News Article

Intriguing Data Helps Explain Nintendo's Smart Device Strategy

Posted by Thomas Whitehead

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?

[via gamasutra.com]

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User Comments (46)

spidey1010

#1

spidey1010 said:

I really don't understand this cry for Nintendo to put their games on smart devices.
A) Putting new IPs and game concepts on smart devices would cannibalize Nintendo's hardware sales, just like Iwata says. This isn't an option.
B) Putting classic Nintendo games on smart devices makes sense to me, I guess. Again, putting too much on smart devices could cannibalize Nintendo's hardware, so the amount of content would be crucial.

To me, it seems that the only sensible move in the way of smart devices is to put a few classic, already popular titles on them. And if that's the strategy they take, it's not about to turn around Nintendo's fortunes overnight, or be a truly significant portion of their overall revenue for that matter. The fact that people would be upset that Nintendo's refusing to put their content on smart devices shows me that their are some truly stupid investors.

Goginho

#2

Goginho said:

"Brand awareness", that's exactly what I've been saying all along (I just couldn't fing th proper term :P). Amidst all these technological advancements and progressions we've gotten lately, people have forgotten about Nintendo. Average consumers forgot what Nintendo is truly all about, and therefore Nintendo have to find a perfectly-balanced way of rebuilding some of that lost recognition, even reputation mind you.
Simply bringing games to smartphones is a no-no. That does not spell profit, and mindless consumers, analysts, investors and what not would love that, wouldn't they. In the long run, that could prove to be a self-destructive move in Nintendo's case. So I say stick to what you do best, expand the horizons a bit and embrace smartphones, but never fall under mindless pressure and sell yourself cheaply by listening to what some say about bringing games over and what not. Persistence is the key, especially through rough times.

Interesting fact, the GameCube had a major technical/graphical leap from the N64 and was a powerhouse in that regard. However, it was a very unsuccessful console, arguably (ironically). The Wii had basically the same technicalities as the GC, but that worked to Nintendo's advantage, as the devs didn't nearly require as much time to produce content for it. The Wii U is a reflection of the GC, as it is a substantially massive leap from the Wii, thus we've gotten little to no games in the beginning, and are still lacking a gradual increment in that regard. It's predicted that the next home console will reflect the Wii, in that it won't have to be significant graphical leap like from Wii to Wii U, mainly due to graphics having reached a necessary visual peak, thus devs won't need nearly as much time to get accustomed to and produce new content as they did for the Wii U :)

The Wii U is a great machine that we can immensly enjoy this generation, and Nintendo should use smartphones to their advantage and truly plan out something useful in bringing back some of that lost recognition. The when next gen rolls around, Nintendo could most likely be at the top of the food chain again with an ideally-powered system, and everybody will come flocking in :) Who needs Ubisoft? :P

So no need to worry peeps.

MAB

#3

MAB said:

What Nintendo should have done is release Urban Champion on smartphones instead of trying to sell it to us 5 times ;)

Mahe

#4

Mahe said:

Nintendo just needs to make better consoles and games. No mandatory Gamepads or Wind Waker HDs as "flagpole releases", please.

schizor

#5

schizor said:

I think the only 2 things needed on smart devices are 1. The Eshop. Make it easier to purchase games. 2. Miiverse. Don't limit the good things about the Wii U to Wii U/3DS owners only. If they made Miiverse bigger so that more people could join "without owning a Nintendo console". That would progress both sales and "Brand awareness". :-) Some kind of Android lookalike go online and buy a game through your browser or smartdevice and the Wii U's standby function would automatically start downloading and installing, that would be a cool feature. ;)

Platypus101

#9

Platypus101 said:

@MAB :) I really thought you were gonna say 9$ (earthbound-style) since they are so hard to get on a smartphone (they should price it accordingly, not just anyone has access to Spelunker on the phone) :P sorry, just having fun with this...

Shworange

#10

Shworange said:

Flappy bird will come back out next month with bugs fixed and the branding :
Flappy Bird copyright Nintendo 2014. You heard it here first.

Goginho

#11

Goginho said:

@spidey1010 People that are upset that Nintendo is not putting games on smart devices are usually ashamed of the brand "Nintendo" for whatever reason, I can imagine.
A friend of mine, who is the CoD/PlayStation type, showed me Super Mario 64 (him playing Bob-omb Battlefield to be exact) on his smartphone while we were waiting for the movie to start at the cinema couple years ago. It had a virtual joystick/buttons and everything, and it was the first time I've ever seen a full fledge console game running on a completely other machine, let alone on a mere phone (at that time at least). I was amazed, but at the same time, kinda baffled and deceived. I also thought about ..why?
So I can only assume that people tend to enjoy Nintendo content, but for some contradictory/hypocritical reason hide or are afraid of legitimately owning something that says "Nintendo" on it, thus having to retort to emulators on their devices and what not. That's why, I imagine, people get upset at Nintendo in some regards, and wish they would start releasing content elsewhere, justifying the reasoning as, "well they need it..they have to if they want to survive...etc..". But meh, it's all just some kind of messed up psychology. Too cool for school, I guess :P
Maybe Nintendo themselves are to blame for that -for this kind of mindset in people, I dunno, but I've learned that there are walking contradictions on this planet :D

MAB

#13

MAB said:

@Platypus101 But wait there's more. If you buy all those Nintendo blockbusters we will throw in Balloon Fight... FREE ;)

Nintenjoe64

#14

Nintenjoe64 said:

If Nintendo spent the money needed to advertise their own games on iTunes, they'd pretty much be advertising for all the Mario clones.

@MAB has it right. It's time for Nintendo to stop taking advantage of the fact certain fans want to buy something every week even if they've owned it 6 times and if Iwata wants to release their all-time worst games as filler for the ridiculous gaps between major releases, release them on rival systems and damage their brands instead of Nintendo's. I think it's time to licence Wii Music to 3rd parties.

kyuubikid213

#15

kyuubikid213 said:

@Mahe I really don't see why you're so averse to the GamePad. It's a great controller and despite having a screen on it, it doesn't feel heavier than the 360 pad.

It's a good controller. Lay off it already. And there's a nice selection of games where you don't even need to use the GamePad like Assassin's Creed, Call of Duty, and (in some cases) Super Mario 3D World.

bezerker99

#16

bezerker99 said:

You know what creates brand awareness??? Marketing and advertising everywhere. Just sayin'......

GalacticMario28

#17

GalacticMario28 said:

It's nice to see an article that actually addresses the details of what it would be like for Nintendo to go the smart device route rather than just saying they should put their games on smart phones already.

Daisaku36

#18

Daisaku36 said:

"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."

So, you're telling me publishers don't always make money on smartphones? NO WAY!
Seriously, the people that keep saying this are the same ones who have been saying they want Nintendo to go third party for the past 14 or so years. They won't shut up unless it happens.

Platypus101

#20

Platypus101 said:

@MAB well heck! When is this happening?! I NEED this!
I really wish there was a better way to convey sarcasm via text... ;)

IceRod

#21

IceRod said:

@kyuubikid213 Don't waste your time on Mahe - he will inevitably leave something negative about the GamePad on around 90 % of articles.

I am relatively new to Nintendo Life and have enjoyed it so far, but it has two major issues: 1.) a severe Eurocentric bent and 2.) trolls everywhere in the comments.

To the first complaint I get that Nintendo Life is trying to serve both American and European audiences, but how does it hope to do that without almost any American writers? This deficiency really reared its ugly head during the roundtable devoted to the NES' anniversary, as almost no one in the roundtable had owned that console since personal computing and Sega were much more prevalent in the '80s than Nintendo apparently. Since I grew up in America though I did own a NES and have so many fond memories with it and its games. That roundtable should honestly be looked upon as an embarrassment by the site as well as a call to action by the site to hire writers from both sides of the pond.

To the second point there are so many trolls here that it makes it a horrid experience to read the comments usually. What is worse, these trolls have become so predictable at this point, always whining about the same things. For example:

Mahe - The GamePad sucks! Me: We get it already! I love the GamePad, but even if I didn't, Nintendo made its choice, and they aren't going to drop it any time soon. Pick up a Pro controller already and give it a rest.
MAB (formerly MadAussieBloke) - Sega is dominant to Nintendo and everyone! The 3DS isn't that great! Me: Sega is a pale shadow of its former self. It has put all of its resources into Sonic, and it can't even get that right most of the time. The 3DS is arguably one of the best consoles out right now, and millions of people disagree with you.
Unrandomsam - Almost everything is terrible! If a game is not 60 fps it must be awful! Almost every game is too easy, except for some Donkey Kong and old school Sonic games. Mario games suck! Bravely Default is overrated! Me: You are the most negative poster on here by far. You post on almost every article, and it is almost always negative. Nintendo is going through a rough patch, and its fans don't need to be dragged even lower by someone always spouting doom and gloom. 60 fps is nice to have for sure, but there are plenty of games that look great without it. I never once while playing Super Mario 3D Land said "ooh, I wish this would play faster." You are very much in the minority on needing this. Yes, a lot of Mario games are easy to beat, but if you want to collect every coin and star then things get much harder. I do wish games were harder like in the NES era, but still, I am happy with the creativity and new gameplay innovations in these newer games. Bravely Default is awesome to me, and I am sorry you are disappointed in it. It is much better than the console Final Fantasys have been in years, and I am enjoying it very much. Even if you don't like it, you don't need to badmouth it and pass off your personal opinion as if it is everyone's. Let others decide for themselves if they will like it.

GamerOZO

#24

GamerOZO said:

@NintendoLee NES Remix Mini! You get to play some of the stages of Donkey Kong and then after you've completed, it says:
'Download the full game on Wii U! The new game console from Nintendo! Only £249.99 with two games!'

IceRod

#26

IceRod said:

@Doma I am not sure I have noticed your posts as much as these other people, but I will keep an eye out in the future. ;)

IceRod

#28

IceRod said:

@antonvaltaz Yes, that is the one. I did not realize that so many of the participants were from the U.S. You would not know it from their gaming past - at least half of them admitted early on they had never owned the system. Regardless it was an ill-conceived article: it is hard to celebrate the nostalgia of something when you have never experienced it originally....

unrandomsam

#29

unrandomsam said:

@bezerker99 Brand awareness is created by having the best product. That is the type of awareness worth having. Better the product the less marketing and advertising you need. The more marketing the worse the product it is always like that.

HyperSonicEXE

#30

HyperSonicEXE said:

True, most apps do not make any money, or barely any.
The success of games such as Angry Birds, Temple Run, and Candy Crush, who maximized their brand recognition, saw great revenue.

Granted, they will probably only be popular for a short time, compared to the lives of Nintendo's properties.

In a one-generation cycle, Nintendo could generate much revenue for itself with its already-high brand recognition, and then simply bow out of the market and cite technological changes, rather than their IP's being damaged by cheap, fast games by sharing the limelight with many "burning out" brands.

unrandomsam

#31

unrandomsam said:

@HyperSonicEXE The existing ones always seem to make quite a bit. (Square Enix and Sega ports for example). Not noticed one not hit the top 20 or 40 so. (Which out of 500,000 apps isn't that bad). Must be worth it otherwise they wouldn't be keeping putting more on there. (Or they would be putting them on the eshop or elsewhere).

unrandomsam

#32

unrandomsam said:

@IceRod What is wrong with a site based outside the US not being US centric. (There is plenty of US centric sites). It doesn't have enough negative comments for my liking though.

bezerker99

#33

bezerker99 said:

@unrandomsam what makes you a marketing expert? I've been in radio sales advertising for 10 plus years and have seen the results of what advertising can do. Trust me, I know what it takes to create brand awareness.

IceRod

#34

IceRod said:

@unrandomsam There is nothing wrong with a European site being Eurocentric, unless that site intentionally goes out of its way to represent American interests, like this one does when listing U.S. releases in the eShops every Thursday. I definitely believe you when you say this site is not negative enough for you, but do you mean by that the authors of the articles? Like they are too easy on Nintendo or something?

unrandomsam

#35

unrandomsam said:

@bezerker99 All I need to know about it is all marketing is basically lies and if the product is good you don't need it all you have to be is the best. The money is better spent on the product itself not trying to manipulate people into buying it.

bloodycelt

#36

bloodycelt said:

@unrandomsam, @IceRod: Nothing wrong with a eurocentric site, however at least other ones I visit such as El Reg... have a .co.uk as a dead giveaway.

People's perception of a product and company are a necessary requirement for success... nobody will buy your console or games even if they are the best on the planet... if they don't know that. On the otherhand... the product had better match the expectations marketing has given the customer... or it backfires.

A large reason why some great games like Valkyria Chronicles will no longer bring ports over is... Sega seems to think that gamers will automatically know a game is good. But... IF YOU DONT PUT OUT A FEW ADS... EVERYONE WILL JUST THINK ITS THE USUAL TRASH YOU PUT OUT!

The only way you can sell a game with no marketing is if your brand is THAT recognizable with the target audience.

Nintendo has Disney's problem... everyone knows they put out good product. But they're also associated with children... and so once a kid needs to prove they are an adult... they don't want to be seen with a nintendo product. If they wanted to go after hardcore gamers... they may have been better off making a new brand like Disney did with Touchstone.

(Maybe call it Cod box, trick both call of duty fans... and fishermen).

unrandomsam

#37

unrandomsam said:

@bloodycelt Sega has the same mentality as me then. They haven't advertised - Operation G.H.O.S.T / Border Break / K.O Drive at all really yet I know I want them presuming the port is decent.

SNK never advertised the Neo Geo AES (Other than a tiny classified in the odd magazine - 4 line or so).

I know I am less likely to buy something if I see loads of stupid ad's for it.

(I import this Sun Cream called No-Ads suncream because I agree with the idea even though it probably ends up costing more).

bloodycelt

#38

bloodycelt said:

@unrandomsam
Yup and that is why Sega is doing horribly.

SNK on the other hand has brand recognition from the Arcades market, while they did not advertise, I assure you that they did marketing with the owners of the arcades, as that was their core business during the Neo-Geo days.

Now if SEGA had not destroyed their cred with rushed/craptastic sonic games, alien colonial marines, and other garbage. AND they sized down to something closer to SNK's size... they could get away with making a handful of really good games each generation, with no marketing. (Yes NIS, Aksys, Atlus, Xseed all get away with little advertisment due to catering to a niche, even so... they all set up booths at PAX, they all put a few ads in Game Magazines. )

However, that would suggest Nintendo needs to trim down to around 30 employees, and then make a single game every 3-4 years, and keep their system alive for another 20+.

bezerker99

#40

bezerker99 said:

@unrandomsam So when you see a commercial for Pepsi or Coke or McDonald's or even that cute little lizard from Geico - all you see is a bunch of corporate lies ???? I don't. I see great products that have created great brand awareness through excellent marketing campaigns. Do you think any of these said companies need to advertise? I'm sure everyone has heard of them. Wonder why they always spend money constantly marketing? Maybe they know something you don't.

IceRod

#41

IceRod said:

@Wyld-Woo I like to use a mix of both honestly, but in real life I might tend more toward brave over default, even at the risk of scary alley cats jumping on my face. ;)

IceRod

#42

IceRod said:

@berserker99 @unrandomsam I agree with unrandomsam to a point. Look at Windows: I can remember countless Windows Vista ads from years ago, and one can now easily see the inundation of Windows 8 ads recently, both problematic operating systems with a bad reputation, but I can't recall many XP or Windows 7 ads, because word of mouth sold those products. However, like berserker99 says, a company like McDonald's that has been on top for a while will stay on top if it continues to put money into advertising. If you don't have something that can sell itself, then you NEED to advertise. The Wii falls into the "so innovative it sells itself" category, while the Wii U does not. The Wii U needed advertising badly, and even if Nintendo ramped things up considerably, it is possible it will be too late to really light people's interest. The PS4 though is not all that innovative, but good word of mouth and massive advertising helped it sell a ridiculous amount considering how few games it actually has.

unrandomsam

#43

unrandomsam said:

@bezerker99 McDonalds I cannot even stand the smell in the place. I drink Fair Trade black tea / Mount Fuji Green Tea / Red Wine / Belgian Trappist Beer none of it is really advertised at all. None of the restaurants I go to try to manipulate me into going and they are always booked up. Just because it is possible to manipulate some / most ? people into doing stuff doesn't mean it is an ethical way to behave.

bezerker99

#44

bezerker99 said:

@unrandomsam So, if you had a business, wouldn't you want to have a sign out front that tells your name and who you are and Hey, We Are Located HERE!!! ???

I sure would! Guess what? That's advertising! Nothing manipulative about it.

WYLD-WOO

#45

WYLD-WOO said:

@IceRod
Haha, I did mean in real life!!! A very brave choice too mess with them cats, you must have a very powerful Ice Rod... Or a very strached up face...

unrandomsam

#46

unrandomsam said:

@bezerker99 It is ok if it is done tastefully but if it is done in a deliberately detracting way as is common that that shouldn't happen. I would prefer it to just say bakery or whatever like they do in Europe (Not x's bakery). My favourite beer doesn't even have a label and is significant hassle to acquire (Seen as you have to go to where it is made. http://www.sintsixtus.be/eng/brouwerij.htm). That site is all the advertising they have.

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