Nintendo Wants to Avoid “Notorious” Smart Device Business Models

Provided nothing goes awry, we’re looking at the end of this year when we start seeing Nintendo’s first dedicated smart device games and apps. Their partnership with DeNA, veterans in the smart device industry, has showed Nintendo’s thoughtfulness in pushing their IP into this area. Doubtless it will be a way to generate significant revenue to help transform Nintendo’s oft-fluctuating profit margins… and perhaps even encourage reluctant players to try their dedicated hardware.

There was a recent shareholder Q&A at the company’s Annual General Meeting, where Satoru Iwata was asked about Nintendo’s pricing models for mobile—and Iwata firmly stated that even with free-to-play games, Nintendo will be shying away from structures that could come across as shady or notorious practices to separate people from their cash. Nintendo’s goal is to earn a small amount of revenue per player from millions of players globally, rather than enticing a smaller pool of players to fork over fistfuls of cash through addictive gaming models.

Here is part of the statement, translated officially by Nintendo:

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.”

Nintendo plans to focus on a small amount of mobile products in the coming year, hoping to develop large audiences for those and evolving them into “services”—which is something that DeNA is very strong at and well known for.

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.”

This certainly gives a more structured insight into Nintendo’s plans for the months ahead. Whether this is something Nintendo fans and the gaming world wants to see or not is another thing entirely!

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Dave
Author: Dave View all posts by
Dave will tell you that he likes to play video games, this is in fact a lie. What he really likes to do is buy games, and leaving them sitting unopened on his shelf. He is a monster.

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