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Key Takeaways From The Nintendo Investor Q&A

by Donald Theriault - May 18, 2015, 5:56 pm EDT
Total comments: 3

A case study in mobile game design and alliance building

Nintendo recently released their investor Q&A session in English and the report gives some interesting information about how Nintendo will conduct business going forward.

Nintendo Isn't Doing Mobile Like Everyone Else

As would be expected, a full third of the questions are focused on Nintendo's announcement that they are opening up to limited smartphone game development. One of the questions was about how they could use smartphone games to return to “Nintendo-like profits,” and how the mobile initiative would assist with that.

“I imagine the smart device business will become a pillar that supports a certain percentage of our overall revenue.” - Satoru Iwata

Although the temptation would be there for Nintendo to design games in the Japanese style – Monster Strike pulling in the equivalent of US$3.7 million a DAY in revenue would give them an excuse – Iwata cited the differences in how the rest of the world consumes mobile games compared to Japan to explain why they will have a worldwide focus.

As well, the usual mobile measure of success is in average revenue per user (ARPU), with the aim to get whales to jack that ARPU figure up in order to get investments and to heck with the people who play it for 15 minutes. Nintendo's goal is to get as many people to play the games as possible, and for them to play it a lot, so as to try and open them up to moving to Nintendo’s main focus: dedicated hardware.

In discussing other ways to bring Nintendo-like profits back, Iwata cited fixing things that aren't working on the console and handheld ends. Unfortunately, a statement further down may muddle things a bit.

The New Loyalty Program Is Probably Coming Later Than You Think

Question 5 in the Q&A discusses Nintendo's plans for the new loyalty rewards program. The key takeaway is at the bottom, in which Iwata is hoping to discuss the new program with shareholders at a financial briefing at the end of October.

Some were hoping to get details of the new program at E3, but it seems as though the details are still being worked out as to what the program entails. It's possible that they could have details finalized between the day of the Q&A (May 8) and whenever they record the video for the Digital Event on June 16, but I wouldn't guarantee it at this point.

The challenges will be deciding whether they want to integrate legacy systems like Club Nintendo and the Deluxe Digital Program or not, and what sort of way can they reward people who play often. Could this be tied to an achievement system of some kind? It's hinted at, but it's impossible to tell.

I initially figured the new program would start October 1, as soon as Club Nintendo Europe/Japan/Australia finally went down for good. However, at this point we may not see anything take advantage of the program in full until the games that come out in North America on November 20, whatever those end up being.

Nintendo Isn't Doing Alliances for Gaming Hardware

With the capital investment of DeNA and the theme park agreement with Universal, shareholders asked if there may be an agreement of similar scope for the dedicated gaming hardware. Iwata turned it down flat, saying although Nintendo has been approached about these alliances and they don't expect anything to come of the offers.

Most companies make agreements with others regardless of how the people who have to implement it feel, but once again Nintendo is doing things differently. Iwata stated that not only do they have discussions at the executive level, but the people whose jobs would be affected most are considered to ensure that there won't be a culture clash.

Clearly in this instance, DeNA and Universal (it has been confirmed that Universal approached Nintendo) are seen as good fits for the company. Furthermore, the acquisition of ResMed for the Quality of Life hardware works as well. This just means we won't see another attempt at Nintendo/Philips or Nintendo/Sony for gaming hardware any time soon, which shouldn't be a surprise.

Whatever NX Is, It Will Be More Import Friendly Than The 3DS And Wii U

Admittedly, that's not hard.

Aside from the fact that they are considering what works in Japan and abroad, which lends itself to multiple form factors, there weren't a lot of details given about the NX in the Q&A. As promised, the cards are being kept close to the chest until 2016.

As we've discussed before, Nintendo is more open to having region locking removed from whatever the NX becomes. Iwata's quote, which we gave a rough translation of before, was officially translated as “I personally want to give it positive consideration”.

Once again, the usual caveats apply – just because you may be able to import does not mean you'll enjoy it in full because of language barriers. Companies may have the option to lock games, and if Japanese games start coming with dual language support they're likely to get locked to prevent Japanese players from buying outside the country for cheaper. Plus, the implementation can be a pain in the rear. Case in point: technically, the PlayStation Vita is a region-free system, but you need a second memory card to have an outside PSN account if the game isn't available at retail somewhere.

Final Thoughts

The full Q&A is worth a read. Even though it's light on details in the here and now – I'm surprised the Zelda Wii U delay didn't come up, honestly – it gives a good idea of what Nintendo's thinking as they continue the turnaround from a long period of losses and enter a time of transition for their business.


nickmitchMay 18, 2015

That's disappointing about the new loyalty program.  If they won't be ready to talk to investors until the fall, I doubt there'd be a full roll out until after the current fiscal year.  The bit about alliances for hardware should nix any Xbox buyout rumors/wishes.  And I sincerely hope the NX is region-free.  That would be nice.

EnnerMay 18, 2015

While trying to avoid the hunt for whales is a nice direction, Nintendo might find the mobile game market does not support their "wide and shallow" goals. I can imagine other mobile developers had similar approaches in mind with their games but found little success.

oohhboyHong Hang Ho, Staff AlumnusMay 18, 2015

I have only spent single digit dollars on mobile games and have come off disappointed every time. Mobile is a wasteland if you have any other way to play games including boardgames and Pen and Paper games. Even the free Pokemon games on the 3DS sour quickly as they don't have enough real gameplay to support themselves and progress is meaningless and based on either grinding or money. Dressing up Skinner boxes don't make them games.

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