An NES console.

Nintendo’s Going Mobile

Nintendo recently released two news babies into the wild with nothing but the barest scraps of information to protect them from the Internet: the company, in partnership with DeNA, will be making mobile games; and, Nintendo is working on a new “dedicated game platform,” codenamed “NX.”  With almost no details to report or discuss, all we can really do is engage in the twin 21st century pastimes of Waiting in Agony to Know Everything Right Now, Dammit, and Wildly Speculating.  So, let’s speculate!

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Nintendo goes boldly into the future.

The two announcements came at a press conference on March 17, the primary audience of which was stockholders.  This is worth remembering when trying to draw inferences from Nintendo’s announcements.  Nintendo’s stock price has been stagnant for years, and this press conference knocked it up to as high as it’s been since 2011.

Let’s consider the mobile announcement first.  Nintendo has been understandably reluctant to jump into the mobile gaming fray.  They’ve enjoyed a more-or-less uninterrupted reign atop the handheld gaming market since they released the Gameboy in 1989.  The last thing they want to do is cannibalize their own market, trading sales of $200 handhelds and $40 games for some $0.99 apps.  They’ve also been adamant over the years that their games should be considered “premium,” and thus worth the $40 price tag, on top of the upfront console investment.  They don’t want to cheapen their brands by releasing a bunch of Nintendo-skinned match three games; if they did, people wouldn’t be able to see the value in such premium games as Puzzle & Dragons: Super Mario Bros. Edition.

But for all their reluctance, Nintendo doesn’t really have a choice.  They’ve been able to ward off all would-be usurpers of their handheld gaming throne for decades, but smartphones are an entirely different animal.  Nintendo’s best-selling handheld, the DS, sold just north of 150 million units.  Their current model, the 3DS, has sold around 50 million units.  (For comparison’s sake, the PlayStation Vita, released the same year as the 3DS, has sold about 4 million units, making it slightly more successful than something called the Bandai WonderSwan, which is powered by a single AA battery.)  Meanwhile, by the end of 2016, there will be over two billion people in the world people with smartphones. 

Nintendo has done a great job over the years convincing people who want a handheld gaming console to buy the Nintendo model and not the competitors’.  But now they’re not just competing with other handhelds; they’re competing with the very competent portable gaming device that you’ve already got in your pocket.  A 3DS and a game will run you around $250.  Things you already own are free.

Nokia N-Gage
Why would I buy a 3DS? My phone plays games!

It’s too early to declare the handheld market dead.  The 3DS isn’t on pace to match the DS’s sales figures, but it has already sold more units than all but two of Nintendo’s home consoles: the NES, which it will probably pass, and the Wii.  And the 3DS can clearly provide a much more robust, sophisticated gaming experience than a smartphone can.  I personally love my 3DS, and I hope it has a long, healthy life and is eventually replaced by another, better handheld.  I don’t want to see handheld gaming go the way of dedicated music players.  But it would be foolish to ignore the possibility.  Mobile gaming is a juggernaut, and, more to the point, is a giant pool of money.  Nintendo wants some of that money.  Nintendo stockholders want some of that money.

The move seems like a pretty smart one.  Nintendo doesn’t want to wake up one day to discover that the market for handhelds has evaporated and been replaced by a new market in which Nintendo does not participate.  They do not want to be the Kodak of gaming, in other words.  Of course, there is risk.  Despite their best efforts, they might end up devaluing their brands and cannibalizing their handheld market, hastening its decline.  The mobile gaming market may be a lot bigger than the handheld market, but there’s certainly no guarantee that Nintendo the Mobile App Developer, competing with countless other companies to sell $0.99 games, will be more profitable than Nintendo the Almost Totally Dominant Handheld Developer.  So what this move means for Nintendo in the long-term is not exactly clear.  In the short term, though, it’s crystal clear: it means free money.

So what exactly will everyone’s favorite former by-the-hour hotelier do in the mobile market?  Let’s make some barely educated guesses:

  • Nintendo will try to make gateway games. The mobile market is largely about casual games and, therefore, casual gamers.  Nintendo already has had success reaching casual gamers, making the Wii one of the best-selling consoles of all time, but what they failed at with the Wii was converting these casual gamers into dedicated customers (more on this in a future post).  Mobile gaming offers them a huge opportunity to put their IP in front of millions of eyeballs, and I think we’ll see a concerted effort to steer those people towards ostensibly better, more robust games on the 3DS, NX, or maybe but probably not the Wii U.  If Nintendo is serious about maintaining its other platforms, it needs to find customers for them, and mobile is (potentially) where those customers are.
  • There will be some sort of Nintendo hub. Nintendo is used to operating more or less in a vacuum, where they are their only competition.  Every Nintendo-developed game release is an event simply by virtue of the fact that so few third-party games come out on Nintendo systems.  The mobile gaming market is the exact opposite of this.  Hundreds of games come out for iOS and Android every day.  Every day.  Brand recognition alone will help Nintendo titles float to the top of that pool, but still, that’s a lot of competition.  Glut of Wii shovelware notwithstanding, Nintendo has always prized control over their brand and everything touching it (see: Nintendo Seal of Quality, friend codes, etc.), so it’s easy to assume that they won’t want their games to simply sit alongside so many crappy games – including inevitable Nintendo clones – in the various app stores.  And they want to develop Nintendo brand loyalty across the board, not just app sales on a case-by-case basis.  I don’t know all the rules and requirements that Apple and Google (and Microsoft?  Blackberry?) impose on publishers, but Nintendo probably won’t be able to just skip the app stores altogether.  They will, though, look to sidestep them whenever possible.  This probably means some sort of Nintendo hub, a Nintendo meta-app through which you will access your games and a Nintendo-only app store.  This may be an optional thing, but considering Nintendo’s reluctance to jump into this market in the first place and their historically tight micromanagement of their brands, I wouldn’t be surprised if the hub were mandatory.
  • We’ll see companion apps and cross-platform functionality. Along the lines of gateway games, nothing will more explicitly steer gamers towards Nintendo’s console games than apps that directly interact with those games.  I think we’ll see a lot of future 3DS, NX, and Wii U games that are launched along with some mobile companion game.  Play Angry Fox to earn XP and unlockables for Star Fox.  Earn in-game currency for Flappy Link by playing a Wii U/NX or 3DS Zelda game.  This will probably be more successful at steering console gamers towards the mobile games than the other way around, but it still seems like a no brainer.  Nintendo has toyed with cross-platform functionality for years with games like The Legend of Zelda: Four Swords Adventures and the newest Smash Bros., so this would make sense even if gateway games weren’t a part of their strategy.
  • Something with Amiibo.   This fits into the strategy of leveraging and building loyalty to Nintendo IP, it fits into the strategy of cross-platform functionality, and it fits into the strategy of getting free money.  I don’t know if Amiibo (Amiibos?  Amiibi?) can interact with NFC-capable phones, but if Nintendo can get the tech to work, they’re going to do it.  Even if they can’t get the tech to work, they’ll probably do something ridiculous, like release an Amiibo reader that connects to your phone via Bluetooth or, even better, a proprietary cable!  Sold separately!
Pokémon Shuffle screenshot
Pokémon Shuffle, Nintendo’s free-to-play match three game for 3DS.
  • Nintendo-skinned match three games. Nintendo stresses that they don’t want to do anything to tarnish or devalue their brands, which implies that they’re not going to just graft their IP onto existing, oft-cloned mobile games.  They, of course, are going to want to be judicious about using their IP in mobile games, and they’re going to want to create new, innovative, quality games.  But when this century-old company’s new, innovative, quality games are being dramatically outsold by every Johnny-come-lately’s match three game, how will Nintendo resist slapping together some Super Matchy Bros. game and watching the money roll in?  And why would they resist?  If the point of this mobile venture is to satisfy stockholders, Nintendo will have to pay attention when stockholders ask, “These match three games are making millions of dollars!  Why don’t we have one?”  If the point is to get free money, what easier way to get free money is there than to reskin Bejeweled with mushrooms, fire flowers, and Yoshi eggs?  If the point is to bring Nintendo IP to where the people are, the people are playing match three games on their phones.  Nintendo doesn’t want to dilute or cheapen their brands, but honestly, what hasn’t Mario been shoehorned into?  Take a look at a list of all the games Mario has been in, and try to tell me that a Mario-skinned match three would tarnish the brand.  And besides, it’s not like there’s no precedent for Mario-themed match three games…
  • Dr. Mario. If they know what’s good for them.

    Put me in, coach!
    Put me in, coach!
  • The games will be really good. Nintendo may not be able to resist putting together some cash-grab, low-hanging fruit games like a Mario match three; they might like to think they’re above it, but they’re not.  But one thing they’re not going to do is release bad games.  If (when) there’s a Mario-themed match three game, it will be a really good match three game (inasmuch as such a thing exists).  And their new, innovative games will be really good.  Nintendo’s been doing touch controls for years (see: DS, 3DS, Wii U), and they’ve been doing mini-games for years (see: Mario Party, Nintendo Land).  There’s no reason they can’t nail mobile gaming.  And when you look at the history of mainline games for Nintendo’s flagship IP, it’s obvious that they can create excellent games at will.  There’s plenty of chaff in the spinoff department, but has there ever been a bad – or even mediocre – mainline Mario game?  A bad mainline Zelda game?  Nintendo’s flagship franchise entries typically range from great to phenomenal.  Now, obviously, the mobile Mario and Zelda (and Metroid and Pokémon and Donkey Kong and Star Fox) games won’t be mainline games for their respective franchises, but if Nintendo gives them that level of attention – and they should, as they’ll want to make a good first impression – there’s every reason to believe they’ll only release high quality games.  As Nintendo has continued to lose third-party support over the years, they’ve had to lean more and more on their own IP.  This is, of course, risky, but the House of Mario knows that maintaining untarnished images for their IP is essential for this strategy to work.
  • We’ll see new IP. This might be one of the least sure things on here, but it’s the one I’m really rooting for.  Nintendo needs new IP, especially if they can’t win back third party support to fill out their release calendar between once-a-generation games like Mario Kart and Smash Bros.  Mobile games would be an easy way to throw new characters against the wall and see what sticks, especially if they have a Nintendo mobile hub to help steer new IP towards a receptive audience.
  • StreetPass will get revamped. StreetPass is a nifty feature of the 3DS that already adds bonuses to a number of games and has its own stable of mini-games.  But you carry your mobile phone with you a lot more often than you do your 3DS, and you encounter far more people carrying their own mobile phones than you do people with 3DSes (is that the plural?).  Light, asynchronous social interactivity is a hallmark of popular mobile games like Candy Crush and Words with Friends.  This seems like a match made in heaven, especially paired with whatever new cross-platform membership service Nintendo has up its sleeve.  Whatever StreetPass is doing now, it can do ten times better on mobile.
  • Nintendo will buy some studios. Nintendo is about to discover that you can’t release new installments of your mobile IP once every five years the way you can with your Zelda games, especially if you’re trying to build a brand new mobile gaming presence, support a new membership service, put your IP in front of casual consumers’ eyeballs, satisfy your new mobile partner, and placate your stockholders.  To develop these mobile game, they’re going to need development teams.  Sure, a mobile game doesn’t require many people to make, but it’s not like Nintendo can just have two or three mobile development teams.  Especially if they’re trying to do things like innovate and develop new IP.  How can you quickly staff up, get a bunch of new game mechanic ideas, get a bunch of new IP ideas, and thin the ranks of your competition?  By buying up a bunch of indie development studios.  Despite the Wii U’s poor performance, Nintendo has gobs of cash on hand.  It might not be a bad idea for Nintendo to treat their mobile development division the way you treat the 25th slot on your fantasy baseball team.  Tiny development studios with one game in their portfolios are a dime a dozen, and Nintendo has a lot of dimes.  Why not buy up a bunch of these teams and set up the Nintendo equivalent of Google Labs?  I don’t know how likely something like this actually is, but it seems like a good way to throw some compost on the creativity garden.  At some point Nintendo will need another strategy besides asking Shigeru Miyamoto if he has any new ideas.
  • There will be some annoying pricing models. The most obvious route for Nintendo to take in pricing its games will be free-to-play.  These are mobile games, after all.  Nintendo CEO Satoru Iwata has taken to using the preferred nomenclature “free-to-start” rather than “free-to-play.”  In one sense, this approach is, as Iwata himself attests, about honesty.  You don’t actually get to play a free-to-play game for free: you get to play some of the game, or you get to play it sometimes.  But then again, you can play free-to-play games for free.  I do it all the time, as do most people who play these games, which generate all their revenue from a tiny fraction of the user base.  The “free-to-start” nomenclature seems to imply that you will be paying for these games.  There are a lot of ways to do free-to-play, and Nintendo has already started experimenting with the model on the 3DS.  Rusty’s Real Deal Baseball offers you demos for a number of mini-games that you can then buy for four bucks each – or less, if, adorably, you haggle with the game.  (Which would, I guess, mean that haggling is a mini-game that costs you negative money, basically the opposite of free-to-play: pay-to-not-play.)  Pokémon Shuffle, on the other hand, employs everyone’s favorite free-to-play model, annoy-you-into-paying: you get five lives, and then you have to wait – or pay – for more.  The point here is that Nintendo obviously hasn’t landed on a single pricing model to apply across the board, and this experimentation will continue on mobile, with sometimes tolerable and sometimes annoying results.  Nintendo pricing is already all over the place.  (Eight dollars will get you eight new tracks, three new racers, and a bunch of karts and kart parts in Mario Kart 8; or, eight dollars will get you four themes for your 3DS.)  On mobile, Nintendo’s pricing is going to be even more all over the place.  All over more of the place.  Aller overer the placer.

This is all speculation, of course, and not very informed speculation.  I’ve never worked in the games industry, nor have I spoken to anyone in it for this piece.  I’m just someone who has been playing videogames for almost thirty years and has spent a lot of time reading and thinking about the industry, and Nintendo in particular.  It’s certainly possible that none of this will come to pass.  (Except for the annoying pricing model thing; that will definitely happen.)  Nintendo is nothing if not unpredictable.

Mario-web-001

Will this ultimately prove to be a good move for Nintendo?  It’s impossible to say right now.  And it might even be impossible to say after the fact.  If Nintendo is in the midst of a protracted, inexorable decline – as some people have been saying for years – then this move into mobile might not make a difference one way or another, and will look like a bad decision in retrospect irrespective of its effect on the company.  On the other hand, if the mysterious NX turns out to be a wildly successful reinvention of console gaming, this mobile initiative might just look like a harmless diversion whose success or failure is tangential to Nintendo’s core business.  But one thing is certain: watching these next couple of years unfold is going to be interesting.

And as for that second announcement, the Nintendo NX, I’ll have plenty to say about that soon.  Stay tuned.

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