Nintendo president Satoru Iwata has outlined the company’s strategy when it comes down to the mobile titles they will be releasing later this year. The actual quote is rather big, so thankfully Nirolak from NeoGAF bullet pointed the main extracts that you need to know. From the sounds of it they are looking to mainly build free-to-start games which are essentially free-to-play games. The reason why they have adopted this model is because they feel that paid games don’t do as well as free-to-play, which is true. Anyway, here’s what Iwata had to say.
- They’re not ruling out paid apps, but they sound vastly more interested in f2p apps (which they prefer to call “free-to-start”) because paid apps don’t do very well on mobile and sell for a very small prices.
- Their monetization strategy for f2p games appears to be aiming for a high monetization rate (as in the percentage of people spending money), but getting less per individual user. This is a more common strategy you see on PC with games like Hearthstone, where the goal is to get 10%+ of your audience to buy an expansion for $25 every 4-6 months instead of 0.5% of your audience to spend $800 a month. I use Hearthstone as an example since it’s also successful on mobile. MOBAs are another example of how this is done in a different genre.
- Like most successful mobile games, Nintendo’s games will be continually updated services that get new content every so often.
“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.”
“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.”