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Nintendo facing industry backlash over controversial comments

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Nintendo president Iwata at GDC - Nintendo

Ask any video game insider about the future of gaming and they'll quickly point to Facebook blockbusters like Farmville and mobile hits
like Angry Birds.

Ask Nintendo boss Satoru Iwata, however, and you're in for a rough ride.

During his keynote speech at this week's Game Developers Conference, Iwata shrugged off the success of social and mobile gaming by issuing a clear warning to game makers: such titles are bad for business as they promote quantity over quality, and the increased interest in these platforms will threaten their very livelihoods.

"The majority of people here are creating games for social and mobile," Iwata said to a packed crowd on Wednesday. "I fear our business is dividing, and that threatens the employment for those of us who make games for a living." He later added that such platforms "have no motivation to maintain the high value of video game software"
and that "game development is drowning."

It's a bold statement (especially when considering the glut of cheaply-produced shovelware games that plague the Nintendo Wii), but to many experts, it amounts to little more than fearmongering from a company who should, in fact, be embracing such change.

"Long-term, Nintendo is doomed," analyst Michael Pachter told All Things Digital. "[Iwata]'s under full frontal assault by Apple."

That's not an overstatement. Just moments after Iwata wrapped up his speech, Apple head Steve Jobs pulled the wraps off the iPad 2, which will launch March 11 -- two weeks before Nintendo ships their impressive 3DS handheld. Though neither company mentioned the other by name during the two speeches, it's clear they're thinking of one another. A lot.

The other target of Nintendo's ire, social game kingpin Zynga, wasn't amused by being slighted.

"I expected better from Nintendo," Zynga bigwig Brian Reynolds said. "They are missing the point of what we are doing. We are making games that everyone can play and socialize on while playing."

Even companies who have enjoyed a healthy working relationship with Nintendo seem concerned.

"[Iwata] may be right, but then the 200 to 300 million people who play games on Facebook are wrong," said Jeff Brown, the VP of corporate communication for Electronic Arts.

Nintendo has long touted the power of its singular vision -- the company sees itself as a trendsetter, not a trend follower -- but such insular thinking hasn't always paid off. The company opted to retain its cartridge-based game format when designing the Nintendo 64, a decision that ultimately doomed the company to a distant second behind Sony's CD-based PlayStation. And as the Xbox and PS2 fought for control over the living room by including convergent features like DVD playback, the purely game-oriented Nintendo Gamecube fell out of the picture, selling a mere 22 million units worldwide (not that being a pure game device is always a bad thing -- the Wii has already topped the 80 million
mark).

Of course, they've enjoyed more than a few hits as well, and it's never a good idea to count the Kyoto giant out. The 3DS is enjoying tremendous buzz and has been virtually flying
off shelves
in Japan. With DS and Wii sales lagging in recent months, Nintendo hopes the system sells just as briskly when it hits the U.S. on March 27th.

The company is hardly alone in fearing the tide of inexpensive games that have made the App Store and Facebook such potent forces. Frank Pearce, co-founder of World of Warcraft developer Blizzard, also senses the changing tide.

"It's really tough to compete against free," he said at GDC. "No matter what level of quality you hit, there are a lot of people who are willing to sacrifice that for a cheaper version...The industry is changing in terms of the business model."

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