Nintendo Chills Mobile Ambitions After Animal Crossing Success
Nintendo Co. is retreating from the $77 billion mobile gaming arena after disappointing results deflated once-lofty ambitions, ending a multiyear effort just as the market goes through an unprecedented Covid-era boom.
www.bloomberg.com
Very interesting read. Here's a few quotes to summarize it.
Nintendo Co. is retreating from the $77 billion mobile gaming arena after disappointing results deflated once-lofty ambitions, ending a multiyear effort just as the market goes through an unprecedented Covid-era boom.
President Shuntaro Furukawa proclaimed two years ago that smartphone games would be a $1 billion business with growth potential, building on his predecessor's promise that Nintendo would release two to three mobile titles each year. That spurred hopes among investors that the gaming powerhouse could carve out a substantial slice of the market. In May, however, the president adopted a markedly different tune, saying "We are not necessarily looking to continue releasing many new applications for the mobile market."
Nintendo's shares slid 4% the day after that remark. Close observers might have sensed Nintendo was growing disillusioned with the mobile realm even earlier. Its smartphone games project was born out of necessity to shore up the bottom line amid the Wii U's failure. Now, riding a surge in Switch popularity and investor confidence, the Kyoto-based company appears to have reassessed the mobile business and narrowed its focus to its own console ecosystem.
"In a sense, Nintendo's enormous success on console reduced the need and the pressure to put resources into mobile."
Fearing that it would harm the brand equity of its franchises, Nintendo asked its mobile development partners not to force players to spend a lot in games, according to people at those companies, who asked not to be identified as the matter is private. A Nintendo spokesperson declined to comment.
Nintendo has tested various revenue models for its smartphone games, including one-time purchases for Super Mario Run and subscriptions for Mario Kart Tour. Both apps have fallen short of market expectations in terms of revenue, according to Kazunori Ito of Morningstar Research.
Nintendo's dimmed enthusiasm for smartphone games is driven not only by disappointing revenues and unsatisfying monetization options but also by the limitations of the platform. The company believes its franchises shine brightest when coupled with designed-by-Nintendo controllers and it's never been fully comfortable with the touchscreen-only interface of a phone.
"New smartphone games will come, but it's very likely these will be just alibi releases to appease shareholders," said Toto.