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Nintendo raises the banner for premium mobile gaming

A latecomer to a battle that was lost some time ago, Nintendo is choosing to champion premium games on mobile over the ubiquitous F2P model

For those who have been following the games industry closely over the past decade or so, watching Shigeru Miyamoto take the stage at Apple's iPhone 7 event in California last week felt like a cheese-induced fever dream. Of course, we've all known for some time that Nintendo's stance on mobile gaming had softened to the point that a long-term partnership with DeNA and the phenomenal launch of Pokemon Go had become possible. Seeing Miyamoto announce what will likely be one of the company's most important launches of the year on Apple's stage, though, took Nintendo's new approach to mobile out of the realm of abstract knowledge and into the realm of concrete reality.

Plenty of analysts and commentators have, of course, argued for Nintendo's engagement with mobile games for years. What is very clear from the announcement of Super Mario Run, though, is that Nintendo is still utterly determined to do mobile on its own terms and nobody else's. I've written before about how Nintendo sees mobile as a complementary business to console gaming - with mobile titles using established, well-loved console IP to drive their success, and in turn drumming up interest in subsequent console games through their broad reach and accessibility. Where much commentary has focused on mobile as a threat to console, Nintendo sees the potential for a virtuous circle. In order to realise that, however, Nintendo has apparently decided to take on a herculean task; Nintendo wants to change how the world consumes mobile games.

"If almost any other company did this, I would probably dismiss it out of hand as naive and doomed to failure... Nintendo is turning up fully armoured and equipped to a battle that was already lost long ago"

There were lots of things about Miyamoto's appearance at the Apple keynote that were interesting, from the overt statement made by Nintendo's most famous creator turning up on Tim Cook's stage to the still-unclear nature of the iOS exclusivity for Mario's mobile debut. Perhaps the most interesting thing, though, is that Nintendo has chosen to eschew the well-established free-to-play models used almost universally in the mobile space. We don't know exact details of the game's business model yet, but Miyamoto was adamant about his desire to avoid the microtransaction models that have become the foundation of mobile gaming. Instead, some kind of up-front payment - perhaps not at the point of purchase, but early in the user experience - seems to be planned.

If almost any other company did this, I would probably dismiss it out of hand as naive and doomed to failure. Whatever your personal feelings on free-to-play may be - and there are undoubtedly lots of bad, abusive F2P games out there which have led to a lot of people feeling justifiably "burned" by the model - it's effectively the only model that works on mobile. Right now there is a market for one premium game on mobile devices, and that's Minecraft. Everything else that tries to put a price tag on itself in Apple's App Store or Google's Play Store sinks without a trace. In the early years of the App Store developers regularly lamented the "race to the bottom" in mobile game pricing, and waged several doomed (and often ill-conceived from the outset) efforts to revive premium games on mobile devices; more recently, such efforts have become rare. Nintendo is turning up fully armoured and equipped to a battle that was already lost long ago.

Of course, none of the developers who tried to fight against the tide of F2P was Nintendo, none of them was using the most recognisable franchise in videogame history, and none of them was Shigeru Miyamoto. All of those things are important. Super Mario Run has an instant head-start on any other premium app out there; assuming it's "free to start" (the distinction the company has made between its planned offerings and existing free-to-play games), it's going to get tens if not hundreds of millions of downloads as soon as it launches. That will be assisted significantly by another very important factor that sets Nintendo's effort apart from those that have gone before; Apple's support. In the past, Apple has not always been enthusiastic about supporting premium games on its platform; now, it's taken the unprecedented step of adding the unreleased Super Mario Run to the App Store in advance, with the download button replaced with a "Notify" button. Apple's clout, in terms of placement in the App Store, is likely more valuable than any marketing campaign a publisher could hope to pay for.

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The billion-dollar question, though, is whether all of this will be enough to turn back the tide - or whether Miyamoto is just a latter day Canute. Even for a company with Nintendo's clout and Apple's backing, it's hard to escape the fact that the assumption of F2P is deeply rooted with mobile consumers, who have, for all the protestations of a vocal minority, harshly rejected almost every game that has attempted to charge a premium price instead. Commentators talking critically about the rise of F2P tend to highlight specific policies or decisions that contributed to its dominance, including Apple's tendency to highlight free games rather than paid ones as a consequence of its early view of the App Store as little more than a value-add for iPhone hardware sales. Others tend to "blame" consumers for being unwilling to pay for premium games, which is little more than an exercise in futility and self-importance.

The reality is that the rise of F2P was likely inevitable; while Apple's policies, and later Google's, did help to boost the model, nothing short of an outright ban on microtransactions would have stopped F2P from becoming dominant on mobile. Absent of impediments to the functioning of the market, distribution costs (i.e. the cost of creating and distributing a copy of something) tending towards zero will be followed rapidly by prices tending towards zero, and a different monetisation model will emerge. If you create a good game and put a premium price tag on it, no matter how low, you have left open a space below you in which a competitor with an equally good game can undercut you. As long as there's some other way to make money (advertising, F2P, sponsorship, whatever), it's inevitable that eventually everyone will be pricing even the best of games at zero.

"This is, in many ways, the last stand for premium mobile gaming. The danger is that Nintendo burns through its IP library rapidly, builds no sustainable businesses and then finds its mobile returns tumbling with each subsequent game"

What Nintendo is battling, then, isn't just a trend or a fad in mobile; it's economic logic itself. Yet that's not a reason to write off what the company is trying to do. For a start, there's a different kind of economic logic at work for Nintendo; the company fears that an F2P Mario game would risk the value of its IP, and would rather take the gamble of launching a Mario game that's non-F2P and doesn't perform well commercially (a risk which has a medium likelihood of coming to pass but minimal consequences), than the gamble of launching an F2P Mario game and having it viewed as exploitative and damaging (perhaps a lower likelihood of coming to pass, but catastrophic consequences for Nintendo's biggest asset). For another thing, Nintendo is arguably the only company in the world in a position to actually make this work. If there is to be a premium tier for games on mobile devices, it will have to be held aloft on the back of very famous franchises and creators, whose reputation and recognition will counterbalance the economic pressure that otherwise pushes prices towards zero. In other words, consumers who don't feel that they have to pay for games in general must find some value in the act of paying for a Nintendo game.

Creating that "premium" tier of mobile games, if Nintendo can actually pull off such a miracle for the medium to long term, might be the most lucrative thing the company has ever done. As it stands, it's pretty much inevitable that the firm's early mobile titles will be successful simply off the back of the interest which surrounds them. Nintendo's fame and Apple's support mean that the games will be downloaded so much that even a very modest conversion rate will ensure financial success. Consider that Pokemon Go has been downloaded over 500 million times to date; if Super Mario Run achieves similar stats and only 1% of its users decide to pay for the full game, it will have "outsold" (though not outgrossed, of course) the Wii U Mario titles, off the back of vastly lower development costs. Only a small uptick in that conversion rate could even make Super Mario Run into one of the top-grossing Mario games of all time.

That's a magic trick, though, that can't be repeated indefinitely. The top-grossing mobile games generally continue making money for years and years, thanks to allowing regular players to continue paying into the game. Nintendo's model for Super Mario Run seemingly ensures that the game's revenues will fade out much more rapidly - and it will be very difficult to avoid diminishing returns with subsequent Mario games, since you'll never recapture the storm of interest of Mario's first mobile outing with his second.

This is, in many ways, the last stand for premium mobile gaming. The danger is that Nintendo burns through its IP library rapidly, builds no sustainable businesses and then finds its mobile returns tumbling with each subsequent game. Should that come to pass, even the Kyoto giant may have to bow to the inevitability of F2P; but if Nintendo can pull this off, it may open the doors for far more varied business models for everyone in mobile gaming.

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Latest comments (11)

Anthony Gowland Consulting F2P Game Designer, Ant WorkshopA year ago
Right now there is a market for one premium game on mobile devices, and that's Minecraft
Sorry to hear you're out of business now, Barry.

Is the hope is that if you publish enough articles saying it's impossible to make money with paid games, it will become truth?
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As far as I know Mario Run won't ever be in the paid charts as it's free to download with a single paid unlock. If true that makes it like a paid game in that once bought, it has no IAP's. But it remains unconfirmed until release.
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Francisco Javier QA Manager, Zed GroupA year ago
There's a lot of confusion about Super Mario Run being paid, free and even if it'll have paid content, but if you visit supermariorun.com they state clearly the model they have choosen:

Free to download.
Some free content.
Additional content will be available for purchase.

And yes, the confusion comes from the same Miyamoto on stage at the Apple's event: where he seemed to say it was a single pay game.

We will see how they do, but clearly, the most interesting model for Nintendo is the Free-to-Start and expand your game as much as you want. They'll do lots of money in that way!
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Show all comments (11)
George Williams Owner A year ago
I'm thinking the base game will be free but adding new characters, levels, boosts will cost real money - therefore adding to the shelf life of the game and making Nintendo money.
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.A year ago
@George Williams:
"Miyamoto was adamant about his desire to avoid the microtransaction models"
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Robin Clarke Producer, AppyNation LtdA year ago
I find this article quite strange.

Nintendo have been fairly unambiguous about how they're approaching mobile.

Aside: There is already a healthy tier of premium mobile games (ask Devolver, Fireproof, SquareEnix, TinyBuild, Kairosoft, Sports Interactive etc.), and Apple have massively disproportionately promoted paid games over free ones. Free to play is a bigger category because it's a more effective distribution model in most cases, not because Apple or Google have tried to ram it down anyone's throats or because consumers aren't willing to pay ever.

Super Mario Run is a free to play game. The specific model they're using (from what they've said) is structured around a single, early purchase to unlock the main part of the game. They've not ruled out microtransactions later or for those who want them.

Super Mario Run doesn't need to adopt Kings/SuperCell/MachineZone's model because it's the most valuable gaming IP in the world. This is Nintendo using the same strategy as they took with the GBA and Virtual Console re-releases of their back catalogue - staggered as slowly as possible to extract the maximum value from their brands. This is Mario cashing in an appearance fee they've spent decades ratcheting up the price for.

Animal Crossing and Fire Emblem will be more conventional F2P games as a service, and it would be extremely unlikely that anything else that comes from the DeNA partnership won't be F2P in some form, all the more so after the mega success of Pokemon Go. They've never made any secret of this.

Nintendo aren't trying to turn the clock back, they've been waiting for the hardware and market to be at the stage where they can make significant returns on mobile outside of just Japan.
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Was a single developer contacted in the writing of this article? It's not even wrong.
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Ethan Einhorn Director of Marketing, Sidekick VRA year ago
I really hope that Nintendo's strategy with Super Mario Run is successful and repeatable. I love games like Lara Croft Go, Monument Valley, and The Room, and I'm a huge fan of all things Nintendo.

I think those who love premium games should keep in mind that we already have many lifetimes' worth of amazing portable games available to us. And better still, premium games are never, ever sunset. This is why I carry my VITA with me everywhere I go, in the same pocket as my iPhone. Once I've wrapped up the VITA game I'm currently playing, I have 171 more in my library ready to enjoy. Given that many of those are 100+ hour RPGs, that should keep me busy for, what... 15 years? And then, on to the 3DS and NX games.

Of course, I will excitedly snap up any great premium mobile game that comes my way. But even if economic forces bring their production to a full halt, core gamers still won't ever have to succumb to watching ads or buying virtual currency. They will simply have to start looking backwards for their portable gaming fix instead of forwards. And when that means playing "Uncharted: The Golden Abyss" instead of "Mobile Strike", that can only be a good thing.

Edited 1 times. Last edit by Ethan Einhorn on 16th September 2016 4:46pm

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Christopher Bowen Editor in Chief, Gaming BusA year ago
There's a market for everyone. And as the market goes more mobile, we're going to see platform gamers making more moves onto mobile, and they just don't tolerate the F2P nonsense. Even Nintendo's own products in that sphere show the weaknesses of the model. All Pokemon Go did for me, for example, was make me go out and get Alpha Sapphire.

So this whole "you're F2P or bust" on mobile idea doesn't seem to hold water. Everyone has a market, and there is a market that will pay Nintendo's asking price for Super Mario Run. I'm in that market, and we need to be catered to. Thankfully, we're not dealing with shelves; there's no finite space to worry about. And the last time i checked, it was still the #1 game on the App Store in terms of marketing, and it's not even out yet.
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Steve Peterson Marketing Consultant A year ago
It will be very interesting to see what initial pricing Nintendo chooses for the additional Super Mario Run content, how much content/play time you get for that price, and what the response is from the public. I'd guess Nintendo will likely go with a higher price rather than a lower one; perhaps $4.99 instead of $0.99 to start with. Whether or not that price succeeds in attracting a lot of buyers is going to be the perception of value Nintendo can create. If it feels like a great Nintendo console game for only $4.99, it should do well. If it's a boring endless runner for $4.99, few will pay. Of course, being digital, it's easy to change the price. If Nintendo is really being smart, they'll test the effect of different price points using short-term sales in order to settle on the price that generates the most revenue.

It will be interesting to see how Nintendo's experiments in mobile games do, and whether they can create new price points/monetization schemes for mobile. If any company has the IP to command that, it's Nintendo. Pokemon GO should be proof of that. So far, Miitomo has been Nintendo's first mobile "game", and it generated a lot of downloads initially but quickly flopped after a few weeks after people discovered there really wasn't much fun there. Animal Crossing and Fire Emblem have great potential, but execution is everything. DeNA is advising them, which is good, but the final design decisions are up to Nintendo. Will they make good choices? I'm hopeful they do, but not convinced they will.
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Klaus Preisinger Freelance Writing A year ago
In the mindset of the eighties, Nintendo could release a freely accessible piece of software which draws in levels from the Mario Maker library, gives you three lives for a $1 'microtransaction' and calls it a day. To put it another way, keep the business model from when Ronald Reagan was a thing and update the rest.

In the spirit of the nineties, Nintendo could release a piece of software granting you partial access to the experience and letting you decide whether to buy the full product or not. No actual demo disk or visits to the mall required though, this inconvenient part of the experience has been updated. Also players get infinite lives now, be sure to subtract 5% in your review for that casual move.

In true odds fashion, Nintendo could contemplate who else is making money (e.g. magazines printing cheat codes, companies providing dedicated servers (for shooters), services providing voice chat and social features) and sell those things.

Honestly, f2p is more of a throwback than the end of an evolutionary process. Nobody cares whether f2p will burn out the customer. There is no reason to build a brand over a long term, just get rich quick off those whales. Who cares if they will never spend money on another game, this is a five year retirement plan, not a 30 year brand building exercise. There is no need to blame Google and Apple either, they list the best paid games, just as they list the best f2p games.

All it ever took for one genre to rise over the others again, for one business angle to gain more of a foothold again, was one new generation of younger siblings having grown up to despise the way things were for no other reason than they were teenagers now and blasted with PR. So raise your glasses, roll in Phil Collins and his piano and cue the Circle of Life.
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