Company / division: Nintendo
Nintendo Sells 2.74m Switch Units in First Month (Apr 27, 2017)
In case there was any doubt, Nintendo has a hit on its hands with the Switch, its hybrid console/portable gaming system. It sold 2.74m units in the first month after launch, which is apparently roughly the same number that the earlier Wii U sold in its first year, and 20% of total sales to date of the Wii U. That’s not hugely surprising – reviews were mostly decent, the device has been out of stock off and on since it debuted, and the company had already upped its production. That was enough to generate almost exactly a billion dollars in revenue, or a little over 20% of the company’s entire revenue for the fiscal year which ended last month. The company’s forecast for the new financial year, which ends next March, is 10 million unit sales. Remarkably, Nintendo has sold ever so slightly more copies of the Zelda game that’s the standout title for the device at launch than of the console itself, which might just be a reflection of those supply constraints. In total, Nintendo appears to have sold around twice as many software units as hardware units in the Switch category, suggesting that people have bought an average of two games from Nintendo for every console. Together with Nintendo’s belated push into mobile gaming, it’s doing pretty well at the moment, though that mobile push is still generating much less revenue – the category which includes smartphone gaming only generated around $200 million in revenue for the year.
Nintendo Kills off NES Mini but May be Working on SNES Mini (Apr 19, 2017)
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.
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.
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.
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
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.
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.
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.
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.
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.
Nintendo plans to release 2 or 3 mobile games a year after Super Mario Run’s success | Macworld (Dec 23, 2016)
Nintendo certainly seems to have taken the success of Pokemon Go and more recently Super Mario Run as signs that it should invest further in mobile gaming, something observers have been clamoring for for years. But despite the massive numbers, we oughtn’t to overlook the poor reviews and backlash against Super Mario Run following its release. There are still risks aplenty here.
Pokémon Go arrives on the Apple Watch | TechCrunch (Dec 22, 2016)
This Watch app was announced way back in September, so it’s been a long time coming. But it looks really solid and is cleverly integrated into the Activity app too. Stuff like this is what the Watch needs to make a success of its App Store, which so far has been a little underwhelming.
Super Mario Run breaks records with 40 million downloads in its first 4 days | TechCrunch (Dec 21, 2016)
The numbers are huge, as expected – that’s a lot of downloads, but it’s worth remembering that this was a free download of a game with lots of nostalgia value. Unlike Pokemon Go, this year’s other big Nintendo-backed mobile game, Super Mario Run has eschewed the standard IAP business model, and reviews have been terrible as a result. What really matters is paying users and regular users after the initial hype dies down.
The owners of Pokemon Go were never likely to struggle to get people to download the game – with such a rapid rise to enormous popularity, the challenge was always going to be keeping people actively using the game, and at this point it’s about getting people who’ve abandoned it to come back.