MiHoYo's Genshin Impact had a hell of a few months. Launched at the end of September to more than a small amount of scoffing about how closely "inspired" it was by Nintendo's Zelda: Breath of the Wild, the game has nonetheless soared in the mobile charts, and by Sensor Tower's reckoning it has now grossed a staggering $400 million in its first two months on the market. This week, it picked up Game of the Year awards from both Apple and Google, pretty much guaranteeing that it'll be downloaded many, many more times over the next few weeks, and giving it a very strong start into 2021.
It's a seriously impressive debut and a major milestone for Chinese-developed games in general -- and as the scale of the game's success has become clear, the rhetoric around the creative debt it owes to Nintendo's recent blockbuster has changed dramatically. Where once Genshin Impact was criticised for being so blatant and heavy-handed in its lifting of themes and mechanics from Breath of the Wild, now it's more common to hear criticism of Nintendo instead. Why has Nintendo left the field so wide open for a game like this to waltz in and earn hundreds of millions of dollars? Money that, in this reckoning, Nintendo has effectively left on the table.
Where once Genshin Impact was criticised for lifting from Breath of the Wild, now it's more common to hear criticism of Nintendo instead
The question itself isn't entirely unfair. Nintendo owns the Zelda IP but has done nothing with it on mobile; it launched Breath of the Wild on Switch and Wii U almost four years ago and never seems to have seriously considered doing anything with that specific iteration beyond those console launches, instead turning its attention to the upcoming Switch-exclusive sequel. From a purely business standpoint, it's certainly the case that Nintendo either overlooked or, perhaps more likely, outright ignored the commercial potential for a game of this type on mobile -- demand that it was uniquely well positioned to fulfil, but which an upstart rival has now taken over instead.
Moreover, it's not like Nintendo has some kind of strategy predicated on ignoring mobile. On the contrary, it is still claiming mobile as one of the nascent pillars of its long-term business, and the enormous success of Niantic's Pokémon Go means the potential of mobile hasn't escaped the company's bosses -- even though that IP is only licensed from Nintendo, rather than developed or published directly by the firm.
So did Nintendo really miss a trick here -- potentially a billion-dollar trick, at that? Should the success of Genshin Impact provoke a round of soul-searching in Kyoto, and tough questions about why Nintendo itself wasn't fast enough, aware enough or flexible enough to meet this huge market demand? Well... maybe. But before jumping to that comfortable and well-worn narrative, the big and slow-moving industry behemoth outplayed by the nimble newcomer, it's worth stepping back for a second looking at something else that happened around Nintendo this week.
Nobody is going to tell you with a straight face that people will queue up for the Genshin Impact theme park in ten years' time
A few days ago, the delayed opening date for the first phase of Nintendo's first theme park -- located alongside Universal Studios' theme park in Osaka -- was finally announced, along with the first official media footage from inside the park. It's not especially dramatic footage; we get to see what the opening area of the Mario Kart ride is, and confirmation that there will be AR technology of some kind involved, but that's about it thus far.
Nonetheless, this meagre trickle of information and images drove many corners of the Internet pretty wild. Interest in Nintendo's theme park is clearly enormous, even outside Japan -- and right now it's not even entirely clear when Japan will be letting tourists back in again. The footage attracted enormous interest, garnering tons of coverage across both traditional and social media, perhaps even comparable with the early information releases about Galaxy's Edge, the much-hyped Star Wars area at Disneyland in Los Angeles.
On the surface, this doesn't have very much to do with Genshin Impact's success, but it speaks, I think, to the quite different objectives and strategies a company like Nintendo has, compared to a firm like MiHoYo. Genshin Impact is making a ton of money, it has achieved huge popularity very quickly, and is unquestionably a major achievement for its developer -- but with the greatest of respect to the game and its creators, nobody is going to tell you with a straight face that people are going to be queuing up for the Genshin Impact theme park in ten years' time.
It is a game designed to capture a specific zeitgeist in terms of both the popularity of the properties it's inspired by -- primarily a Nintendo property -- and the style of monetisation it employs. Genshin Impact's commercial numbers show that it's accomplishing exactly what it set out to achieve, but to do so it's standing on the shoulder of a giant, namely the Zelda IP, that was grown far more slowly and more carefully.
What Nintendo is setting out to achieve -- and what a few other companies in the industry are also beginning to claw towards with their own stewardship of their key IPs, slow though that learning process has been in many cases -- is necessarily a more long-term strategy. Nintendo could, in theory, have launched a Breath of the Wild spin-off game in the style of Genshin Impact; it would have had more brand recognition from the outset and might even have grown faster than MiHoYo's game as a consequence. However, the company's approach would have needed to be very different, likely resulting in much lower revenue numbers, at least on a per-player basis -- because unlike MiHoYo, Nintendo has to be conscious of what each game it releases and each customer transaction it concludes is doing to the value of its core IP.
"Nintendo may sacrifice a profit now in order to maintain IP value, but it's based on a hard-nosed calculation, not a mystical Japanese art of management"
Nintendo has been willing to experiment with gacha mechanics and the like in its mobile games, but has largely been careful to avoid any accusation of abuse or whale-chasing - and even at that, it keeps those games somewhat at arm's length from its core console titles. This is simply because the company's IP is valuable in the long-term, and sacrificing that for short-term revenue is a disastrous approach. A game that makes a ton of money today but undermines Nintendo's ability to sell theme park tickets, merchandise, movie licenses and, of course, many more games for decades to come, is a game whose short-term success isn't worth it -- not if you're thinking like Nintendo is thinking, and hoping to become the company Nintendo is aiming to be.
This is not, as some commentators occasionally hint at, down to some kind of uniquely Japanese perspective on business, or any other convenient orientalist nonsense. There's nothing mysterious about what Nintendo is doing here; on a general basis, this company is just as focused on quarter-to-quarter profits as the next corporation, but it also has some extremely broad future ambitions about how that profit is going to grow and where new revenue streams can be developed, all of which require its core IPs to retain their value, lustre and consumer goodwill.
In other words, Nintendo may make decisions which sacrifice a profit now in order to maintain IP value, but it's based on a hard-nosed calculation, not a mystical Japanese art of management. The company's executives make decisions to safeguard the development of entire new revenue streams in terms of theme parks and resorts, merchandise, tie-in movies and TV shows, and who knows what else.
Would releasing a game like Genshin Impact with the Zelda branding have damaged that IP? Perhaps. It's very clear that despite the popularity of free-to-play generally and gacha mechanisms specifically, they're highly divisive -- and some of the people who like them least tend to be parents, exactly the people Nintendo is hoping will book tickets to theme parks and tie-in movies. At the very least, for Nintendo to make the creative and commercial decisions that MiHoYo made with Genshin Impact would have been a major risk, and a company with ambitions to build itself up into a Disney-style family entertainment conglomerate isn't going to be keen to see some of its most valuable IP running with scissors.
It's absolutely true that there's nobody who loves to harp on about the company's century-ago start as a playing card manufacturer quite as much as Nintendo's own top execs, but that focus on the company's long history is sometimes more about motivated reasoning than anything else -- it provides a romantic justification for a strategy that's as calculated and bottom line focused as that of any other corporation. Playing cards are to Nintendo what old footage of Walt drawing Mickey is to Disney; cute window dressing on a firm whose choices and rationales are as grounded as any other, and one which doesn't leave money on the table without good reason.
Some of the reasons why Nintendo is going to end up leaving a billion dollars or more on the table to be snapped up by Genshin Impact might well be to do with an abundance of caution or a slowness to respond to changing market conditions -- it is smart and grounded, not infallible. But to a great extent, the decisions that led to this point were informed by the need to carefully steward the Zelda IP, knowing that maintaining its quality and goodwill now will be worth many billions more to the firm in the years and decades to come.