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This Data Easily Explains Nintendo’s Mobile Strategy
by Bryan Cashman on 02/05/14 05:16:00 pm   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

Consumers on mobile devices are not flocking to action, racing or fighting games, among Nintendo’s strongest genres. Instead, a quarter of mobile gamers prefer puzzles games.

Favorite Mobile Game Genres

A survey on the favorite genres for mobile gamers indicates little interest in genres of Nintendo’s biggest sellers Super Mario, Mario Kart and Smash Brothers. (Source: SmashingIdeas)

Despite the popularity of Nintendo’s games on consoles and handheld games, there is not evidence if strong demand on mobile.

“We feel that simply releasing our games just as they are on smart devices would not provide the best entertainment for smart devices, so we are not going to take any approach of this nature,” said Nintendo President Satoru Iwata.

Mobile Gamers Likely Won’t Pay for Nintendo Games Upfront

The biggest challenge for Nintendo to port games to mobile is that consumers aren’t buying games on mobile devices. In 2013, only 7% of revenue for mobile games came from non-free games. The obvious, but still staggering, size of this story is that free to play monetization tools bring in 93% of all spending on mobile games.

Free to play revenue for mobile games

Only 7% of all of the revenue made in mobile games is earned by games that do not support in-app purchases. (Source: AppAnnie)

There are currently no titles in Nintendo’s back-catalog of games that are designed from the ground up for free to play. The company has never designed games with a range of free to play monetization methods involved. Without planning from the start when to insert time gates, probability gates, grind gates, or other monetization methods, Nintendo’s games would lag other game makers in a free to play environment.

Research firm SuperData agrees.

“Nintendo’s existing titles are not geared toward a market that is moving toward free-to-play,” noted SuperData last week. “The truth is that Nintendo’s business can’t simply redirect and adopt a free-to-play model.”

Nintendo is Wise to Use Mobile Apps for Marketing & Dialogue

While criticized by some as being too conservative, Nintendo’s decision to release entertaining apps on mobile devices that can promote the sale of the company’s core handheld and console gaming units is a smart choice.

Recent analysis by Gartner indicates that most mobile apps will not generate profits, but instead they will increase brand recognition and product awareness.

“Our analysis shows that most mobile applications are not generating profits and that many mobile apps are not designed to generate revenue, but rather are used to build brand recognition and product awareness or are just for fun,” said Ken Dulaney, vice president of Gartner to Mediapost.

Dulaney warns app developers not to expect profitability; echoing Nintendo’s guidance to investors that mobile can be a communication tool instead of a path to profits.

“Application designers who do not recognize this may find profits elusive,” said Dulaney.

Nintendo is not ready to publicly discuss the goals of their mobile campaigns, but they are testing the waters this year.

“It is our intention to release some application on smart devices this year that is capable of attracting consumer attention and communicating the value of our entertainment offerings, so I would encourage you to see how our approach yields results,” said Nintendo president Satoru Iwata.

Mobile Apps Let Nintendo Talk to Children and Parents Together

“Our biggest downfall last year was that we failed to communicate the true value of Wii U, failed to make children persuade their parents to buy our products for them, and failed to offer products that parents could not resist,” said Shigeru Miyamoto, Nintendo’s lead game designer.

Without a true presence on mobile phones and tablets, Nintendo is losing touch with children increasingly dependent on mobile devices.

Mobile Game Usage by Parents and Kids

With parents and children playing mobile games together, mobile games offer Nintendo a unique platform for upselling handheld and console experiences to parents. (Source: SmashingIdeas)

Not only are children using mobile devices at rapid rates, they’re also playing games with their parents. Of parents who play mobile games, 23% play with their children at least once a day.

By releasing marketing experiences on mobile devices, Nintendo will have a new communication point with both children and parents to help the company upsell console and handheld device experiences.

Nintendo Will Release Some Existing Products on Mobile

While Nintendo confirmed traditional games like Mario won’t move to mobile other properties and games still may.

Services already released on existing Nintendo hardware that are “capable of improving usability and consumer experience when they are implemented on smart devices” will receive a shift of development efforts to smart devices, said Satoru Iwata. While no titles are confirmed, games from the Wii Fit and Brain Age franchises, which work best when used daily to check-in to their programs, may find better homes mobile than Nintendo’s own platforms.

Nintendo’s Mobile Strategy is a First Step for the Future

Nintendo’s first steps towards mobile indicate a thought-out conservative approach to leverage the platform. This first phase will leverage the vast audience of mobile users to open communication channels to users, and to bring apps to mobile that are missing their full potential by only being on consoles and handhelds. At the very least, Nintendo’s efforts will give brands like Mario, Zelda and Wii Fit an opportunity to collect mobile mindshare, an important first step in making the company relevant again to those who moved onto mobile-only experiences.


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Comments


Kaze Kai
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I love Nintendo games and consoles, but they really don't excel at making puzzle games except for what you find in Zelda games, and I definitely enjoy puzzle games the most on my tablet compared to any other genre.

I actually cannot believe Nintendo even considered making games for a platform that they don't own the IP to. When is the last time Nintendo ever released a game on an outside console anyway? I'm sure the Dr. Mario games would work pretty well on mobile devices though, as for F2P models, just charge for DLC levels - I actually like that some games are free or cost $99 but you can buy DLC that adds up to be equal to or more content than what the main game offers for a dollar. Feels like I'm getting my money's worth.

Joshua Slone
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Really? As far as traditional console/handheld publishers go it seems like they've had some of the biggest successes outside of Tetris with series like Dr. Mario, Panel de Pon, and Picross. Given, the last time they were pushing out new puzzle concepts on a regular basis was probably 20 years ago, but the market really hasn't been there to support many.

As for the last time there was a Nintendo game on an outside console, there was a Pokémon game released for the Sega Pico of all things, if that counts. Further back there were the CDi Mario/Zelda-branded games in the early 90s and various home releases of their arcade games in the early 80s, but I don't think Nintendo did any of the actual work besides licensing the rights in those cases.

John Flush
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Sorry, all I can do is laugh a little. Ever heard of the Professor Layton titles? Brain Age? Just the fact no one thought of them yet you still think you know what they have and haven't made in the last few years is astonishing.

Christian Nutt
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Professor Layton isn't actually made by Nintendo -- it's published by them in the West, but it's made and published by Level-5 in Japan. Level-5 is actually bringing the franchise to mobile with its next installment: http://www.level5.co.jp/products/layton/layton7.html

Sam Stephens
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As far as puzzle games go, Nintendo has developed a few Tetris riffs. Tetris DS is excellent and was developed in house. There is also Mario vs Donkey Kong and Pushmo (developed by Intelligent Systems, but still a Nintendo IP) which are great as well.

John Owens
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Really good article. I've read a lot on either side of this issue and I like Kaze remained to be convinced that Nintendo would do anything significant on mobile that wasn't just to keep shareholders happy.

This article however makes me think a little differently mainly because it was written by someone who accepts Nintendo for what they are rather than what they think they should be.

If they bring out F2P versions of those games and normal pay versions on the 3DS. I wonder which one will be more successful and also preferred by the audience.

Andrew Haining
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All this "Nintendo should put their games on Android and iOS" talk seems to be coming from Michael Pachter, who quoted an estimated 10 million copies sold PER GAME, which he estimated would make them millions of dollars. A good comparison for that strategy would be Sega's equally old, equally adored back catalogue that is already on mobile and who manage to sell hundreds of thousands on android, which would barely pay the porting costs.

The 10 million figure is pie in the sky and even if it wasn't the estimated 5-6 million profit from 10 million sales would not fix nintendo, it'd barely be noticed.

Eric Harris
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Thank you Andrew. The dummies that think Nintendo should go mobile obviously no clue about the games industry.

Leon T
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Nintendo has a nice range of puzzle games that could work on mobile. Yoshi, picross , Dr. Mario, pushmo, and brainage to name a few. They also have games like Mario vs DK or games they can take from their mini games collections.

I do agree that Nintendo is making the better choice of not just porting those games to mobile devices though.

Yasuhiro Noguchi
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Not sure if this data really explains Nintendo's strategy.

Food for thought: Did it ever occur to anyone that consumer survey data like the one from Smashing Ideas only represents a snapshot in time of products that are in the market? After all, average game consumers aren't game developers. They only know what they like based on products that are available in the market.

The actual report (http://blog.smashingideas.com/wp-content/uploads//2013/11/Smartph
one-Gaming-Report.pdf) doesn't ask if consumers would prefer to play Nintendo first party AAA games on their smartphone/tablet devices if the option was available. Nor does it ask if they would be willing as consumers to pay upwards of $40 for a Nintendo 3DS-type game if it was only available on iOS or Android platforms.

And those are critical questions, as there's really nothing that delivers the level of Nintendo quality gaming on the iOS and Android platforms. Not to mention the intricate marketing campaigns that are orchestrated by Nintendo on their major first-party releases.

Nintendo's success with selling the downloadable version of Animal Crossing: New Leaf for the 3DS at full retail price as its cartridge counterpart paints a partial picture of what might be if Nintendo decided to go platform agnostic.

According to Nintendo's IR information from January 2013, they managed to move 700K downloads of Animal Crossing: New Leaf in the Japanese market alone, representing 25% of total unit sales of that title at the time (http://www.nintendo.co.jp/ir/en/library/events/130131/05.html). In their E3 briefing from 2013, Nintendo reported the US launch saw their biggest eShop sales in history for the game (http://www.nintendo.co.jp/ir/en/library/events/130612/02.html). The game has now sold 7.3M units worldwide as of December 2013 (http://www.nintendo.co.jp/ir/pdf/2014/140130e.pdf).

If the 25% ratio still holds for the downloadable title, that represents 1.8M units at full retail price as the physical version (Nintendo hasn't released an official breakdown for download sales in their latest sales data.). The big difference is that Nintendo pockets a much higher ROI from the download version because the cost of goods is much lower per unit.

So what does this all mean? Well, it means that at least on its own hardware ecosystem (a totally "walled-off garden," if you will), Nintendo is capable of selling its software as digital downloads at premium prices.

And imagine if the well-oiled Nintendo marketing machine can mobilize all its promotional muscle (social media, videogaming press and even TV commercials!) to drive awareness of their games on the iOS and Android platforms. Not just data-driven UA campaigns, but honest to goodness traditional, mass market videogame marketing.

It would be an amazing experiment if Nintendo decided to throw down the gauntlet and tried it.

Josh Charles
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To be honest, I think you're giving way too much credit to Animal Crossing's success in downloads and extrapolating that to Nintendo as a whole's success in downloads (versus retail). And I don't think the two are the same thing nor do I think Animal Crossing is a guide for all first-party 3DS games.

Animal Crossing is a not a good example to use for the download to retail ratio for two reasons. A) On principle, it's never good to use one game as representative of all games and B) (and more importantly) Animal Crossing is an exception rather than the rule precisely because of its game design.

Animal Crossing is a game designed to be played in small bursts every day. (Most of the game mechanics revolve around changes that occur in the game's ecosystem each morning at 6am.) For this type of game, it is more convenient to have easy access to it since the player will need to check in on the town each day. Anecdotally speaking, more people than usual from my area were downloading the game for this reason. That was not the case with Fire Emblem, Pokemon, or Zelda. I personally decided to download Animal Crossing for ease-of-access. I do not, however, prefer downloading games in general versus retail because the prices are usually the same if not higher on the download side when they should be lower when the lack of manufacturing costs are taken into account.

In any case, I think the success of Animal Crossing that you're referring to is more of an anomaly than an upward trend for all (or most) Nintendo first-party offerings. I would argue that each game is different depending on circumstances and play style. The retail version of Fire Emblem Awakening, for instance, had a problematic launch period that prevented people from finding the retail version for several days after it's official release date. Naturally some people just downloaded the game instead since it was available. This lead to an initial increase in downloads before dropping down comparatively once the physical copies became available. In Pokemon's case, it's much more convenient to own the retail copies of X or Y because many players will want to collect every Pokemon so they use two 3DS systems plus both physical copies to trade Pokemon between the two. (Some Pokemon are exclusive to each version.) Yes - it's a rather strange thing to do but thus is the impulse to catch 'em all.


"And imagine if the well-oiled Nintendo marketing machine can mobilize all its promotional muscle (social media, videogaming press and even TV commercials!) to drive awareness of their games on the iOS and Android platforms. Not just data-driven UA campaigns, but honest to goodness traditional, mass market videogame marketing."

^ You're kidding about the well-oiled Nintendo marketing machine, right? The same marketing machine that took over 1 full year to figure out how to explain the value of the Wii-U to their target audience? The same marketing machine that is just now admitting that they're trying to figure out how to use mobile to promote their products? The same marketing machine that can't figure out how to leverage long established platforms to get their brands in front of children and parents like Happy Meals at McDonalds or cartoons outside of Pokemon? (Look at the positive effect of a Youkai Watch anime series in Japan on sales of the game months after it came out.) The same marketing machine whose commercials for Wii-U look like they're straight out of the 90's? Surely you can't be speaking of the same marketing department that we've seen in action the last several years? And their social media savviness is hardly anything special - in followers and in content. If Nintendo can't even adequately drive awareness of their games on the 3DS or the Wii-U to people who don't already follow everything they do, why would they all of a sudden be able to do that if their games were on mobile? There's zero reason for me to believe this would work out.

Yasuhiro Noguchi
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Ultimately, it comes down to the consumer's perception of value and convenience.

Granted, using a single example of a game doesn't indicate an overall trend for their first title lineup. But it goes to show what _might be possible_ if their game content had the right usage case and was available as a digital download. In fact, if I were in Nintendo's shoes, I would use Animal Crossing (or Mario Kart) as the trial balloon for mobile/tablet digital distribution.

Regarding the well-oiled marketing machine comment, I think what Nintendo did to turn around the sinking 3DS ship (lower price point being a major driver) is a testament of what the organization is capable of in terms of communicating the value proposition of their platform and software lineup to the consumer.

To be fair to Nintendo, the Wii U is a trouble child that's a sales and marketing organization's worst nightmare. I doubt if any amount of messaging is going to turn that ship around at this point with the arrival of the PS4 and Xbox One. Only a hardware price reduction and killer content is going to save the platform.

"If Nintendo can't even adequately drive awareness of their games on the 3DS or the Wii-U to people who don't already follow everything they do, why would they all of a sudden be able to do that if their games were on mobile?"

But do they really need to if they have the right content for the platform? Nintendo seem to have a very good history of monetizing the user demographic that understands the value proposition of the Nintendo brand and its franchises. This audience will be critical to Nintendo's sales success if they were to ever dip their toes into the mobile/tablet market.

Eric Harris
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I think people need to realize that one of the strengths Nintendo has is, the hardware helps make the software fun. Smartphones have a really bad interface. It is touch only. It is not that games cant be made from it, but the hardware is limited. Would Golden Eye had been as much fun on a Smartphone? Face it, the mobile phone platform is just garbage for console games.

Sam Stephens
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The biggest design issue with mobile games is having them exist on multiple devices with different sized screens. Knowing Nintendo and their design philosophy, they would definitely be vehemently against working within these constraints.

Yasuhiro Noguchi
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Yeah, they might just release on iOS then. Would make their life much easier. Android would be a much more difficult problem.

And for what it's worth, Nintendo already make games for multiple screen resolutions on the Wii U. ;)


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