The transition to the next generation is a matter of months away and yet developers remain largely in the dark about the console that will restart the cycle again.

Nintendo’s Wii U will launch some time between June and December this year, and while its hardware specs are a matter of (vehement) speculation, Nintendo has begun to answer pressing questions on one of the console’s most important aspects – it’s online service.

Below, Develop has compiled all public information on the Wii U’s digital distribution, online network and DLC plans. The data is drawn from comments made by company president Satoru Iwata, NOA exec Reggie Fils-Aime, and general manager Shinji Hatano.

Tweet us at @developonline, or email us here, if there is any specific aspect of the console you would like discussed further.

Developer Relations

As with each occasion that Nintendo announces new hardware, the company’s executives claim they have learnt a sacred lesson concerning third parity support. The frequency in which Nintendo fails to live up to such promises, however, suggests such claims should still be read with a degree of weathered cynicism.

Iwata says Nintendo must now give third-party developers “as much freedom as possible” with regards to digital content, online purchase options, and perhaps even player metrics.

“Some say that the guidelines and regulations we previously established are too strict and behind the times, and others say that Nintendo should not put too many restrictions on the features of software targeting the consumers,” he told investors last week.

Games as a service?

As a side note, Iwata has expressed that obtaining player data, such as purchase decisions, would be “critical” in outlining the firm’s future strategy. It could lead to Nintendo having more of a networked engagement with customers, or at least moreso than trading loyalty points. Such a direction could lead to significant changes down the road.

Microtransactions

Nintendo is taking dichotomised approach to virtual items.

Nintendo won’t practice microtransactions

Iwata’s point is predictable but reasonable. Nintendo serves too wide a range of customers to have virtual trading at the centre of the game experience.

“Our games should be a trusted brand for a very wide variety of consumers, including children and casual users who are not so familiar with the trends of video games,” he said.

“Therefore, we would like to have regulations with a certain degree of strictness so that consumers will get a sense of reassurance from our games. I am not saying that Nintendo is better than third-party developers. Each developer has its own customer base, and we should be more careful with this point for Nintendo consumers.”

As previously reported, Iwata has a problem selling half-finished games that customers have to pay extra for to play the full experience.

Nintendo will allow others to employ microtransactions

There are some caveats. Note that the option to employ microtransactions may be restricted to ‘established’ developers. Nintendo has made clear that it doesn’t want to work with the great unknown, the dirty garage coders – ironic, given how it is this breed of developer that is pushing online game services forwards the furthest.

“If third-party developers would like to adopt this form of microtransaction, and if this kind of business relationship between the developers and consumers is commonly accepted in Japan, we have no intention to decline it,” Iwata said.

“Please understand that this is totally up to each developer, and I am not in the position to say yes or no. Again, we will not turn down such requests by third-party developers as far as they can establish an appropriate relationship with their customers.”

Shinji Hatano (Nintendo senior managing director), said the company is actively in discussion with local Japanese developers to discuss appropriate in-game item protocols.

“Each developer has its own desire, but basically, not only Nintendo but these developers share the same idea and have no objection that we need to establish the reliable system for the consumers on which they can feel safe and comfortable when they select the software,” he said.

DLC

Downloadable content will be endorsed and practiced by Nintendo and third parties, crucially without such arbitrary data and price restrictions that plagued Wii development. Iwata made it clear to investors that Nintendo’s revenue from the digital business would “largely increase from now”.

Perhaps there is an elephant in the room: Wii U has no hard drive. That makes game installs onto a Flash card highly unlikely, but perhaps not DLC add-ons.

“Regarding add-on content, effectively providing such content for a game which has sold well could be a way to keep the market momentum,” Iwata said.

“The sales pace is getting slower day by day even for the biggest hit software. If we could announce some big news in connection with the add-on content for such software, many people would start playing it again, which could be an opportunity to revive the momentum. In this context, the add-on content should be considered as a key to extending the lifespan of products and to maintaining the sales momentum, as well as a chance to earn additional profits.”

Nintendo Network

It’s a sign of how far behind Nintendo is. While it would be deemed madness if Microsoft and Sony scrapped Xbox Live or PSN in favour of a new service, not many can even remember what Nintendo’s online service is called.

Expect the new, centralised “Nintendo Network” to be firm’s digital portal for the next decade. It will likely collaborate services of the Wii Virtual Console, DSiWare, WiiWare and perhaps even the 3DS eShop into one system for both handheld and home consoles.

Nintendo Network is expected will provide a significant upgrade over predecessors, with Nintendo claiming it has enough infrastructure to service full-game downloads from launch day. The company has also claimed the service will allow customers to purchase downloadable content for first- and third-party 3DS games.

Picking up Steam?

Again, the Wii U’s lack of hard drive dampens hopes for any significant online services – from DLC to microtransactions to game installs. And yet, clearly privy to something we’re not, Nintendo is discussing bold steps it will make in these areas.

And in June last year, Nintendo of America president Reggie Fils Aime was making overtures about an online platform that would incorporate third party services such as – possibly – Call of Duty Elite, EA’s Origin, and Valve’s Steam.

He said Nintendo won’t ape Microsoft and Sony’s approach of having one ubiquitous draconian network, opting instead for a system that allows third-party publishers to host their own platforms online.

“For Wii U what we’re doing is creating a much more flexible system that will allow the best approaches by independent publishers to come to bear,” Fils-Aime said in an interview last year.

“So instead of a situation where a publisher has their own network and wants that to be the predominant platform, and having arguments with platform holders, we’re going to welcome that. We’re going to welcome that from the best and the brightest of the third party publishers.”

We are speculating here: Days before Fils-Aime made his claim, Valve managing director Gabe Newell praised Nintendo’s next console and claimed it was “a lot easier to look at Wii U and have it fit within our framework”.

Shopping options

Perhaps the most meaningful investment by Nintendo is how Wii U’s customers could interact with the Nintendo Network.

Not to belittle the progress Microsoft and Xbox Live has made in the past decade, but Nintendo’s capacity to innovate – along with its multi-generational knowledge of casual markets – could pave the way for a transformation in how people buy digital content.

Amazon-like recommendations

Iwata claims that a custom recommendations system – tailored for each individual user – will be of “significantly increasing importance” in the digital content era.

“Anyone who can invent the most appropriate matching mechanism will take a great advantage in the digital platform business from now, I think,” he told investors last week.

Iwata explained that Nintendo already gathers data from Club Nintendo subscribers along with play records.

“As a result, we are starting to see a number of such relationships as, ‘those who have played with this software are also actively playing with that software’ or ‘those who find this game satisfactory are giving high marks to that software as well’.”

But he insisted Nintendo won’t ape the Amazon ‘Customers Who Bought This Item Also Bought…’ recommendations system.

“Rather, messages such as ‘consumers who liked this product very much also gave a high score to that product’ should be more useful information for our potential consumers. So, the issue is how effectively we can deliver such information to them,” he said.

Near Field Communications

Iwata makes it clear that Nintendo has struggled to establish its digital games business because online transactions “are not simple enough” for the typical Wii customer.

“It is said that with each extra step [in purchasing DLC], the number of consumers drops by one-tenth,” he told investors.

“Our challenge is how to improve such steps one by one.”

A key solution exists in the Wii U tablet itself: Near Field Communication technology has been added, and Nintendo is looking at how customers can make purchases with the swipe of a credit or store card onto the controller.

“If we can provide a system in which consumers can use such e-money, they will far more easily be able to make payments than by entering credit card numbers or purchasing the Nintendo Prepaid Cards at stores,” Iwata said.

The Nintendo chief said he was mindful to ensure that online transactions are simple and swift, yet not made by accident. He said his overall idea is to establish “a solid system in which consumers will make payments at their will and with a minimal amount of effort”.

App Store?

Reports of a Wii U app store remains unverified speculation, but one publication says it has been told from insiders that Nintendo is planning such an application ecosystem.

The service would provide apps that operate on the Wii U itself as well as run independently on the Wii U’s tablet controller, very much aping the App Store for iPad. Lifestyle apps will merge with games in a manner similar to iOS and Android, the rumours suggested.

Commitment

What separates all the above between fantasy and reality is, in the end, the extent of Nintendo’s willingness to provide a comprehensive online service.

A lack of hard drive may seem bizarre when the competitors may scale up to 500 MB storage, but Nintendo promises a plan is in train. Iwata even claims that the Nintendo Network infrastructure could already digitally distribute the software “on a scale as large as the packaged software”.

He nevertheless believes Nintendo’s primary business will be at retail.

“We are not anticipating that the digital business will suddenly play the central role next year, and we are not anticipating the packaged business to go away anytime soon,” he said.

“There is no doubt that [digital] has an overwhelmingly bigger growth potential than other business fields today. But if you ask me whether the level of the revenue will immediately match the ones currently generated through the existing hardware and packaged software sales, I do not think it is going to be that way anytime soon.”

Nintendo is expected to bare all on Wii U at E3 this June.