Satoru Iwata says downturn in game industry due to year-over-year improvements becoming "less noticeable" and extended length of current-gen.

Nintendo president Satoru Iwata has outlined why he believes the game industry overall has been in a downturn the past two years. The executive told investors that this is due to two reasons, the first of which has to do with consumers being reluctant to pay the current rates for packaged software when the games are only marginally updated over what is already available.

"One is that consumers have a higher psychological hurdle to paying a certain sum of money for software," Iwata said. He did not name this sum outright, but separately said today that selling $50-$60 titles has been a "challenge" of late.

"Many people attribute this to smart devices, but I don't think it is the only reason," he added. "We try to offer various kinds of software for a video game platform, and the games are improving steadily each year, but these improvements are becoming less noticeable. In short, what one platform can offer will eventually become saturated."

The result is that consumers will become tired of and get less excitement from the same type of entertainment, Iwata explained. "It has become more difficult for a game which developers in this industry, including us, created with the same or greater amount of energy, to move or amaze consumers."

The overall lowering of software prices and an increase in the number of devices gamers can play on without owning a dedicated platform like the 3DS is making it more and more difficult for Nintendo persuade gamers to pay full price for games, Iwata said.

"I believe the future of the video game industry depends on the number of games developers release that consumers consider to be fresh and worth paying for."

The other reason why the industry at large is hurting right now, according to Iwata, is due to the Xbox 360 and PlayStation 3 coming to the end of their already protracted product cycles. Sony will launch the PlayStation 4 this year, while Microsoft is expected to follow suit.

If the industry is to turn around, developers must create compelling titles to spur gamers to purchase hardware, Iwata said.

"I believe the future of the video game industry depends on the number of games developers release that consumers consider to be fresh and worth paying for," he said.

Specific to Nintendo's struggling Wii U, Iwata explained that Nintendo had originally planned to release a number of first-party titles during the first half of the year, but these were delayed for quality reasons.

"No big titles are scheduled for release before Pikmin 3 in July because we decided to take time to add the final touches to ensure that consumers fully feel that they are valuable titles," Iwata said. "The brand of a franchise would be completely degraded without customer satisfaction. This is why we delayed the release schedule of such games."

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