Who knew that plastic figurines could be such a winner for Nintendo. Source: Nintendo
It’s shaping up to be a bountiful Christmas for the big N. Not Netflix, the ‘N’ on every Australians lips. But rather the other N, Nintendo. After almost a year of being slammed by shareholders, critics and analysts, the global gaming giant is celebrating a couple of wins.
Its latest gaming release, Super Smash Bros for Wii U, appears to be having the intended effect of ramping up console sales before Christmas. Well, at least in its core market, Japan. Even its new line of NFC-enabled figurines – dubbed Amiibos – appear to be selling very well.
So well, in fact, that Nintendo has used this success to shrug off the lingering debate on whether or not it should enter the smartphone gaming market. Nintendo needs to seriously consider this issue; its overconfidence could be its undoing.
So far, the gaming giant is yet to release or even speculate on launching some of its most popular franchises on devices. No chance of a Mario game for the iPhone, or a Donkey Kong title for the Samsung Galaxy Tab. Nintendo’s current aim is to make its own assortment of devices as attractive for consumers as possible. Despite the popularity of its games and its characters, hardware sales (consoles, handhelds and accessories) make up the majority of its revenue.
By confining its characters to its consoles, Nintendo is using its IP (characters and gaming franchises) as a hook for gamer to buy into its ecosystem. Given that Nintendo actually earns more revenue from handheld devices than they do from any other category, it’s arguable that Nintendo suspects that porting this IP into onto other smartphones and devices may weaken the effectiveness of this lure, and somewhat cannibalise its sales.
But this isn’t how content works. Walled gardens aren’t as effective as they used to be. When it comes to content, controlled release of IP has proven to be a far more effective strategy.
Consider Netflix for instance. In a bid to enhance its service and capture more subscribers, Netflix begun producing its own original shows. You may know a few of them: House of Cards and Orange Is The New Black.
Netflix could hoard these shows; keep them solely on their platform. And in some markets, they do. But in order to advertise their service and push their reach abroad, Netflix licensed its shows to various broadcasters around the world. For instance, in Australia Foxtel screened both House of Cards sand Orange Is The New Black, as well as other popular Netflix original TV shows.
This didn’t deter users away from Netflix, but instead served as advertising for the service and the content it offers. It’s quite possibly one the main drivers behind Netflix hype in Australia, and why it will likely have a gangbuster launch when it hits our shores next March.
Back to Nintendo, and the gaming giant could benefit from a similar approach. Why not design and release an older Mario game on the iPhone? If the aim is to hook users with the IP, they why not cast it out into the biggest pond, mobile gaming?
If managed properly, it wouldn’t cannibalise sales. Two of the world’s best-selling games franchises, Call Of Duty and Grand Theft Auto both have app equivalents and if anything they serve as a gateway to the full game.
Nintendo’s existing brand would help it cut through the clutter of rubbish games on the App and Play stores. It could then charge a small upfront cost to cover the cost of development, and since the app is only really an advertisement for its wider offering, the company doesn’t need to bother itself with other frustrating, albeit highly profitable, app monetisation strategies like in-game payments.
An official assortment of apps would also be an adequate response to the piracy of Nintendo games on mobile platforms. Currently, mobile users harness ‘emulators’ to play Nintendo games on their devices, simply because there is no legal alternative. Recent reports suggests that Nintendo is considering – albeit though a patent filing – its own emulator. But it’s still shooting down any assertions that it’s going mobile.
While there are immediate benefits to a fleshed out mobile strategy from Nintendo, there are also long term implications to consider. As we’ve mentioned in the past, gaming is merging with cloud computing. If technology continues at a pace, then this current round of consoles may be the last of their kind.
If Nintendo is to survive and thrive past the era of consoles it needs to start exploring more platform and revenue opportunities for its content. Simply put: software revenue needs to grow to eventually overtake hardware revenue. At the moment, software sales appear to be trending with hardware sales.
It sounds like a tough ask, but if Nintendo can turn plastic figurines of its characters into a smash success, then it can do anything. It only needs an open mind and perhaps an open dialogue with its fans on technological change.
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