Nintendo Is On A Collision Course With Apple

Nintendo: The reluctant mobile superpower on a collision course with Apple

Brendan Lyall is the CEO of Grow Mobile by Perion

The news that Nintendo and DeNA have partnered to produce mobile games together has led to a glut of articles, think pieces and speculative lists about what the future holds. The thought of Mario Kart on an iPad has been enough to lead to a worldwide rush of excitement, evidenced in the corporate landscape by the 27 percent jump in Nintendo’s share price following the news.

While the news has been presented as a total volte face from Nintendo, the truth is a little different. The inherent caution the company has towards mobile gaming remains even after the announcement, and it is possible that it will hobble their ability to become a genuine mobile gaming giant.

The battle to control the soul of mobile games

The principal problem holding back a whole-hearted uptake of mobile from Nintendo comes down to one thing: control. As shown in this piece from The Guardian’s Keith Stuart, the company’s desire for control manifests itself in two ways that may well affect how likely it is to succeed in the mobile gaming space.

The 💜 of EU tech

The latest rumblings from the EU tech scene, a story from our wise ol' founder Boris, and some questionable AI art. It's free, every week, in your inbox. Sign up now!

The first is about the extent to which they can control the quality of their games in the mobile gaming space. While there is little doubt Nintendo produces excellent quality paid games, the question is how relevant such an approach will be within the mobile gaming free-to-play space.

Incorrectly, a number of pundits have suggested that DeNA will be responsible for helping them with that. They won’t. Satoru Iwata made it clear that Nintendo will be developing the titles themselves and will be finding the best solutions to “free to start” gameplay (his words, not mine) for the company.

That could be a cause for concern. Though it is admirable Nintendo has committed to a no direct ports policy in favor of mobile ready titles, they will need to work hard to adapt to a space where monetization mechanics matter as much as graphical quality. After all, none of us here will argue here that Clash of Clans and Candy Crush Saga are beautiful games, but their success is undoubted. Reaching this middle ground compromise between quality, accessibility and monetization could be difficult for Nintendo.

Controlling distribution: conflict with the major stores?

It’s the second manifestation of Nintendo’s control approach which is more likely to damage their chances on mobile. Most people have taken it as read that Nintendo games will be appearing on major Western stores, such as the App Store and Google Play – that Nintendo will alter their approach to releasing games on mobile in the same way they’ll change their design philosophy.

But when you look at what was actually announced, you’ll realise that isn’t their intention. The implication from the press conference, as reported by Polygon, was that DeNA’s platform would be the only way to get Nintendo titles on mobile, Windows PC and on their home devices.

This suggests that, at the point of writing, there are no plans to release titles on the App Store and Google Play. Now, for Android users, that isn’t necessarily a problem. The DeNA platform will probably be accessible to Android devices, allowing users willing to download an APK file from their PCs to get a hold of it.

However, it is still likely to prove problematic for most Western users. While it is common for users in the likes of Japan, China and Korea to explore downloading apps through a PC or alternative platform, in the West the walled gardens of Google Play and the App Store reign.

And they do not relinquish control over distribution in their platforms. Google Play recently banned the Amazon App Store app from release; Apple killed GREE’s multiplayer service OpenFeint (similar to DeNA’s Mobage offering) when it released Game Center. Both stores also ban apps that allow people to pay for things without directing through the store to enable them to get a cut.

In short, the decision from Nintendo and DeNA to release games on a separate distribution platform puts them on a direct collision course with Google and Apple. Though both platforms would bite their own limbs off to get Nintendo content exclusively, the proposed nature of the DeNA backed distribution platform goes against everything those stores have curated.

So while it may well work out nicely for Nintendo in Japan, the current state of play suggests we shouldn’t be too excited just yet about widespread easy access to mobile games from them globally just yet.

The sleeping giant

So it’s fair to say that it isn’t the moment to bet your house on Nintendo turning into a mobile loving super power just yet because of this caution.

The reticence of Nintendo to release mobile games outside of their own platforms, the company’s long history in triple A game development and their commitment to future hardware suggests that mobile is still something the company doesn’t fully trust.

But simply the fact that Nintendo has made a push towards mobile valued at $180M suggests they do value it. And if a title were to break through, succeed and monetize then they could easily seek to expand their influence – perhaps breaking down their controlled distribution approach with it.

And if that were to happen, then it really could have a sizeable impact on the industry. Taking ourselves into the ever-dangerous territory of prediction, if Nintendo were to throw their full weight behind mobile it would significantly disrupt the industry because:

The strength of the Nintendo IP and their overall industry reputation means that they’ll get huge organic uplift. Access to near certain and sustained featuring from store providers, word of mouth installs and social channels will give them a serious head start. They’ll even be able to claim Nintendo related keywords on iOS to give them a boost on the store.

They are serious about advertising and marketing spend. In a year between 2013 and 2014, Nintendo committed nearly $1B to promoting their consoles. That means if they do want to spend on mobile advertising and enter the performance space, they have the means and willingness to do it properly.

Nintendo has enormous cash reserves to invest in expansion on mobile. The $10B Nintendo has in reserve to protect the business could buy Supercell three times over at a $3B valuation: a serious war chest for any company.

In short, Nintendo’s entry into the mobile gaming market could be big enough to disrupt even the biggest players. The strength of their franchises, game design ability and commercial clout could easily allow them the chance to nearly instantly join the mobile gaming top table – if they get a hit and are willing to amass the mobile expertise to push it on.

Ultimately, there is one major thing that will determine whether the DeNA/Nintendo partnership works to its full effect: Nintendo’s willingness to embrace the dynamics of the mobile market and not just the dynamics of mobile game mechanics. For a conservative company trying to control its IP, sustain a console business and remain true to what it knows, the mobile gaming landscape is one that Nintendo still seems uncertain about stepping into.

But if it can assuage its concerns, open up its games to as broad a market as possible and find monetization success with one title, Nintendo could conceivably turn from sleeping giant to super power.