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Nintendo's future shouldn't be focused on Smartphones

With all the analysts and stockholders claiming Nintendo's recent losses caused by mobile markets, it is important to realize what a mobile market to Nintendo really means, and what other courses of action will be a better fit for their future.

Chip Sineni, Blogger

January 20, 2014

5 Min Read

With all the analysts and stockholders claiming Nintendo's recent losses being caused by smartphone and tablet markets, it is important to realize what a mobile market to Nintendo really means.  

Take one look at the top grossing sales in the mobile market. The Mobile market is dominated by Free-to-Play.  Analysts and stockholders  should be asking if Nintendo has the core competencies to compete in this market. Does Nintendo demonstrate they understand Free-To-Play? Do their products show they have an expertise in understanding setting up a compulsion loop based gaming, on players almost giving up, but instead throwing in another dollar? If not, then this is not an instant solution to their problems.

While some of  Nintendo's IPs are similar to F2P games in the market - Pokemon to Dragonvale, Animal Crossing to FarmVille, Dr Mario to Candy Crush, Nintendo is about having a super polished experience where they teach players skills and have them grow those skills to overcoming greater challenges. The F2P mechanics that dominate mobile would be re-training the whole company's DNA, and remove much of the magic that allows them to generate profits.

Their main Flagship titles like Mario or Zelda have no top grossing equivalent in the AppStore; in fact there are very few true 'action' games that chart on top grossing mobile charts at all, and even fewer with a balance towards premium monetization.

Without remodeling their whole company's towards Free To Play style games, these are things Nintendo could do to expand their business:

  • Retro Games on App Store: This seems obvious and probably the one stockholders are most asking for, but the problem here is that is won’t be a signifact revenue stream. The $10 -$5 dollars they would want to charge per title (what they are charging now) would mean these are among the most expensive titles on the market, and parents and kids are used to downloading something free. Yes it would generate revenue, but similar offering by competitors like Sonic the Hedgehog, despite doing well, have not charted high on top grossing for any duration to make this a play that will "save Nintendo"- it is just another supplemental revenue stream.

  • Controller for App Store: One way the above idea could generate more profit is to make an exclusive controller for mobile games, that you need to use to play Nintendo games. Something like their WiiU classic controller and make it the only one that will work with their mobile games. Smart design so it can work with all phones or tablets. This way, they are more selling a new 'pseudo console' that uses your mobile device. Playing Nintendo games on mobile could be a more premium experience.  

  • Make a real version of Pokemon Skylanders: It is crazy to think Skylanders and Disney Infinity stole  Pokemon's 'Collect Them All' tagline to real toys and Nintendo themselves haven't done the same. Yes 'Pokemon Rumble' is a (half hearted) attempt at this, but Nintendo needs to do real investment and marketing to make this a viable product. Right now with so many Pokemon products (both games and toys), there is no version real enough to take off, and they are all seperate efforts.  There are no real separate Skylanders toys to collect. Skylanders IP generated $1.5 billion in revenue (not counting this holiday season) . 

  • Retro games on PC and consoles: This would make more money than a similar effort on mobile for two reasons. The first being this market is used to spending more money than mobile- $10 dollars on PC or console is a good deal. The second reason being this is where much of the Nintendo market graduated to. Imagine how well a 'Mario Classics' collection would do on Steam?

  • Put latest  greatest games on PC and console:  How many customers would pick up the next big Zelda if it was on PC or console? To justify the development costs of blockbuster game, their best bet is to get it into as many consumers hands as possible. Again this audience is not scared of paying $50 for a great game, and this audience is a fan of Nintendo quality products. It is missassumption Nintendo software is just for kids, but a correct assumption is their hardware is not as popular for adults who already own other gaming devices. 

  • Exclusive Deal with PC or Console Platform: This idea isn’t new, but Nintendo could align with Sony, or Microsoft or Steam. While Valve might seems like the least likley fit, because they aren’t as rigid of a platform, they might be a better fit for Nintendo to find terms more agreeable to them. Valve wants more people playing in living rooms, and a broader reach, and give reasons for the Linux side of their business; Nintendo needs to sell their products to a lot of customers. Nintendo could even make a custom Steambox that plays PC games and Nintendo products, or Nintendo could just be exclusive to Steam (in addition ot their own platforms) and Valve gives them a better % of profits to keep just to drive people to their platform. With 65 million Steam users, there should be some mutually lucrative deal that could be made, or something similar with Microsoft or Sony. Nintendo in Microsoft or Sony's corner would make the decsion of what next-gen console to buy an easy one. 

Again mobile should be a part of the success story for Nintendo's future, but the other parts will be the ones that yield greater results.  Analysts should stop directing Nintendo to emulate mobile companies like Supercell or King, and should instead be looking at emulating success of companies like Activision that are catering to core gamers, and selling physical goods of their products. 

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