Nintendo on its monetization plans for mobile games
Posted on 3 years ago by Brian(@NE_Brian) in Mobile | 12 Comments | 0 Likes
Smart device game applications are drawing attention in the game industry because so many people around the world own smart devices (smartphones and tablets) and because, even though the total number is small, there have been several successful applications that have been hugely profitable after becoming very popular.
On the other hand, the competition among smart device applications has been so fierce that Nintendo cannot succeed just by releasing any software title with its popular characters or the themes in its popular game franchises. Any company that releases a new smart device application must face the challenge of making it stand out among the crowd.
About the shareholder’s question on how to charge for smart device applications, in general, there is one system to ask consumers to make a one-time payment for the application and another system to ask consumers to pay for additional downloadable content. As for the latter, people often call it the “free-to-play” system. However, since Nintendo is a company that wants the value of the games to be appreciated by consumers and wants to keep the games’ value at as high a level as possible, we do not want to use the free-to-play terminology that implies that you can play games free-of-charge. Instead, we use the term “free-to-start,” as this term more aptly describes that at the beginning you can start to play for free. And, the fact of the matter is, game software with a one-time payment system has not been doing a great job on smart devices. Because there are so many competitors making smart device applications, there is fierce competition and the pressure to lower prices. As a result of this competition to discount products, smart device game applications are being sold at far lower prices than the ones for dedicated video game systems. I think some of you would have seen such campaigns as “90 percent discount for smart device applications” in the shops on your smart devices. Because it is a digital product, it does not require transportation fees nor other constant expenses necessary for packaged software, and some may think it is good if it sells (even at a low price point), but once the value of a software title decreases, it can never be increased again. Since Nintendo wants to cherish the value of software, there will be a limit to how low of a price we might want to attach to our game applications for smart devices. The price of our game applications on smart devices will be compared with the prices of other smart device game applications. We believe we should not limit our payment system only to one-time payments, even though this is not something that we can announce as a general principle because different payment systems suit different kinds of software.
If I can add a few more explanations about the free-to-start system, even though you can start playing with the application for free, it later requires you to pay if you want to play beyond the initial area or to pay for items if you want to play the game in a more advantageous position. In extreme examples, some games are designed so that the players will be so excited psychologically as a result of, for example, being able to obtain a very rare item that they do not think twice about pushing the button, which immediately completes the monetary transaction and the player is charged with the bill. We know that some of such games have become a social issue. For your further information, in Japan, among those who are playing free-to-start games on their smart devices, the number of people who are actually spending money is very small. Yet, because this small group of people is paying a large sum of money, with which they could have even purchased several dedicated video game systems, this is one reason this free-to-start model can be very profitable. On the other hand, when we look around the world, the situation is different, and such a charging system has not necessarily been working well. When we look at successful smart device game applications abroad, a number of companies have been asking each of a greater number of consumers to pay less money. Companies may be able to make a very profitable business in Japan by asking a small group of consumers to pay a large amount of money (for their smart device applications), but we do not think that the same approach would be embraced by people around the world. Accordingly, even though we recognize that it is not an easy path to take, as long as Nintendo makes smart device applications, we must make them so that they appeal not just to some limited age group but to a wide age demographic just as our games thus far have been doing, and they should appeal to anyone regardless of their gaming experiences and gender, and most importantly, regardless of different cultures, nationalities and languages. We would like to make several software titles that are considered worldwide hits as soon as possible.
Regarding your question about the target audience, we are trying to make applications that appeal to a wide variety of people so that the games can receive payments widely but shallowly from each consumer. In other words, even if a consumer makes a relatively small payment, because of the large consumer base, the game can generate big revenue. This is the business model we would like to realize. I think the shareholder has just asked these questions partially because he is concerned that Nintendo might shift to the notorious business model that asks a small number of people to pay excessive amounts of money and that Nintendo’s brand image might be hurt. Please understand that Nintendo will make its proposals by taking into consideration what Nintendo really should do with this new challenge.
On a different note, we are not planning to release many game applications from this year (when our first smart device application will be released) to the next. The reason for this is that software for dedicated game systems is considered a “product” that tends to produce the strongest and most fresh impact on the world at the time of its release into the market but its impact can be lost gradually as time goes by. With that analogy, smart device applications have a strong aspect of “service.” Even though the initial number of players tends to be small, those who have played invite others to play too, and as the total number of the players gradually increases, so does the revenue. This, however, means that the release of the game does not mark the end of its development. If the game cannot offer services that evolve even on a daily basis, it cannot entertain consumers over the long term. Accordingly, we would like to spend sufficient time on the service aspect of each title, and we would like to grow each one of our small number of game applications with the objectives that I just mentioned.
Reggie on Nintendo’s E3 showing, hardware, Wii U sales, Skylanders, amiibo, and mobile
Posted on 3 years ago by Brian(@NE_Brian) in 3DS, General Nintendo, Mobile, News, Switch, Wii U | 11 Comments | 0 Likes
A new interview with Reggie Fils-Aime was added to Forbes’ website today. Reggie discussed several topics, including Nintendo’s E3 showing, hardware, Wii U sales, Skylanders, amiibo, and mobile.
Those who are interested in reading up on what Reggie had to say can head past the break for the Q&A breakdown. You’ll find Forbes’ original piece with a few additional comments here as well.
Pokemon Shuffle making the jump to mobile devices
The Pokemon Company announced today that Pokemon Shuffle is coming to mobile devices. Previously, the free-to-play title was launched on the 3DS as an eShop download, which has seen over 4.5 million downloads.
The mobile version of Pokemon Shuffle will be arriving later this year. It seems to be the same exact version as the 3DS edition, but with optimizations for iPhone and Android.
Reggie: Nintendo’s mobile games can offer “a positive experience”, drive people back to core systems
Posted on 3 years ago by Brian(@NE_Brian) in General Nintendo, Mobile, News | 7 Comments | 0 Likes
Back in 2010, Nintendo of America president Reggie Fils-Aime made some comments about mobile gaming in which he told Polygon that, on these devices, people don’t seem to stick to a single title.
Here’s what he said at the time:
“Clearly, it doesn’t look like their platform is a viable profit platform for game development because so many of the games are free versus paid downloads. If our games represent a range between snacks of entertainment and full meals depending on the type of game, (Apple’s) aren’t even a mouthful, in terms of the gaming experience you get.”
Polygon spoke with Reggie at E3 2015 last week and said that Nintendo hasn’t changed its opinion on the nature of gaming on smart devices. He also believes that mobile gaming can offer “a positive experience” while driving people back to the Big N’s core systems.
“We’re going to do it in a partnership with DeNA. DeNA has technical knowledge that we’re leveraging. They have a rapid iteration process to drive improvement in the content that we’re going to leverage, but Nintendo is going to create the content. We’ve announced that Mr. Kono, from Mario Kart fame, is going to be our lead developer on this. And so from that standpoint things haven’t changed. It’s our IP, we’re going to leverage it and we do believe done properly it’s going to drive a positive experience with the IP and drive people back to our core video system business whether it’s handheld or console.”
Iwata again says that the Nintendo Digital Event will cover titles through early 2016, no NX, QOL, or smart device games
Posted on 3 years ago by Brian(@NE_Brian) in 3DS, General Nintendo, Mobile, News, Switch, Wii U | 13 Comments | 0 Likes
Update: Bumped to the top. Fully translated tweets:
[Iwata] Originally, the Media Briefings (press conferences) were attended not only by reporters but also by security analysts, distributors and game industry staff—but now that Internet broadcasting is commonplace, many videogame fans can now watch them, too.
[Iwata] On the other hand, the information sought by reporters present at the press conferences can vary greatly depending on their viewpoints. As a result, every year saw the difficulty of pleasing everyone increase. That’s when we settled for a new format to convey information. With the Nintendo Direct format, our E3 has greatly evolved in the last 2-3 years.
[Iwata] This is the back story as to how the Media Briefing changed into the Nintendo Digital Event. During the Digital Event broadcast, we also have distributors gather and open a conference specially dedicated to them.
[Iwata] During our financial results briefing on May 8th, we talked about how we won’t announce anything about the new NX hardware until next year, and how we don’t have plans to showcase our QoL (Quality of Life) business or smart device announcements at E3, which we at Nintendo consider a trade fair for console games. However, perhaps these statements may not reached out as far as we had hoped.
[Iwata] For this year’s Nintendo Digital Event, we will use the occasion to showcase Wii U and 3DS software that is expected to release this year and early next year. It will be voiced in English with Japanese subtitles. This year, I’d like to join you all in Japan to watch the broadcast together. (Note: The second half of that tweet obviously pertains only to Japan.)
Nintendo president Satoru Iwata has reconfirmed what fans should and shouldn’t expect from the Digital Event today. You know, just in case you needed a reminder.
Once again, Nintendo will be focusing on games launching through early 2016. This applies to both Wii U and 3DS.
As mentioned previously, there will be no talk about Nintendo’s next system known as the “NX”. There also won’t be any news about the Big N’s Quality of Life initiative or smart device games.
That’s it! Iwata will be watching along from Japan as the Nintendo Digital Event airs. He’ll probably be tweeting throughout the day as well.
Iwata on challenges with smart device games, benefits, Nintendo’s IP strategy
Posted on 3 years ago by Brian(@NE_Brian) in General Nintendo, Mobile, News | 3 Comments | 0 Likes
Satoru Iwata closed out the Q&A portion of Nintendo’s latest financial results briefing by further discussing the company’s smart device software strategy. Iwata was asked about how often titles will be released, and how long service will be obtained.
Here’s the full question from one of the investors:
In my mind, I already have a clear-cut image as to what will happen in a year or two from today, but I hope to be able to correctly understand your mid-term smart device software strategy. Although you emphasize that the aspect of “service” is stronger with smart device games (as they, unlike packaged software for dedicated game systems, require constant content updates after release), we often see that some of them have shown temporarily good results immediately after their releases by climbing to the top of the download chart. On the other hand, as I hear what Mr. Iwata has said so far, I feel as if the company is willing to increase the relevant revenue gradually over a long time. Does your strategy involve constantly releasing three or four titles every year or will you limit the total number of titles to be released to around at least five at the start and maintain the service operations for such limited number of software for five or even 10 years in order to steadily increase the revenue?
Iwata’s complete response – covering Nintendo’s smart device plans and related benefits, plus IP strategy – is posted below.
Iwata on Nintendo’s monetization approach to smart device games, still working on Mii app
Posted on 3 years ago by Brian(@NE_Brian) in Mobile, News | 0 comments | 0 Likes
One topic stemming from the Q&A portion of Nintendo’s latest financial results briefing concerns how the company will monetize its smart phone games. President Satoru Iwata offered some insight last week, and while he didn’t provide any specifics, he did discuss what the strategy is moving forward.
Iwata indicated that Nintendo is looking at the key term “wide and small” as opposed to “narrow and large”. He explained that the strategy is how to obtain “a small amount of money from a wide range of consumers.”
In his response, Iwata also mentioned that Nintendo is still working on its smart device app using Mii characters that has long been teased.
Read up on Iwata’s full comments below.
Iwata on generating “Nintendo-like profits”, smart device business, preparing initiatives/changes for dedicated games business
Returning to “Nintendo-like profits” is something that often tends to be discussed at the Big N’s financial results briefings. The general thought is that by reaching that mark, Nintendo would be bringing in an operating income of over 100 billion yen.
One investor asked about reaching “Nintendo-like profits” during the Q&A portion of the company’s financial results meeting last week after it was announced that Nintendo’s operating income target for this fiscal year is 50 billion yen. Check out what president Satoru Iwata had to say below. In addition to discussing “Nintendo-like profits”, Iwata also commented on what’s in store for the smart device business, and teased preparing initiatives/changes for the dedicated games business “to make changes to some of the elements that are currently not working so well.”
Firstly, we base our thinking regarding profits for the next fiscal year on generating those that can be seen as typical of Nintendo, just as you mentioned. As investors should determine “Nintendo-like profits,” I believe it is inappropriate for me to explain in public what level of profit this should be. However, many assess that generating an annual operating income of 100 billion yen can be considered a “Nintendo-like profit structure.” As such assessments have been made, we will structure our plans for the next fiscal year to reach such a level. For the fiscal year that just ended in March 2015, we positioned it to be the year to balance revenue and expenses, and we managed to accomplish this. We set our financial forecasts taking into consideration the steps we should take this fiscal year if we are to aim for “Nintendo-like profits” in the next fiscal year.
Nintendo not talking about smartphone games at E3 since the event is for “dedicated gaming systems”
Posted on 3 years ago by Brian(@NE_Brian) in General Nintendo, Mobile, News | 17 Comments | 0 Likes
Nintendo will be releasing its first mobile game this year. We don’t know what exactly is planned, but don’t expect to hear about anything at E3 2015 next month.
Nintendo president Satoru Iwata, speaking at the company’s latest financial briefing, confirmed that there are no plans to discuss smartphone games. That’s because they realize the event is for “dedicated gaming systems”.
Iwata on maximizing Nintendo’s IP, mobile plans
Posted on 3 years ago by Brian(@NE_Brian) in Mobile, News | 2 Comments | 0 Likes
And now, I would like to discuss our future business developments.
Right now, the game business is undergoing significant change. The spread of the Internet and social media has dramatically changed the lifestyles of people all over the world, and Nintendo is adjusting its strategic endeavors in line with the new market dynamics.
For one thing, in order to maximize the value of Nintendo IP, we are working to leverage opportunities that go beyond a traditional focus on dedicated video game systems. As you know, amiibo is one such effort. Also, we made the announcement that we will take advantage of smart devices. As smart devices are increasing in significance as the dominant window through which consumers connect with one another and with society, it is natural for us to leverage smart devices to communicate directly with our consumers.
In addition, to facilitate the ability for consumers to be closely and continuously connected with Nintendo IP, Nintendo will also deploy Nintendo IP on games for smart devices.
Regarding this subject, we announced our business alliance with DeNA on March 17. Each of our companies offers unique strengths, and we are confident that when combined, the synergies will enable us to compete strongly in the smart device space.
We will start the service for the first game application by the end of this calendar year. Internally at Nintendo, we have executed several organizational and personnel changes in order to properly operate the smart device business, and we will make further changes before the first release.
As we confirmed on March 17, all of our IP can be considered for a smart device game. On the other hand, since the game business on smart devices is already severely competitive, even with highly popular IP, the odds of success are quite low if consumers cannot appreciate the quality of a game. Also, if we were simply to port software that already has a track record on a dedicated game system, it would not match the play styles of smart devices, and the appropriate business models are different between the two, so we would not anticipate a great result. If we did not aim to achieve a significant result, it would be meaningless for us to do it at all. Accordingly, we are going to carefully select appropriate IP and titles for our smart device deployment.
Regarding the number of the titles, you may want to know that we will release approximately five titles by the end of the next fiscal year, which is the end of March 2017. You may think it is a small number, but when we aim to make each title a hit, and because we want to thoroughly operate every one of them for a significant amount of time after their releases, this is not a small number at all and should demonstrate our serious commitment to the smart device business.
We will strive to expand this business into global markets at a steady pace so that eventually we will entertain hundreds of millions of people all around the world. We are aiming to make this one of the pillars of Nintendo’s revenue structure.