efforts will play an important role in fulfilling the e-Reader's potential as a gaming medium, so what's the hold up?

To understand the current situation, we have to look at it from Nintendo's perspective. As a gaming medium, the e-Reader (or to be more precise, the "dot code" technology used for e-Cards) is very new, and as such, is quite unproven from a marketing standpoint. The japanese model of the e-Reader has been out in Japan for quite a while, and still, there seems to have been no third-party interest in the peripheral. This is easely explained by the fact that it has no Link Cable port, and it was primarely developed to fuel the Pokémon hype.

Nintendo soon realized that their card-reading device needed to be enhanced in order to achieve its full potential, and so they developed a second model. But they couldn't release it in Japan less than a year after the release of the first model, so they decided to use the US market as a testing ground. The US model of the e-Reader, with its Link Cable capabilities and its built-in NES emulator, has been able to attract some mass-market attention, and third-party developers are beginning to acknowledge the potential of the device, both as a standalone platform and as a Game Cube peripheral. So it would seem that Nintendo has played its cards right, up until now.

Gamers, however, being impatient consumers by nature, are already complaining about the trickle of e-Cards games being produced. Five NES classics, a series of Pokémon cards, and a few promotional offerings like Air Hockey-e are certainly not enough to keep gamers interested for very long. And all we have to look forward to until next Christmas are 66 Animal Crossing e-Cards and five more NES games? What gives?

Patience, my friends, patience. These first series of e-Cards are being released by Nintendo to demonstrate the commercial viability of the e-Reader, and nothing more. This is evidently Nintendo's short-term marketing strategy for 2002, and "phase 2" of this venture is already being carefully prepared for 2003. Even without having any real evidence to show, I can safely say that discussions between Nintendo and third-parties are currently under way behind closed doors. But there are many complex issues that Nintendo needs to resolve in order to ensure the commercial success of the e-Reader/e-Card medium.

One of the major problems Nintendo has to deal with is the current north-american trading card retail context. I had a short talk with a few trading card shop owners in my city, and they all said that they weren't interested in selling e-Card packs, aside from the Pokémon Expedition series. Their reason is simple: To them, e-Cards are video game oddities and not trading cards in the traditional sense. Right now, they will only sell e-Cards if they have big licenses attached to them, like Pokémon, Magic the Gathering or Yu-Gi-Oh. So you'll probably have a hard time finding Animal Crossing e-Cards in those specialty shops. On the other hand, while video game boutiques are already selling the e-Reader and most of the e-Card series, a lot of them are not really into the trading card business, and they are currently adopting a wait-and-see attitude towards e-Cards. Meanwhile, big chains like Wal-Mart see e-Cards as just another product they can sell, but they require all e-Card packs to be sealed in cardboard/plastic packaging, mostly to discourage shoplifting. So right now, Nintendo needs to build a niche for e-Cards in the trading card market, and this is something that requires time and a solid marketing strategy.

Another problem is the manufacturing of e-Cards. While developing mini-games (or other types of data) and encoding them on e-Cards is relatively easy, the mass-production of e-Cards is another matter altogether. If the fabrication facilities used by Nintendo to manufacture e-Cards have a limited production capacity, it means that only one series of e-Cards can be produced at a time: While the Animal Crossing e-Cards are being mass-produced, the second series of NES e-Cards must wait. With this kind of situation, it's not surprising to see new e-Cards series being released so far apart from one another.

Evidently, in order for e-Cards to become mainstream products, Nintendo needs to extend its munufacturing capacities by establishing partnerships with other trading card manufacturers, such as Upper Deck and Topps, in addition to its existing partnership with Wizards of the Coast. This is easier said than done, as business negotiations can get pretty complex, with licensing agreements and exclusivity clauses. And then they have to figure out what kind of data they'll be putting on the e-Card data strips: Stats? Mini-games? Data to be uploaded to a Game Cube game? There are lots and lots of possibilities, but no matter what they decide to do, it takes weeks to figure out all the legal mumbo jumbo, and turning an idea into an e-Card application requires a lot of money, energy and time.

There is yet another issue to take into account: The "dot code" technology, developed by Olympus Optical Corporation. Nintendo surely doesn't want the market flooded with unauthorized third-party e-Cards, mostly because they created the e-Reader to make money off the e-Card sales. The best way to keep this from happening is to keep the dot code technology a company secret as much as possible, just like Coca-Cola has kept the Coke recipee a secret for decades. This makes intellectual property rights easier to defend (and licensing agreements easier to negotiate), but it complicates things for third-party developers who need technical documentation to fully harness the capabilities of the e-Reader, because to understand how the e-Reader works, you have to have at least some knowledge of how the dot coding works. Nintendo probably has this issue figured out already, so it will be interesting to see what kind of dev kit they will supply to third-party e-Card application developers.

All the issues described above, along with other issues that consumers like you and me may not be aware of, tend to explain why software support for the e-Reader has been (and will keep on being) so sporadic. As far as third-party development is concerned, the next logical step for Nintendo will be to arrange a partnership with Konami towards the creation of a new series of Yu-Gi-Oh trading cards equiped with e-Reader data strips. This will be of significant value to Nintendo because it should open the door to future e-Card projects with Upper Deck (Upper Deck and Konami are already partners for the existing Yu-Gi-Oh trading cards). That's my prediction, anyway. Nintendo should also direct some of their efforts towards promotional offerings, such as e-Cards in cereal boxes and video game magazines (most notably Nintendo Power). It's a good short-term strategy.

The future of the e-Reader is promissing, but it depends largely on third-party support. There is no doubt in my mind that the decision-makers at Nintendo HQ understand this very well, and they will work to get third-parties involved. But this will take time, and all we can do is wait patiently. Hopefully, 2003 will be a great year for the e-Reader.