Narrative: Nintendo's Mobile Renaissance

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    Narrative: Nintendo’s Mobile Renaissance (Dec 27, 2016)

    Updated: January 31, 2017

    Until 2016, Nintendo has always shunned the mobile gaming market, and instead focused on its dedicated home and portable game consoles. However, that began to change in 2016, as Nintendo first licensed some of its Pokemon intellectual property as part of the massively successful Pokemon Go launch, and then took a more direct role in launching a mobile game with Super Mario Run for the iPhone in December. The popularity of Pokemon Go seems to have finally convinced Nintendo management that its combination of familiar characters, gameplay expertise, and an ability to trade on nostalgia can be powerful and lucrative in mobile gaming.

    However, Nintendo was only a minority partner in Pokemon Go, taking home far less money than some less savvy investors originally believed it would, and there are lingering questions over its staying power with large numbers of users. Super Mario Run was highly anticipated, but Nintendo’s attempt to break the in-app-purchase model which dominates mobile gaming seems to have backfired, resulting in terrible reviews.

    In late January 2017, it also became clear that the business model wasn’t paying off in a big way, delivering a higher conversion rate (though on a basis that isn’t really comparable to other big games) and lower revenue per paying user than competitors.

    I continue to believe that Nintendo is absolutely right to invest much more heavily in mobile gaming, and will likely have several more massively popular games in the coming years, but it needs to tread carefully and not assume that its brand and other assets will allow it to break the mold in mobile gaming.

    Nintendo to Double Production of Switch Console – WSJ (Mar 17, 2017)

    Another sign that the Switch is a hit, despite some fairly mixed initial reviews: Nintendo is reportedly doubling its production run for the console from eight to sixteen million, which would put it on pace to match the initial sales of the Wii, and well ahead of Wii U sales. It should also help prompt more game makers to produce titles for the console, which is a good thing since lack of games was one of the big criticisms at launch. That will, of course, take time, so it’s not an instant fix by any means, but it looks like Nintendo finally has another hardware hit on its hands after a tough few years. Alongside a long-awaited push into mobile gaming, that could mean a good period of growth for Nintendo is coming, assuming they learn the lessons from their Super Mario Run launch.

    via WSJ

    Nintendo Switch Reviews Suggest Excitement About Model, Less About Actual Performance and Games Available (Mar 1, 2017)

    The review embargo for the new Nintendo Switch console seems to have lifted overnight, and the reviews that have resulted are mostly pretty mixed. There’s quite a bit of excitement for the concept and some of the execution, but every review I’ve read so far highlights hardware bugs, performance lags, frustrations with Bluetooth and cramped controllers, and especially a lack of games at launch. It appears that Nintendo mostly allowed reviewers to demo one game – a pretty good new Zelda title – and a package of mini games called 1-2-Switch which seems mostly intended to show off various game modes rather than provide hours of entertainment. As such, this seems like an in-betweener for Nintendo – neither the big hit the Wii and DS were, nor the obvious flop the Wii U was. In time, it’s possible that software updates and more games will push it over into the hit category, but it certainly doesn’t look like it’s there yet. All this is, of course, interesting in the context of Nintendo’s simultaneous push into mobile gaming through smartphones, which has also been a mixed bag so far.

    via Ars Technica (lots more on Techmeme)

    Pokémon Go is again Apple’s top-grossing app after releasing new characters – Axios (Feb 22, 2017)

    This is one of two quick pieces from Axios on apps that I’m going to cover this morning. This one shows that Pokemon Go has had a little resurgence off the back of the new characters it released recently, making it a top app again on iOS. To my mind, that again reinforces the point that Nintendo has done far better with the app it only owns a minority share in than with the app it owns outright (Super Mario Run) and likely even makes more money from Pokemon Go despite that minority share. That’s something it’s going to have to think hard about as it prepares to launch additional mobile games in the coming months.

    via Axios

    Pokémon GO Has Grossed $1 Billion Worldwide Since Launch – Sensor Tower (Jan 31, 2017)

    I’m including this today mostly because it’s an interesting counterpoint to the Nintendo results and related data about Super Mario Run from earlier. There’s such an interesting juxtaposition between the $53 million Nintendo has generated from Super Mario Run so far, and this billion-dollar gross figure from Sensor Tower for Pokemon Go since it launched. On the one hand, Nintendo only owns a minority stake in Pokemon Go, but the game has probably still generated more revenue overall for Nintendo than Super Mario Run, which it owns outright. And of course Pokemon Go’s business model is much more along the lines of the fairly standard in-app purchase model. It’s still early days for Super Mario Run, but it’s interesting for Nintendo that the game which appears to have been a far bigger success on mobile is the one it doesn’t own outright, and which adopted the standard IAP model rather than something different.

    via Sensor Tower

    Nintendo’s ‘Super Mario Run’ Scores Revenue, but CEO Wants More – WSJ (Jan 31, 2017)

    This is the first real indication we’ve had directly from the source of how Super Mario Run has performed for Nintendo since it was released in mid-December, and it came in the context of Nintendo reporting its results for the December quarter. Overall revenue for the quarter was 174 billion Yen, or around $1.5 billion, while total revenue from Super Mario Run so far (including January) is around 6 billion Yen, or $53 million. So even though Super Mario Run has done well in its own right, it’s a drop in the bucket in terms of Nintendo’s overall business. The other key number is that around 5% of those who have downloaded the game have paid $10 to unlock the full functionality. As a frame of reference, King (maker of Candy Crush) reports that around 2% of its monthly users make some kind of payment, with the average paying user spending a lot more than $10 per month. Zynga sees a conversion rate of just under 2% and again sees spending per paying user per month well above $10. So although a 5% conversion rate may seem high, that’s a one-off payment, whereas competing game maker’s smaller number of paying users pay repeatedly over a period of time for a much larger total amount. So far, Nintendo’s business model, which attempted to buck the usual IAP model for games, has both annoyed some users while delivering a lower payout than competing games. I’m not convinced it’s done figuring out the right business model for its mobile offerings.

    via WSJ

    Super Mario Run will be available on Android in March – The Verge (Jan 23, 2017)

    Super Mario Run was an iPhone exclusive when it first launched, and as such was featured in Apple’s Fall 2016 keynote. However, that exclusive won’t last forever, and it appears that the game will be coming to Android in March, despite the criticism of the business model and other features of the game. What’s not clear is whether the business model will be the same – while getting people to pay for iPhone games is hard, getting Android users to pay up is much harder still, so I wonder whether the additional investment will be worth it if Nintendo sticks with the $10 unlock model. More broadly, there will be additional games for both iOS and Android later this year, so Nintendo is clearly still committed to its smartphone game strategy. However, we still haven’t seen the symbolically important release by Nintendo of any of its highly popular original games for smartphones, something almost every observer seems to think it should do, but which it chooses for some reason to resist for now. It’s also worth noting that Super Mario Run (though not the next game) is another example of iOS first, Android later – a trend that continues to be one of the biggest hits against Google’s Play Store and Android in general.

    via Super Mario Run will be available on Android in March – The Verge

    Hands-on with Nintendo Switch: Jack of all trades, master of some | Ars Technica (Jan 14, 2017)

    This early review pours some cold water on the enthusiasm that’s generally met the launch of the Switch. The lack of games, controllers which are awkward in some configurations and games, underpowered hardware for the console mode, and other issues are highlighted here. It feels as though Nintendo decided to get the Switch out the door as quickly as possible rather than waiting the usual long period from launch to release so as to allow more games to be ready – so far, the reaction I’m seeing to that paucity of games is pretty negative, so we’ll see how this works out for Nintendo over time. There seems to have been decent pre-order interest, but we’ll have to see how those early buyers actually like the devices when they get them.

    via Hands-on with Nintendo Switch: Jack of all trades, master of some | Ars Technica

    The Nintendo Switch will launch on March 3rd for $299 – The Verge (Jan 12, 2017)

    The Nintendo Switch was unveiled a while back with a very effective promo video and a few other details, but price and some other details were not announced at that time. We now have price, specs, and a few other tidbits from Nintendo, and it looks like it’s going to be by far Nintendo’s most popular gaming device in quite some time. It has some weird quirks – relatively low resolution on the screen, very short controller cables, and so on – but most users will put up with those. This device is also another flavor of mobile gaming from Nintendo alongside its recent mobile app releases, so in some ways Nintendo is hedging its bets here, which is a smart move – its mobile apps have been popular, but it’s not clear yet that they’re the basis for a long-term sustainable business for Nintendo.

    via The Nintendo Switch will launch on March 3rd for $299 – The Verge

    Why Super Mario’s Run Was Short – WSJ (Jan 2, 2017)

    The headline is overstating things – it’s not like Super Mario Run is done. But there are some good numbers in here – notably that 3% of the estimated 90 million downloads have converted to being paying users. At $10, that’s actually pretty high, and Nintendo will do just fine if it can keep converting new users at that rate. However, the poor reviews – many driven by the IAP model – may prevent Nintendo from continuously filling its funnel. Definitely some lessons here for future Nintendo mobile games.

    via Why Super Mario’s Run Was Short – WSJ