Intriguing Data Helps Explain Nintendo's Smart Device Strategy

Games aren't necessarily the route to glory

Following Nintendo's recent Q3 investor briefing, the reaction to its much-anticipated smart device strategy was decidedly mixed, with Satoru Iwata's announcements on a dedicated development team with the objective of producing free "services" in an app not quite representing the move into the iOS and Android markets that some had demanded. Combined with the company's various other plans, incorporating Wii U, 3DS and the mysterious 'Quality of Life' platform, the announcements didn't prompt a surge in share prices, but rather a small dip that's only recently recovered.

Yet the arguments for Nintendo to bring its catalogue of games to smart devices aren't infallible, and it was unsurprising that Nintendo is resisting any moves that will damage its long-term prospects as a hardware manufacturer. Consultant Bryan Cashman, with 14 years of experience in the videogame industry, has collated some interesting data on Gamasutra that highlights why Nintendo's current strategy makes sense in the current marketplace.

It's highlighted that the most popular genres on smart devices may not suit Nintendo titles, as they can fall under the "Brain & Puzzle" category, though the Brain Training series could also be pushed forward by Nintendo. More tellingly, however, is the fact that many don't pay up-front for mobile games, with free-to-play the most vital market — though viral games like Flappy Bird are relatively rare exceptions in succeeding primarily through adverts; the table below shows that only around 7% of mobile revenue comes from games not available for free.

Research firm SuperData is also cited, explaining that Nintendo can't effectively make its content free-to-play without a fair amount of work.

Nintendo’s existing titles are not geared toward a market that is moving toward free-to-play. The truth is that Nintendo’s business can’t simply redirect and adopt a free-to-play model.

Beyond that, generating profits from smartphone apps and games is challenging, with the sheer number of options on the platforms and the aforementioned challenge of selling apps cutting down options. Ken Dulaney, vice president of Gartner, is quoted as explaining that brand awareness is a primary objective for big companies and their apps, which is the exact goal of Nintendo's future application and service.

Our analysis shows that most mobile applications are not generating profits and that many mobile apps are not designed to generate revenue, but rather are used to build brand recognition and product awareness or are just for fun.

Application designers who do not recognize this may find profits elusive.

That brand marketing is important on smart devices as they're the go-to sources of information for so many consumers, while research suggests that more parents are gradually engaging with this iOS and Android content with their children on a daily basis; it's all part of a battle for "mind share".

We recommend checking out the original article for additional sources, but what do you think? Do Nintendo's smart device plans represent the right path forward in that market?


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