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Nintendo's mobile strategy: No whales

Iwata shuns free-to-play conventional wisdom, sheds light on philosophy behind upcoming NX game system

Nintendo always strives to do things differently, and the company is taking that same approach to its entry into the mobile game market. In a post-earnings Q&A with investors, Nintendo president Satoru Iwata noted that having mobile games driven by a relative handful of heavy spending customers might work in some markets, but it's not a strategy he wants to pursue.

"As we at Nintendo aim to reach all consumers around the world, we have no intention to analyze and follow successful examples in the Japanese smart device market," Iwata said. "My understanding of how to succeed in the Japanese market now is to find a limited number of generous consumers who are willing to spend a lot and analyze what encourages them to spend. However, if we did that, I don't think that we would be able to entertain hundreds of millions of consumers all around the world or to produce large and long-lasting achievements."

Instead, Iwata wants to think "'wide and small' rather than 'narrow and large,'" basing his strategy on drawing a little money from a lot of consumers rather than the other way around.

"We have had various discussions internally, I have challenged the developers with this issue and they have had many active discussions on the topic," Iwata said. "We already have some specific ideas and will announce them in due course. Above all, as Nintendo is a family brand, we do not intend on changing the situation where parents and guardians can give Nintendo products to their children with peace of mind. In that sense, we want to pay very close attention to how we receive money."

Iwata also addressed the upcoming NX platform, telling investors that it is not intended as a replacement to the 3DS or Wii U. Nintendo expressed a similar sentiment about the DS initially, saying that it was not a replacement for the GameBoy Advance but a new third pillar in the company's product line, bolstering its portable and console lines. Despite that, the GBA quickly faded and was effectively replaced by the DS upon the new system's release. And while Iwata refused to share any new information about the NX release date, his vague comments fell in line with the oft-speculated possibility of a console-handheld hybrid.

"When it comes to how dedicated game systems are being played, the situations have become rather different, especially between Japan and overseas," Iwata said. "Since we are always thinking about how to create a new platform that will be accepted by as many people around the world as possible, we would like to offer to them 'a dedicated video game platform with a brand new concept' by taking into consideration various factors, including the playing environments that differ by country."

Iwata also confirmed that neither the NX nor the company's Quality of Life project would be discussed at next month's Electronic Entertainment Expo.

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Latest comments (25)

Jeff Kleist Writer, Marketing, Licensing 2 years ago
Notice how he says they aren't copying the Japanese market, once again demonstrating that their eyes don't look past their own borders. F2P whales were doing it overseas before Japan.

Nintendo is very much concentrating on keeping it business as usual, despite being dragged kicking and screaming into mobile. And yes, there is legit concerns about children, and irresponsible adults getting into trouble on f2p.

At this point, I think if I were making the NX, I'd be looking at pairing android and iOS with a mother box that can stream over wifi or Internet to the device you already have. That would affordable and subversive.
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.2 years ago
Seriously, Jeff? Because he mentions Japan to his Japanese investors that it means he can't see beyond Japan?

Better still, read the actual Q&A. He precedes this very statement by recalling a mobile developer outside of Japan talking about the difference in the Japanese market and overseas markets which is why he addressed the Japanese market in that quoted statement above.
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Klaus Preisinger Freelance Writing 2 years ago
If you adjusted the language in this QA from business English to downtown gangster slang, the full insanity could shine through here.

Basically, Nintendo now has this written on their site, albeit in more formal English:
Q8: Yo, with that Yamauchi in the ground and you being kinda ill, is that the reason you finally roll the money train into town more often like yo do with those DeNA and Universal suckas? Is that gonna change when you're off your medication again, or is this the new you?
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Show all comments (25)
Jeff Kleist Writer, Marketing, Licensing 2 years ago
@Jim

Nintendo doesn't think past Japan. They've always operated on Japan first, and then the rest of the world will like it. They only got into mobile at all because of the erosion DS is seeing in Japan.

This is a pattern of behavior. That shows no sign of abating.
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.2 years ago
I don't get you, Jeff. They announce some good news for their potential mobile consumers and all you want to do it wreck on it.

This is a pattern of behavior. That shows no sign of abating.
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Jeff Kleist Writer, Marketing, Licensing 2 years ago
@Jim

I don't think you understand

Everything Nintendo does is conceived and executed to sell to Kyoto, and the rest of the world will follow their genius. This worked up until the N64, when Siny offered can numbers something better, but they still had enough loyal customers hanging on to make it.

Again, he's looking first to Japan for their mobile strategy, and they just discovered a unified account for Nintendo customers, probably mostly because they now have to. Deal with an outside contractor and want to stay in control.

I'm not crapping all over anything. I'm just saying that they haven't changed, and short of a major coup where the old guard is completely ejected from the company, likely never will. They're great at this bullshitting, but it's not the first, second, or fourth time we've heard similar sentiments. Just like we always hear about how this time is going to be totally different for third parties. How many times are people going to fall for it?
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.2 years ago
So no abating the behavior?

They were simply announcing that they do not intend to follow the common trend of using whales. Certainly a good thing regardless of whether the trend is Japanese centric or global. So why the continued agenda, Jeff?
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Brendan Sinclair Senior Editor, GamesIndustry.biz2 years ago
Klaus wins.
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Ben Herman CEO 2 years ago
Try to sit back and wait until 2016 E3 to get an answer. The Iwata turtle will start talking then. NC best be a mobile tablet part of the time. Until then......
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Ben Herman CEO 2 years ago
Try to sit back and wait until 2016 E3 to get an answer. The Iwata turtle will start talking then. NC best be a mobile tablet part of the time. Until then......
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Brian Lewis Operations Manager, PlayNext2 years ago
Traditionally the asian markets have a very wide distribution, with a very low spend. It is only in the western markets that you find success with a narrow distribution, and a high spend. Examples of western games with a wide distribution are games like LoL or Hearthstone. Without a very large userbase, these games would have to monetize differently.

I do find a bit of irony in the fact that Nintendo is taking the typical approach of the asian market, but the presentation of this choice is shown as being atypical. I would assume that this is because the statement is for the western press, which would not know that it is in fact typical for the region of origin.
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Greg Wilcox Creator, Destroy All Fanboys! 2 years ago
I say wait and see. Nintendo is known for surprising and silencing skeptics (some silly mistakes they've made aside). So why not sit back with a (REALLY) tall one and see what comes this way (wicked or not)? Brewing up all the ha-has too early just leads to death by eating too much cooked crow. But it's anyone's choice to do so and I'm not stepping on those train tracks as they're laid... :D
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Brook Davidson Artist / 3D design 2 years ago
@Greg
I agree that we should wait to see, but I also wouldn't hold my breath. You can't just ignore those "silly" mistakes. Yes, Nintendo was known for surprising and silencing skeptics, but it's been so long that I don't see how you can consider that even relevant today.

Let's put it this way. There was a point in time where I would always buy a Nintendo console. These days, not so much.
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Greg Wilcox Creator, Destroy All Fanboys! 2 years ago
@Brook: It's only relevant because stuff has the tendency to cycle back into loops after a period of time. Nintendo hasn't had a major "wow" moment in a while (some would say a LONG while). It's probably time for that to happen again... IF they do it right.
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Jeff Kleist Writer, Marketing, Licensing 2 years ago
Jim

It's disgust seeing Nintendo continue to make the same mistakes, over and over, and over again, refusal to learn, and then acting all surprised and coming to the party a decade or more late, and getting praised for bravely entering 2005. They make one step forward, with miles to go before they sleep. They're not a toddler, they're the oldest hardware company out there, and it's time to go to pasture.

Just watch the WiiU reveal at E3. Remember the "unprecedented partnership" with EA, which saw them abandoning the console in weeks? Check any of their console launch hype for the last three generations, and you'll see the same variations on "this time it'll be different!"

Dan Adelman, who used to run indies at Nintendo basically confirmed everything I've been saying for years http://www.dromble.com/2015/01/21/former-nintendo-executive-dan-adelman-discusses-nintendos-culture-third-party-support-and-much-more/ :

Adelman: Nintendo is not only a Japanese company, it is a Kyoto-based company. For people who arenít familiar, Kyoto-based are to Japanese companies as Japanese companies are to US companies. Theyíre very traditional, and very focused on hierarchy and group decision making. Unfortunately, that creates a culture where everyone is an advisor and no one is a decision maker Ė but almost everyone has veto power.

Even Mr. Iwata is often loathe to make a decision that will alienate one of the executives in Japan, so to get anything done, it requires laying a lot of groundwork: talking to the different groups, securing their buy-in, and using that buy-in to get others on board. At the subsidiary level, this is even more pronounced, since people have to go through this process first at NOA or NOE (or sometimes both) and then all over again with headquarters. All of this is not necessarily a bad thing, though it can be very inefficient and time consuming. The biggest risk is that at any step in that process, if someone flat out says no, the proposal is as good as dead. So in general, bolder ideas donít get through the process unless they originate at the top.

There are two other problems that come to mind. First, at the risk of sounding ageist, because of the hierarchical nature of Japanese companies, it winds up being that the most senior executives at the company cut their teeth during NES and Super NES days and do not really understand modern gaming, so adopting things like online gaming, account systems, friends lists, as well as understanding the rise of PC gaming has been very slow. Ideas often get shut down prematurely just because some people with the power to veto an idea simply donít understand it.

The last problem is that there is very little reason to try and push these ideas. Risk taking is generally not really rewarded. Long-term loyalty is ultimately what gets rewarded, so the easiest path is simply to stay the course. Iíd love to see Nintendo make a more concerted effort to encourage people at all levels of the company to feel empowered to push through ambitious proposals, and then get rewarded for doing so."

They're terrified right now, and so some things are getting through, but it won't create meaningful, lasting change without cutting out the malignancy. Which I don't see happening. Nintendo engineers didn't even use XBL or PSN before designing the WiiU network, and I'll bet (thought this is speculation) that the firm they hired is typically programming business applications. Japan execs mostly sees the Internet as a shopping mall, and the time it's going to take for the younger crowd who do to get into positions of power is going to be a long, long time.



You can feel free to disagree with me, but I've been doing this long enough, with a large enough variety of companies in Japan in electronics and entertainment, to know this is very common.

I want Nintendo to learn from their mistakes, and start getting their games out to a wide audience again, Nintendo is coasting, but they're running out of that steam, and they're going to get caught at the top of the loop sooner rather than later
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.2 years ago
And you keep making the same post over and over and over again. Even when they do something right, which you claim you want them to do, you still slam them for it.

Oh, and it was Riccitiello at EA who made that "unprecedented partnership" comment, not Nintendo. And as I'm sure you're aware, he's not there anymore.
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Paul Johnson Managing Director / Lead code monkey, Rubicon Development2 years ago
Whilst I grant that Iwata's is greater than mine, in my experience this a big mistake.

We made our combat monsters f2p game along these principles, allowing for the existence of whales but designing so that all players spending a smallish amount works best in terms of getting the content etc. And it failed dismally. In the f2p world there are only whales and freeloaders, and if you don't give those whales enough stuff to spend money on, you're just going to lose money.

Of course, one man's whale is another man's micro-spender. In mobile you're a whale if you spend over 3 bucks in one place...

Edited 2 times. Last edit by Paul Johnson on 19th May 2015 8:28am

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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.2 years ago
Paul, if Combat Monsters had the download and spend volume that a Nintendo title would have, would it have required whales to achieve profitability?
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Klaus Preisinger Freelance Writing 2 years ago
Nintendo just re-released Puzzle & Dragons with the plumber in it and revised business model. I doubt there would be much resistance if they did the same to Combat Monsters and renamed it Fitzgerald.

Maybe that is Nintendo's new strategy. Take something that works, slap your child friendly IP on it, leverage the moral high ground of your business model, exploit your brand recognition and fan base, and call it a day. Then again, paying $30 up front for P&D just makes you a different type of whale.
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Paul Johnson Managing Director / Lead code monkey, Rubicon Development2 years ago
Paul, if Combat Monsters had the download and spend volume that a Nintendo title would have, would it have required whales to achieve profitability?
Obviously can't answer that authoritavely because it didn't. But in my experience it's all or nothing and if you scale that equation you still come up with all or nothing, just that the "all" is bigger.

Combat Monsters has not had anything like enough visibility to get large, safe numbers to predict with. But I offer it as a stark example that our few whales have spent more money combined than all our "normal sized" spenders combined by a couple of orders of magnitude. That can't be unique to us.

Edited 2 times. Last edit by Paul Johnson on 20th May 2015 10:53am

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Greg Wilcox Creator, Destroy All Fanboys! 2 years ago
@Klaus: Actually... for that $30 you get the original Puzzle & Dragons AND that reworked Mario Puzzle & Dragons on the same cart. That's an even better deal at the end of the day.
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.2 years ago
Paul, all a fair point. But I think there are rules for new IP from small unknown developers and then rules for known IP from large developers. The larger studios with known IP have to rely far less on whales for support. It's an unfair reality that is just one more reason competing against the big guys is an extremely difficult struggle for indies.
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Jeff Kleist Writer, Marketing, Licensing 2 years ago
@Jim

If Nintendo was doing what I want, they would have pulled out of hardware, become a third party, and started merger procedures with Apple, Disney, Sony (despite antitrust issues) or the new player, Geneon Universal.

As you can see, they're very far away from that. Again, we've seen this before. The "unprecedented partnership" comment was made at their presser, and if they didn't agree with it, they either have the most incompetent PR group in history who are not reading the scripts, or they're fully on board with it at the time. There's 3 generations of precedent, their own ex-employees publicly confirm what I'm saying, and most people would agree these patterns of behavior are toxic to a modern, multinational business with the current direction of technology. It's not my fault people have this irrational nostalgia for Nintendo that overrides logic I made my case and backed it up. You can agree with me or not, but as a wise man once said "the beauty of science is that whether or not you agree with it, it's still true". . A healthy Nintendo is a good thing for gaming. A sick dying Zebra like Sega brings down the whole herd

Edited 1 times. Last edit by Jeff Kleist on 20th May 2015 11:05pm

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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.2 years ago
Thank you for the lively debate, Jeff. But I think we've come about as far as we can go with it under this format.
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Greg Wilcox Creator, Destroy All Fanboys! 2 years ago
Here's an odd funny: There seems to be some confusion on a few gamer boards about Puzzle & Dragons Z/P & D Mario among some people who think the game is F2P and has micro-transactions. Yep. On a cartridge game without mandatory online play.

Hmmm. It's not bad communication on Nintendo's part at all. It's more likely than not people who may have already played the mobile game thinking Nintendo just ported it over intact and wants to somehow hit them with fees or gamers who didn't bother to read up on the game on Nintendo's website thinking it's going to drain their wallets over time.
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