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The game has changed for Nintendo on mobile

Last year smartphones were set to be Nintendo's saviour; with the successful launch of Switch the calculus has changed

Two years ago, Nintendo looked like a company faced with a common dilemma; change, or die. Its strategy of sticking firmly to the traditional platform holder business model while trying to skirt around the Teraflop arms-race between Sony and Microsoft had gone magnificently in the Wii era, but as Sony fixed a generation's mistakes and reclaimed its crown with the launch of PS4, Nintendo faltered.

The Wii U had perhaps the most disappointing commercial performance of any console from a major player in the industry's history; meanwhile, assessments of the 3DS could not ignore the fact that, while selling very well in its own right, the handheld significantly underperformed its forebear, the DS.

This happened against a background of Nintendo's actual creative output firing on all cylinders. Critics and (diminished) audiences loved the company's games; indeed, it was clear from the output on the Wii U and the 3DS that the firm's long-term future as a creative powerhouse was secure, with big, bold titles from new young creators taking centre stage and wiping away any fears raised by Shigeru Miyamoto's musings about retirement plans. The problem wasn't software quality; the problem was that the platforms on which that software was appearing seemed to be in terminal decline.

"Last year, mobile was all anyone wanted to talk about in relation to Nintendo... Then Switch launched, and it felt like the whole world lost interest"

It's a little early to announce the halting of that decline just yet - if the Switch really does end up beating the Wii U's lifetime sales in its first year on the market, then we can talk about that - but the narrative has certainly changed since Switch stormed onto the market. Between the success of the new console and the voracious demand (matched to anaemic supply) for the NES Classic and its just-announced SNES successor, the story of Nintendo now isn't about decline at all. Rather, some of the more excitable commentators are already wondering aloud about the return of the Wii boom years, and even the more moderate voices are being swept along in the enthusiasm.

The call for Nintendo to "change or die" has largely disappeared, since the company seems to be on track to prove that it can survive without changing very much at all, thank you very much. Without the "or die" clause, it's an exhortation that loses much of its power, and with the loss of that power goes all of the attention that was formerly being paid to Nintendo's most tangible effort to change: its commitment to smartphone games, through a long-term deal with Japanese mobile game firm DeNA.

Last year, that was all anyone wanted to talk about in relation to Nintendo. Pokemon Go, although not a Nintendo title, was the phenomenon of last summer and seen as proof of the incredible prospects for Nintendo IP on smartphones. The arrival of the firm's own games on mobile was so hotly anticipated that notorious videogame curmudgeons Apple even changed the way the iOS App Store worked especially to allow "pre-orders" of Super Mario Run. A success in downloads but a poor performer in revenue terms, Mario Run was soon followed by a well-received successor, Fire Emblem Heroes, which performed much better commercially, though still without troubling any of the big beasts of mobile gaming in their roosts atop the revenue charts.

"In Nintendo's situation, there's a genuine case to be made regarding how much they're willing to risk the future to secure the present"

Then Switch launched, and it felt like the whole world lost interest in Nintendo on smartphones. The company has at least two smartphone games in the pipeline this year, and on paper they should be generating a lot of buzz; Animal Crossing is arguably the company's best-loved casual franchise and its 'play a little every day' structure is a perfect fit for mobile, and it's reportedly to be followed by a Zelda mobile title later this year. Yet you could hear a pin drop in coverage of these upcoming games, while the appearance of even a logo for a resurrected franchise in the company's E3 broadcast has generated acres of coverage and discussion.

This is not, in itself, surprising. The games media has struggled for a decade with the fact that the huge audience that plays mobile games simply isn't interested in reading about or discussing games in the same way as the console and PC audience. What's a little more concerning, though, is that Nintendo itself hasn't had much to say about mobile games of late. Audiences are fascinated by the Switch and the Classic consoles right now; the billion-dollar question (quite literally) is whether Nintendo itself has also lost some of its interest in smartphones as its more traditional business has returned to health.

To be clear, I'm not implying that Nintendo is about to abandon its deal with DeNA or stop working on mobile titles. The toothpaste is out of the tube and can't be squeezed back in; Nintendo is a smartphone developer now, and it will remain such in future. This is, rather, a question of focus and priorities - and corollary to that, a question of how much flexibility and latitude Nintendo's mobile teams will have to play with its IP.

It wouldn't be entirely surprising if the success of Switch had rekindled opposition to mobile within Nintendo to some degree. The business approach of Super Mario Run, which was more like a classic Shareware game than a modern F2P title, spoke not just to a desire to experiment in the space, but also to a deep-rooted suspicion and dislike of the F2P mechanics which dominate mobile games. That Fire Emblem Heroes ended up using F2P systems was partially down to being a game more suited to those systems, but it also suggested that Nintendo was learning from its mistakes in this new arena.

"The parameters of the experiment have changed. Mobile must now match the resurgent Nintendo's needs, and not the other way around"

It seems probable, however, that many of Nintendo's designers (who are unusually powerful within the company, compared to most other firms in the industry) were not terribly enamoured of the lessons they were having to learn. When it was a matter of 'do this or the company is finished', they might have begrudgingly worked within the confines of the F2P model that has proven so successful elsewhere; with Switch selling faster than the firm can produce consoles, the argument that this is not necessary will have welled up again.

This is more than just the old "but I don't like F2P" argument, which is tired and dull and has done the rounds so very many times. In Nintendo's situation, there's a genuine case to be made regarding how much they're willing to risk the future to secure the present. The resistance to F2P within the company comes in part from discomfort with the sharper practices that are clear in the business models of some other mobile gaming firms, but also from a genuine desire to protect the value of its IP.

Nintendo, after all, is essentially a vault of extremely valuable IP which both provides the secure foundation for the firm's existing business, and relies on that business to maintain its value and relevance. Safeguarding that IP - perhaps the second most valuable library in the world, after the Walt Disney Company's vast holdings - is absolutely crucial to Nintendo's long-term future. The responsibility to pass the IP library on to the next set of hands in better condition than it was received is something that senior staff at the company take extremely seriously.

If Nintendo really has improved its fortunes in the console market, and the mobile space is now seen as an interesting new venture rather than a lifeline from drowning, the calculation changes entirely. Mobile may not lose focus (not much, anyway; a little is perhaps inevitable), but the push to accept F2P systems with which its designers aren't entirely comfortable has lost its inexorable nature. How Nintendo engages with mobile in general and F2P in particular is now going to be on its own terms.

One consequence of that is likely to be that Nintendo's games, while successful and profitable, never really challenge the top of the mobile revenue charts - which tend to be occupied by games that take an approach to F2P that, in Nintendo's eyes at least, is likely to damage the IP by association. (It's notable that for all the revenue flowing through mobile gaming, the only IP created in the space that seems to have any broad value beyond fuelling direct sequels is Angry Birds, a game that wasn't F2P in its original incarnation.)

Nintendo's experiment with mobile isn't over by any means, and in the long term it remains a hugely important. It still wants to succeed, but the parameters of the experiment have changed. For the resurgent Nintendo, mobile must now match the company's needs, and not the other way around.

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Latest comments (11)

Klaus Preisinger Freelance Writing 5 months ago
Funny definition #265:
Mistake - the act of not squeezing the customer with f2p as hard as you can out of fear for your child friendly brand. :D

What is the worst that can really happen to Nintendo? Their hardware business no longer being sustainable and Nintendo moving on to become the #1 bestselling third party company on the planet? Games are Nintendo's bread and butter, the hardware is just a vanity. Take away the hardware and Nintendo is still a power house. Take away their software and they are a penny stock.
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Gwyn Howell Developer 5 months ago
Metaphor of the day - "The toothpaste is out of the tube and can't be squeezed back in"
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Peter Brobby Software developer, Playtech5 months ago
I disagree with your idea Klaus, that Nintendo will be as good without their own hardware. They have brought numerous hardware innovations to the industry that have improved gameplay tremendously. The D-pad, shoulder buttons, rumble, analogue sticks, motion control, wireless pads and touch screen.
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Christopher Dring Publisher, GamesIndustry.biz5 months ago
@Klaus Preisinger: I have to disagree with this Klaus. This was the same attitude people had when Sega went third-party, but the reality wasn't the case. Similar with Atari.

As a platform holder, Nintendo's development priorities are different. They don't just develop games to sell lots of units, but also to attract different consumers. Therefore they invest in games and concepts - including third-party and indie games - that they wouldn't as a third-party studio (where their main objective would be to generate revenue from software).

Take Metroid. Or Nintendo's recent investment in JRPGs. These titles aren't especially big, but the audience for them is dedicated. By bringing them in, even if Metroid or Xenoblade don't prove profitable, or certainly not on a Mario or Zelda level, it doesn't matter. Because you've brought a new audience into your console ecosystem, and that audience is an engaged one that will likely invest in the other games on the platform. Therefore even unprofitable titles can end up being hugely valuable.

Would Metroid, which is a really small franchise by Nintendo standards, exist if Nintendo was third-party? Or games like Box-Boy? Or Star Fox? Or F-Zero? I am not convinced. With the emphasis purely on software profit generation, Nintendo will be faced with the reality of creating games like Mario, Zelda, Smash Bros, Mario Kart and Animal Crossing on a far more regular cadence.

That would make them successful, sure. But it would be a smaller Nintendo. One with fewer studios creating games based, primarily, on the big brands.
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Klaus Preisinger Freelance Writing 5 months ago
Who can really say which strategy Nintendo would take as a software only entity. I think it would be unfair to suggest Monolith Soft only gets funded by Nintendo because they need a platform exclusive JRPG. I say a software only Nintendo could just as well be a bigger Nintendo. Remember, they would be selling games not just to the owners of their hardware, but to a much larger install base.

Sega, on the other hand, first ran out of must play exclusives and then out of cash. If the Switch is failing, Nintendo can probably earn one billion within a quarter just by doing two quick releases on another platform. Sega did not have that type of games anymore when Sega got into trouble. The same is true for Atari. Those Jaguar games would not have supported themselves on any console, let alone drag the hardware division out of the mud. Nintendo is the polar opposite of that. You buy those Nintendo games not because they are on Nintendo hardware, but despite of that fact.

As for past glory hardware innovations, sorry, the last one which was a financial home run was a decade ago. But this very fact is also part of Nintendo's uniqueness, they never seemed to be concerned with being as financially successful as they can possibly be. They seem more attached to the idea of being specifically what they want to be. Which is a hardware and software manufacturer, instead of being either. But I do not believe to be wrong when I say one is a necessity and the other just a luxury.

Edited 1 times. Last edit by Klaus Preisinger on 30th June 2017 2:11pm

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Christopher Dring Publisher, GamesIndustry.biz5 months ago
But how they choose to spend their money is not always up to Nintendo. This is a publicly owned company. Consistency of revenue is important, as is market share. If you are making Xenoblade as a third-party release, well now you're talking Final Fantasy as your competition, and need to start marketing accordingly. Metroid will be competing, if in theme rather than gameplay, with Mass Effect.

It's not that Nintendo couldn't be a great third-party studio, it's just a radically different type of business to a platform holder. It'll require a major restructure of software, marketing and (obviously) the closure of the hardware division. It will involve re-thinking franchises, which ones will work on a mass scale and which ones won't and where to put resources.

It's a completely different business, with different objectives, goals and structures in place. It would make Nintendo a different company, which is why it is the absolute last resort. Sega and Atari are the only two previous console manufacturers that went third party, and look how different they are today. How much smaller (although Sega's transformation is notable).
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Nick Ferguson Sr. Business Development Manager, Amazon5 months ago
Why do some people feel compelled to argue that Nintendo should stop doing what they do best, and suggest they should instead do what everyone else is doing?

Past performance would indicate that Nintendo do best when they come up with something completely different to what everyone else is offering (Wii, Nintendo DS, Switch) as opposed to trying to compete more directly with established industry wisdom (GameCube, Wii U).
You buy those Nintendo games not because they are on Nintendo hardware, but despite of that fact.
Speak for yourself! I buy those Nintendo games because they are great, and that greatness is often down to a symbiotic relationship between hardware and software that you rarely see in the competition.
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Klaus Preisinger Freelance Writing 5 months ago
A mere 30% of Nintendo shares are out there. (Source: https://www.nintendo.co.jp/ir/en/stock/meeting/index.html). Investors are basically along for the ride, with little to no saying power. I am not suggesting Nintendo should do anything, but I am pointing out that in contrast to other companies mentioned, Nintendo can always default to a plan B.

I do not believe NIntendo would need to rework their games for a mass market. They already are prime examples for mass market products. Even on the WiiU, Nintendo sold between three and seven million units of their top games.

I do not agree Nintendo is best when it is doing its own thing. That is too much of a cliché. Because when nostalgia comes push to shove, nobody is quoting some grandma bowling waggle game no matter how well it sold. The IPs quoted are very much core gamer products with fiendishly high controller complexity. Look no further than Breath of the Wild, that did not reinvent a genre, it is merely one of the best polished and paced products of that genre. This is what we will see more of from future Nintendo best-sellers. We know very much what these games are (unless we live in a bubble), but they will be still tweaked to perfection nonetheless. Nintendo are not the hipsters of the gaming industry.
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James Coote Independent Game Developer 5 months ago
I don't think the Disney comparison stacks up. Disney are always pumping out new IP. They are much better at taking IP beyond the medium that spawned it. A book, a film, a game, a comic etc. Nintendo are fretting about taking their IP from a game to a different game.

When Nintendo were struggling a couple of years ago, they had a few directions they could go. Become an IP company was one way, expand into mobile was another, and having a fresh stab at consoles was a third.

The tension was with the mobile expansion and the IP business clashing, but that's now irrelevant since the console business is back. Nintendo can relax and slip back into their comfort zone. Making great games, beautifully wrapped in own IP.

It feels like the theme park and the mobile games will be allowed to run their course, as an insurance policy, rather than becoming core pillars of the company.

Making mobile JRPGs like Fire Emblem is something that can be left ticking over in the background. The Wii U Animal Crossing amiibo board game from a couple of years ago tanked hard - in the context of that failed experiment, mobile Animal Crossing must seem far safer ground.
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Richard Browne Partner & Head of Interactive, Many Rivers Productions5 months ago
I don't think Nintendo will alter its mobile strategy, they're a good 30-40m shy of the Switch being a mass success at the moment, they're still betting on the 3DS as their actual hndheld product and the mobile titles are incrimental games for both revenue and marketing. That anyone would call Mario disappointing cracks me up. Just as a marketing device its paid for itself ten times over and then some.

Edited 1 times. Last edit by Richard Browne on 2nd July 2017 5:52pm

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Christopher Dring Publisher, GamesIndustry.biz5 months ago
@Klaus Preisinger: It's not about mass market, but mass scale. When the games are required to stand up as profitable all by themselves, it needs to hit a certain critical mass of users. I'm not talking mums and dads, I'm talking pure gamers. More people bough the last Pokemon game than every single Metroid title combined.

I never understand people saying: 'Nintendo should just go third-party'. There's nothing 'just' in it. It would require mass lay-offs, possible closures of local offices, a complete re-think of their product strategy, business models, potentially new management to run the business. It won't need half the development resources it's got, and its product acquisition strategy and investment into other developers would vanish.

That has to be a last-resort strategy. It's so hard to pull off and get it right. Again: Sega.
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