This article will look at Nintendo’s strategy for smartphones and attempt to explain how Super Mario Run has performed in the app store.
Nintendo have three goals with their smartphone games:
1. Have more consumers experience Nintendo IP
2. Aim for Smartphone games to be profitable on their own
3. Drive synergy with traditional console business
Lets look at Pokemon Go first. The primary goal for that game was to have more consumers experience the Pokemon IP with the secondary goal for the game to be profitable and drive synergy with the traditional console business. Little did Nintendo know that the game would end up significantly succeeding in all three areas with over 600 million downloads, an annual run rate of $1 billion gross for the game and Pokemon Sun & Moon + 3DS sales breaking records over the past few months. Pokemon Go proved the power of Nintendo IP on mobile and it convinced Nintendo and the world that there is indeed a significant opportunity for Nintendo IP on mobile.
Now lets look at Super Mario Run. The game was announced as a premium paid game with a free trial, or free to start if you will. It was clear from the moment the game was announced that the primary goal of the game was to have as many people as possible experience the Mario IP, whilst the secondary goal was for the game to generate high revenues / be profitable and drive synergy with Mario in the dedicated console business, merchandise business and theme park business. The fact that Nintendo confirmed the game will not have regular/long term updates really does show that for them this game is a marketing tool for the Mario IP and other business segments and not a F2P game designed to generate long term revenue on mobile.
The majority of mobile gamers do not pay in mobile games (these guys don’t buy games and have no intention of ever buying games), even in free to play games. So it was clear from the outset that not everyone who downloaded the game would pay and that a notable number would never pay anything for the game. Those that did pay would hit a spending cap of $10, due to the one off payment, and therefore generating as high revenues as Pokemon Go was off the table from the start. Everyone knew this before the game launched. A lot of people also assumed that the free trial portion of the game and onboarding process would be good enough for people to have a good experience without needing to pay and that it would drive some people to buy the game eventually.
Has Super Mario Run hit its goal of reaching as many customers as possible? Without a doubt. The game has been downloaded over 50 million times in a week on iOS only. This is a record for the app store and Mario Run has achieved something that no other game has been able to do in one week. It just shows how big the Mario IP is and how successful Apple’s notify button + store promotions were. The goal of the game is really to have Mario played by as many people as possible, which is much more likely to happen on a smartphone install base of over 2.5 billion (Apple + Android) than on the Wii U which doesn’t even have a 15 million install base. The second goal is to have them come away with a positive experience, perhaps buy into the game or other Mario products/merchandise. The game being on smartphones also allows the game to be played by a younger audience that is being brought up on smartphones and may never have played a Mario game before / are not that familiar with the Mario IP.
So why have you read about analysts saying the games sales are disappointing despite hearing that the game has been downloaded over 50 million times in a week? There are a number of reasons which I’ll go into now.
The first reason is that the game costs $10. Mobile games in 2016 are usually free to play and those that are paid are usually very niche titles with extremely dedicated fanbases or are a ridiculously huge IP like Minecraft which has 40m paid DL. Now of course there are other successful paid games in the app store but they generate less than the top F2P titles and a large part of the mobile game first audience won’t touch them due to the price tag. Mobile is not a gaming first platform so a lot of people don’t have the intention of buying games ever on the platform. Those people are willing to download a free game to pass the time though. A number of negative reviews center around the price as the number 1 reason for their negative review. Therefore, a conclusion can be drawn that perhaps the price was too high or that Super Mario Run may have got better feedback if it was free to play to allow both high downloads and customer satisfaction. So that’s why some analysts are worried that the high price may have had a more negative impact on the wider mobile gaming audience than a positive one. One could argue that the people complaining never would have bought the game in the first place and will never buy into any Nintendo ecosystem products, but the fact that the number of negative reviews + word of mouth is this high shows it may have left have a bigger negative effect overall.
The second reason is the onboarding process for the game. The app store does not make it clear before downloading that the game has a $10 purchase in game that unlocks everything. It is in the description but no one reads the description, especially for a Mario game. Once users download the game they need to select their country (why?), create a Nintendo account which takes extra time and requires you to exit the app multiple times to complete the set up, then it requires you to accept push notifications etc… It’s a very antiqued onboarding process and one that seems like a Japanese smartphone game from 2011. Once that is all done extra data is downloaded and you play the first three levels. This can take between 5 to 10 minutes to complete and then users are hit with an unlock screen if they want to continue. The $10 unlock screen comes way too soon and doesn’t make it clear what exactly it unlocks (Are there more than 6 levels?) and also doesn’t make it clear what is already unlocked (multiple run throughs to get different colored coins + toad rally etc..) and so users being hit with this paywall early on are not understanding it and leaving negative reviews. People feel they were misled and the free portion of the game isn’t long enough or explained well enough before people are hit with that paywall which turns them off.
Those that are paying for the game right now are core Nintendo fans. Those that never pay in mobile games are being turned away by the price tag and poor onboarding process. Those that may be willing to pay are also being turned off by the high price and poor onboarding process too. It is great that Nintendo is willing to experiment with a pay to play freemium model but it does show just how difficult it is to make that model work on a platform where the majority of users just don’t pay anything. Especially given that Nintendo didn’t quite get the onboarding process right here. The reason F2P came into existence in the first place was because it meant more people could play the game and the small minority that did pay would not have a spending cap on the game. Now free to play is the standard model and the game looks like a free to play game on the app store. So of course people are going to be upset when they’re asked to pay after 5 minutes of gameplay.
Overall, the above has led to more negative reviews and less than positive word of mouth than it has positive reviews. Even some tv shows (Seth Meyers) have made fun of it for charging $10 after three levels. The onboarding process has left a sour taste in peoples mouths. This is a worry given that new/lapsed Nintendo gamers aren’t experiencing the full game and are turning away with a negative experience. This could affect Nintendo’s second and third overall goal of profitability + synergy with consoles + could even affect DL next month or when the Android version comes out. Not to say that Nintendo should have made this free to play, but they seem to have missed a trick by not getting the onboarding process right and perhaps by charging too much.
So, yes the game has been downloaded 50 million times. But if the majority of those are not having a great experience then that is something worth considering when measuring the success of the game. We’re already seeing the game slip out of the top grossing charts despite the number of downloads still remaining high which isn’t a good sign. Then again, that’s 50 million + people still talking about the game so that could also be seen as a good thing in one way. Of course, Nintendo has set the price at $10 to mitigate some of the risk and so that Mario does not become devalued on mobile + make it easier to upsell to console/other licensed products. But it looks like the onboarding process is what didn’t work well for them. Perhaps if the game was labeled more clearly on the app store it would have set expectations better and not had the negative backlash.
Nintendo’s goal in the future, as confirmed by Kimishima, is that Nintendo want to create a successful and profitable mobile games segment alongside their console segment. So we will see different models such as free to play and games that aim to generate higher revenues. If Nintendo get it right we could see them with a billion dollar mobile games segment in a couple of years time which would offset the loss of their dedicated handheld game revenues when Switch comes out and 3DS is discontinued.
So what happens now? Well, everyone will be looking to see how the game performs in Week 2 and beyond. Will the game continue to achieve high downloads in week 2? Initial reports suggest people are still downloading it and it’s still featured on the app store. Will the game convert as well in week 2 as it did in week 1? Initial reports suggest no. That could be an effect of the negative feedback the game has received. Will the game push people towards Nintendo consoles + merchandise? This remains to be seen. It’ll be very interesting to watch.
Anyway, that’s just my take on the above. Please feel free to leave your thoughts below.
*Speculation* With Super Mario Run it was clear that Nintendo wanted to treat this as a marketing tool first to get the Mario IP back into the mainstream. There is no issue with having a few games like that where revenue is not the primary goal, but it does seem like Nintendo overruled DeNA on this game earlier on. It seems to me the game was originally going to be F2P, which is clear from the Toad Rally mode tickets + kingdom builder + limits to how much you can have etc… but Nintendo pulled the plug. Which makes sense given they didn’t want to devalue the IP, but then the two point above have led to negative reviews when it may not have had that much negative feedback had they got those two points right or made the game F2P. Just speculation on my end here. *Speculation*