Comment & Opinion

Nintendo has a mobile strategy, just not a coherent one

Nintendo has a mobile strategy, just not a coherent one

Trying to decipher the direction of Nintendo’s business in recent years has become as subjective as telling fortunes by looking at tea leaves.

We can all agree the cup and leaves exist: Nintendo has launched Switch and released Super Mario Run and Fire Emblem Heroes.

But everything else - future and indeed current levels of success and failure - are down to interpretation.

A lack of transparency from Nintendo isn’t helping matters, either. The recent article from Nikkei Asian Review is a classic example.

It quotes Nintendo president Tatsumi Kimishima as saying revenue from Super Mario Run hasn’t met the company’s expectations.

Recently launched on Android, the game, which has a maximum IAP of $10, is thought to have generated over $50 million on iOS, although it’s unclear over what period of time. Any formal statement of revenue won’t be made until Nintendo’s next quarter is announced on April 27th.

Revenue from Super Mario Run apparently did not meet expectations.

Yet the article also quotes an unnamed senior company official as saying Nintendo prefers the ‘free-to-start’ Super Mario Run model to that of the ‘free-to-play’ Fire Emblem Heroes, despite the latter being a top 20 top grossing game in Japan.

They labelled Fire Emblem Heroes "an outlier".

Contrary opinions

Now, these two statements aren’t 100% opposed.

Despite the fact Fire Emblem Heroes has performed well in Japan to-date - it’s also still a top 100 top grossing game in the US and top 30 in Canada - culturally Nintendo doesn’t like F2P monetisation or game design.

It prefers to offer players immediately enjoyable gameplay, not psychologically exciting meta-gameplay.

It could even be argued that due to the limited scope of its monetisation, Fire Emblem Heroes isn’t really a fully fledged F2P game.

Yet, the problem for Nintendo is what it prefers doesn’t chime with what the mobile gaming audience wants, at least in terms of what the paying mobile gaming audience are prepared to spend money on.

Nintendo likes Super Mario Run's single IAP, but the most successful mobile games make their money from more complex retailing

Of course, a disconnect between what consumers want and what a company wants to offer them is a well worn debate.

Henry Ford’s much quoted (but apocryphal) quote about “faster horses” or Steve Jobs disdain for “focus groups” set the scene.

Nintendo rarely follows market trends.

And Nintendo’s biggest successes have come from offering gamers something new and innovative (DS and Wii), while its biggest failures have come from offering gamers something new and innovative (the 3D element of 3DS and Wii U).

Nintendo rarely follows market trends.

Halting a long decline

Yet for all its otherness, Nintendo does operate under the same financial constraints as any other company.

Its sales have been in decline since the DS-Wii peak years of 2009. Indeed, its 2016 annual revenues of $4.5 billion were down 76% compared to 2009’s $18.8 billion.

In that context, some will suggest beggars can’t be choosers.

Working together with mobile partner DeNA, Nintendo now needs to base its mobile game strategy on current market conditions and then sprinkle its magical dust, rather than assume its magic can persuade more than 5% of downloaders to spend $10 to unlock the rest of Super Mario Run and then complain when it doesn’t.

Nintendo's sales have been in strong decline since 2009

For whatever you think about Henry Ford and Steve Jobs’ philosophy, the longevity of their success came from listening to their customers. Eventually you could buy non-black Model Ts and 7-inch iPads.

F2P might not be appropriate for its forthcoming Animal Crossing game, but if Nintendo wants to make an impact in the $7 billion Japanese mobile game market, not to mention the $40 billion global mobile game market, it needs to get with the program.

Certainly this is culturally difficult for Nintendo. It goes against almost 35 years of developing games highly optimised for its own hardware. But there is a difference in having a mobile strategy and having a coherent mobile strategy.

At present, my reading of the tea leaves suggests Nintendo has the former, not the latter.

Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at PG.biz which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.

Comments

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Gaming Unicorn Marketing Director
I admire Nintendo because they have compassion for people who are highly vulnerable to variable ratio schedules. Nintendo clearly understands that when you combine heavy-handed habituation techniques with gambling mechanics and uncapped spending, you've created poison for a small but significant part of your user base. I struggle personally with gambling compulsion - I've repeatedly spent vastly more than I intended on F2P games that wouldn't make my "Top 500 Games" list, despite carefully tracking spending. And I've regretted it, deeply. I love that Nintendo wants to make games that don't cravenly capitalize on my vulnerabilities. This is also why I bought a Switch for my 10-year-old daughter instead of an iPad.
jon jordan
Thanks for the comment. I agree that F2P games have implication wrt spending patterns, although I would argue this is in a minority compared to say real-money gambling.

But, I think you are correct that Nintendo is concerned about the longterm implications for its IP. That said buying a Switch is a $300 purchase with $60 game, so that's a sizeable investment too.
Fraser Ross MacInnes Product/Design Director at Danke Games
I agree broadly - play to the strengths of the market dynamics (F2P service games) of a particular vertical (mobile), or don't bother. At the same time, I can't shake the feeling that we view Nintendo's mobile performance as a failure more because of the burden of expectation than because of its ill fitting approach. The characters and game formats of Nintendo's most valuable licenses have an obvious market on mobile - for basically anyone born in the late 70s/early 80s onwards, the prospect of having pocket access to those licenses on their existing phone hardware is a no-brainer. We don't place the same burden of expectation on SCE's mobile offerings, despite it too having a bevy of valuable licenses it could bring to mobile. I can't shake the feeling that Nintendo's move onto mobile is short-term shareholder appeasement. I'm sure the company would be quite happy to keep ploughing its furrow of quirky hardware paired with strong first party licenses and let its lacklustre mobile performance trickle down into reduced shareholder pressure to do things that aren't in its DNA.
jon jordan
Yes, I agree that we view Nintendo through a different lens.

However, I'd suggest that the Nintendo of 2017 is not the Nintendo of 2009. Financially, it needs to sort out its shop and releasing proper F2P mobile games offers the potential of $1 billion annually. I don't think it has the option not to take this.
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