People have been waiting for years that Nintendo releases a mobile game. Pokemon go was not a Nintendo creation. Almost all credit goes to Niantic. Finally this year, Nintendo announces “Super Mario Run” at the Apple keynote. The first Nintendo mobile game. The app has been heavily promoted on the Appstore, but it wasn’t clear what business model Nintendo was going to use.

It’s not surprising to see that Nintendo has finally decided to enter the mobile game industry. The smartphone and tablet games represent more than 30% of the total global game market in 2016! Mobile games represent a huge revenue. This is an opportunity for Nintendo to regain a little traction. They are currently way behind Sony and Microsoft concerning sales in the console market.

 

 

Super Mario Run is released.

On the 15th of December, Super Mario Run is released. It gets more than 40 m downloads within the first four days. Surprise the app is free. Well, not really. You’ve got 3 levels then you have to pay 10$ to get the full game. 10$ is overpriced for a mobile game when you know that most games in the Appstore use the free-to-play model. This model allows you to play the game for free, the entire game for free. The revenue comes from the in-app purchase, whenever you want to speed up something or add bonuses you pay for it. That’s the model most players are used to.

Nintendo adopted the wrong business model

What Nintendo has done is use its brand to justify a premium price. The best console games can be sold at a higher price than the average, but for mobile games, it’s entirely different. 10$ is way above the average, it’s too aggressive for the players. Using the pay-to-play app monetization has its benefits but in this case Nintendo kill it with its pricing. 5$ would have been fair. The frustration of the players led to an average review of 2.5 stars on the Appstore (most people gave it 1 star) which led the Nintendo share to fall more than 16% according to the Wall Street Journal!

Of course, people were going to rate it 1 star! You can’t even finish the first boss. How dare you ask for 10$? There’s plenty of free “runner” games on the Appstore. The worst is that you pay 10$ for a game and you can’t even play when you’re on the subway or whenever you don’t have an internet connection!

At the same time, Nintendo is losing a lot of potential customers by using this business model. Some people never pay for games. They download free-to-play games and never spend a dime on in-app purchase. Those same people might one day spend money. Why suddenly would they spend money when they’ve never spent any? Well, if they like the game, they’ll keep playing, and they’ll become loyal to the game. One day they’ll want to speed up construction or buy special characters, and it would be worth it for them since they spent a lot of time playing it for free. By asking people to pay 10$ upfront, Nintendo is missing a part of the market.

The example of Supercell.

Supercell
Supercell co-founders Ilkka Paananen, left, and Mikko Kodisoja at its offices in 2012. AGENCE FRANCE-PRESSE/GETTY IMAGES

When you compare Nintendo to a successful company like Supercell who created Clash of clan, Hay Day, Boom Beach, and Clash Royale. All of their game are or were in the top 100 games for IOS/Android. They are all free-to-play and their revenue comes from the in-app purchase. Although the majority don’t spend money on these games, the few people that pay for upgrades spend up to thousands of dollars as these redditors can attest! It becomes addictive! This strategy allowed the company to make millions. According to GameIndustry Supercell is making over $100 million a month with both its Clash games. Using this model Supercell has a recurring revenue whereas Nintendo only get paid once for the game, the only revenue they get comes from new users. A player can’t buy the game twice but he can buy as many upgrades as he wants.

Nintendo must learn from this experience.

Pricing their game at a premium price (while the game is in the “Free” ranking), giving too few levels to try the game, forcing people to use the internet so they can play. Those are the mistakes that could have been avoided.

Nintendo has already announced new mobile games for 2017. Let’s hope they don’t make the same mistakes twice.

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