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Nintendo’s big switch: Mario is finally going mobile, but the console king faces tough competition

Mario can win many races, but Nintendo has been slow when it comes to mobile games. The planned release of Mario Kart Tour and Dr. Mario on mobile devices this summer will be a great test for the company, a dominant player in the software and gaming markets.

Nintendo’s strategy of integrating the core of the characters to their legacy in the mobile is a hesitant step for a company that appreciates the value of the smartphone industry, but is cautious to “let go” one of its most valuable assets said Joost van Dreunen, founder of SuperData. CEO But van Dreunen thinks that this time there is a good chance that Nintendo will do well.

“The Nintendo ecosystem is based on its IP and the subsequent loyalty of its fans … If it were to sell securities to mobile phones, they would effectively be selling control of their biggest asset,” said van Dreunen.

His mobile experiments to date have had mixed results. Augmented Reality Phenomenon PokemonGo! it attracted millions of fans, but it was part of a broader strategy to convince consumers to buy the Pokemon console games that came a year after the mobile launch. The game itself was developed by Niantic, a new gaming company that emerged from Google and in which Nintendo is a strategic investor. Nintendo is also a partial owner of Pokémon, and the mobile game allowed Nintendo to experiment with the Pokémon IP, said Rebekah Valentine, writer of GamesIndustry.biz, noting that “it included several mechanics that were tested and included in the console version. ”

Super Mario Run by Nintendo was a free mobile game based on the Super Mario franchise that required users to pay for additional levels. The movement had a mixed reaction from the players, with only a small part of the players opting for the matching payment option.

The launch of Dr. Mario and Mario Kart Tour on mobile devices has already been postponed once in 2019, starting in March. It comes at a crucial time for the company.

The financial backdrop for Nintendo

Nintendo shares have fallen about a third in the last year. In recent history, his actions fluctuated around the launch of his successful Switch console, a hybrid console that can be played on the move or connected to a television. A great revenue driver for Nintendo since its launch, tens of millions of Switch units have been sold since its launch in March 2017. Switch was the best-selling video game console in the US. UU In 2018 and reached the highest annual sales for any hardware platform since Sony’s PS4 in 2015. After its first year in the market, Nintendo had to double the production of switches.

The launch of the Switch in March 2017 triggered a major breakthrough in Nintendo’s shares that peaked in early 2018, but stocks have returned most of those gains as even the giant’s Switch sales slowed. Shares recovered recently after the Wall Street Journal reported that Nintendo is ready to launch two new versions of Switch “as early as this summer.”

Meanwhile, the category of “smartphones, royalties and other revenue” detailed by Nintendo in earnings reports, in most cases, represents 6 percent of Nintendo’s revenues in recent years. The hardware has fluctuated quarterly from 49 percent to 67 percent of revenues in recent quarters, and the software makes the difference. According to Deutsche Bank estimates, its market share of the top 20 PC games and consoles dropped from approximately 30 percent in 2017/2018 to an estimated 24 percent in 2019.

In a recent recommendation of Nintendo’s actions for investors, Deutsche Bank cited the two sets of smartphones scheduled for mid-2019 as one of the drivers, but said the moves occur in the middle of a softer general market for software. of games, and “after a dry period and the expectations of investors decreased substantially”. Analysts at the bank added that investors’ expectations are so low that “mobile games can be considered an incremental positive”.

Nintendo declined to comment before the release planned for the summer.

Nintendo has many titles that adapt well to mobile devices, said Carl Livie, managing director of AppLovin, Dr. Mario and Mario Kart among them. Dr. Mario fits the Candy Crush model as a puzzle game, while Mario Kart adapts well within the game time of 5 to 10 minutes for the mobile gaming experience. Dr. Mario reflects the style of play of Candy Crush, but also brings the brand name and recognition of a video game legend, which will allow him to quickly gain a large audience, especially with women over 25, said Livie. Once thought to be a peripheral demographic, women between 25 and 65 years old have catapulted Candy Crush to generate revenue of more than $ 1 billion in 2018.

Nintendo has a strategic problem that some of its biggest competitors do not have: the console is still its financial engine, while the big technology companies have grown up playing as one of the many business efforts, and specialized game developers do not trust in the console to generate income. Microsoft and Epic have released large console games, Minecraft and Fortnite, on mobile devices with great success, but van Dreunen said he does not think Nintendo’s popular console titles such as Legend of Zelda will appear in the next few years.

The competition for the control of the game platform of choice continues to grow. Netflix and Hulu have already changed the role of mobile devices in the transmission of content by allowing users to stop watching a movie or program on their TV, mobile device and laptop. The game is going through a similar evolution. Microsoft’s new xCloud will allow users to play Xbox games on Android phones, and Google Alphabet’s new streaming game service, Stadia, has a similar approach. Apple is launching Arcade, a subscription service for PC games, mobile devices and living rooms. Amazon is also working on a transmission service.

Adam Bankhurst, writer of the gaming industry publication IGN, said that part of Nintendo’s strategy is to offer complementary games for mobile devices that are combined with console games. Bankhurst believes that this is an opportunity to prepare the development teams to eventually move their more complex titles to mobiles and also create a perfect gaming experience where players can unlock characters and missions only from the mobile game. Bankhurst pointed to Nintendo’s Animal Crossing as a recent example and suggested that we could see a Dr. Mario console game coming soon with similar features.

“Given that cloud computing allows increasingly advanced games to be played on mobile devices, the opportunity for Nintendo to add its more complex titles to mobile devices increases, but so does competition in the mobile gaming sector.” .

Newzoo analyst Guilherme Fernandes said Nintendo’s partnership with LINE to jointly develop Dr. Mario and other projects “strongly suggests that the company’s mobile strategy is advancing.”

The question for Nintendo in the future is how much of your IP is you willing to put on your mobile and how much success you can expect.

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