Nintendo: mobile, core gamers, and a tricky balancing act

As Nintendo announces its NX console and a move to mobile gaming, the company faces its trickiest balancing act yet.

Whether you approve of Nintendo’s coming foray into the mobile gaming market or not, the change has surely been in the air for some time. Even as the company insisted that its future lay in making games specifically for its own systems, the success of the mobile sector was becoming increasingly difficult to ignore.

If you think that games on smart phones and tablets are big in the west, they’re positively ubiquitous in Japan. Where the console market has flagged, mobile gaming has soared. The sector’s worth billions in that country alone, and globally, the mobile gaming market is thought to account for 30 percent of the industry as a whole, with an estimated value of around $26B.

With figures like that flying around, it’s hardly surprising that Nintendo’s anti-mobile stance has gradually softened since 2013, when president Satoru Iwata was still saying things like, “We believe that neither Nintendo nor dedicated gaming systems are worthy of existence unless our games give consumers unparalleled fun, which games for free or for 85 yen do not supply.”

One year after that address to investors, Iwata’s stance began to change. Nintendo would, he said, use mobile devices to “make connections with customers” – a sure sign that change was afoot.

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We now know that Iwata was alluding to a deal being brokered behind the scenes: it was recently announced that Nintendo is set to partner up with Japanese mobile company DeNA to produce a series of games for smart devices. While Nintendo has so far ruled out the possibility of straight ports of its games on Wii U or 3DS appearing on those devices, the company has said that its entire 30-year range of properties and characters could be drawn from in future mobile releases. 

As part of their new venture, Nintendo and DeNA will also be launching a customer loyalty app to replace the soon-to-be-defunct Club Nintendo (it finishes on the 20th April), which will be available on PC and mobile phones as well as 3DS and Wii U. Nintendo had already revealed that it was creating a Mii app for mobiles, so it’s possible that the new, cross-platform loyalty service and the Mii app are one and the same thing: a single, streamlined piece of software that allows Nintendo fans to customize their Mii characters and exchange loyalty points for merchandise.

(If Nintendo’s deal with DeNA proves to be fruitful, its contribution could be massive: Nintendo has long been notoriously uneven with its handling of online services, and DeNA could improve this area hugely.)

Then we come to the third prong of Nintendo’s future strategy: its mysterious NX console. Currently, all we know is that it’s “a dedicated game platform” which will offer “new hardware and a brand new concept.” If that sounds vague, it’s intentional. Discussion of the NX wasn’t so much a formal reveal as a means of heading off suggestions that Nintendo’s about to become a third-party developer like Sega.

What that Tokyo press conference does give us is a fairly clear road-map for Nintendo’s next couple of years. Mobile gaming is now firmly on the agenda, it’ll be putting more emphasis on games as an online service (with DeNA’s experience in this area coming in handy), while a new console will be out by around – we’re guessing – 2017.

What’s also clear is that Nintendo have a massive balancing act to pull off over the next year or so – perhaps the greatest one it’s faced since the early 80s, when the company made the jump from arcades to the burgeoning home console market. 

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Since 1989, Nintendo has run its business on two lucrative strands: handhelds and home consoles. It’s an approach that has made the company millions, since one half of the business has invariably supported the other. Where consoles like the GameCube have struggled somewhat, handheld devices like the Game Boy Advance and DS have taken up the financial slack. Nintendo could get away with misfiring experiments like the Virtual Boy because systems like the Super Nintendo and Game Boy were enormously popular in the mid-90s.

Today, Nintendo’s historical successes far outweigh its failures. The Wii U may have failed to take off in the same way as the Wii, but Nintendo’s bank accounts are still full of cash. The company could coast along for quite some time if it wanted to, but it’s evidently realized that the industry is changing: mobile gaming is gradually gnawing at the edges of its dedicated handheld market, and the Wii U, a machine aimed squarely at its core audience, has so far failed to catch fire.

It’s understandable, then, that Nintendo has finally decided to expand its business into the mobile arena – it’s simply too big a part of the industry to avoid. But adding this third strand to its business is fraught with danger – something Iwata himself has admitted: “Prices for content aimed at smartphones and tablets are falling quickly,” Iwata said in February.  “I am still wary of the category.”

That wariness isn’t unjustified. Mobile games are plentiful, but for every hit, there are dozens – perhaps hundreds – of identikit games which fail to break through. A market which thrives on games that are either free-to-download or only cost a few dollars to purchase will be a difficult one for Nintendo, with its fastidious approach to design, to adjust to.

Nintendo has already dipped its toe into the free-to-play hinterland with Pokemon Shuffle, and its collaboration with GungHo Online on Puzzles & Dragons: Super Mario Bros. Edition has proved popular in Japan. If we were to put money on what game would appear on mobile first, it would probably be on one of these two. But there are, surely, only so many match-three puzzle games the market can stomach. Nintendo has said that its first mobile game could arrive this year. If that game proves to be yet another variation on the Columns/Bejewelled/Candy Crush theme, the world’s collective groan could be enough to knock the planet off its axis. 

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While Nintendo looks to expand its horizons, it still has its core audience to maintain. While that audience may not be as colossal as it once was, it remains numerous and fiercely loyal. Some have already expressed concern that the Nintendo NX has been announced so soon after the launch of the Wii U, and that discussion of it amounts to admission of the Wii U’s failure.

Of course, we don’t yet know what the NX is. It could be the replacement for the New 3DS, the Wii U’s successor, or, as some have theorised, a hybrid between the two – a handheld which can also be connected to a television. Whatever the NX turns out to be, its timing and design will be critical for Nintendo.

In essence, the next two years will see the company attempt to create mobile experiences which aren’t so tawdry and cheap that they damage the company’s reputation, but will also provide a decent return on their investment. At the same time, it’ll have to cater to its core audience with new, attention-grabbing releases for the 3DS and Wii U, while also courting third-party support for its forthcoming NX – something that has often eluded Nintendo’s consoles in the past.

All of this amounts to a huge undertaking, and Nintendo obviously has a strategy mapped out. But ultimately, Nintendo’s biggest balancing act comes down to broadening its appeal while retaining its existing following, and maintaining the same level of quality control to the games it brings out on smart devices.

The DeNA deal could spell the beginning of a lucrative new era for both companies. Only time will tell whether Nintendo can retain its reputation for polished, perfectly-balanced games as it branches out into mobile.

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