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Analyzing Nintendo NX, the DeNA Alliance, and Predicting the Big N’s Future

Smart Devices & Mobile Games

by Justin Berube - March 30, 2015, 9:08 am PDT

The previously unthinkable has happened, and it’s not as bad as any of us had feared.

“Now that smart devices have grown to become the window for so many people to personally connect with society, it would be a waste not to use these devices.” – Iwata (March 2015)

The other part of Nintendo’s corporate alliance with DeNA is to jointly develop and operate gaming apps that take advantage of Nintendo’s characters and franchises. That’s right: Nintendo is finally going to be making mobile games. But there are some things to clarify.

Off the bat, Iwata made it clear that the corporate alliance will not be porting previously made games over to mobile devices. Instead they will create original content for the mobile market, though they are open to using any of Nintendo’s currently established franchises in such games.

So why does Nintendo, a company full of masterful game creators, need DeNA? Because Iwata knows the mobile market is completely different then the traditional home video game market.

“…games on smart devices require ever-evolving services rather than just being a finished product. A combined effort will be necessary to operate them.” – Iwata (March 2015)

The above statement from Iwata demonstrates that he views mobile games as part game and part service. It’s that service portion that Nintendo is looking for help with, and why they partnered up with DeNA, a company that has expertise with this in the mobile space. In short, there is a great synergy between both the company’s areas of expertise.

More reason to partner with DeNA is because Iwata wants Nintendo to release multiple hit titles on mobile platforms early on. DeNA surely has advice on what works and what doesn’t in the highly competitive mobile market. Iwata doesn’t really want to take huge chances when it comes to this fact. He has stated:

“If Nintendo cannot make it to that handful of winners, it does not make sense for us to be engaged in the software business on smart devices. Accordingly, we had been thinking that if we ever decided to do it, we would have to put ourselves in the best position to prosper.” – Iwata (March 2015)

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Making games is really only part of Nintendo’s mobile strategy. There are multiple reasons why they are using their characters on mobile. For starters, it gives them an advantage when it comes to making a hit title. Secondly, it also helps Nintendo with their previously mentioned goal of increasing their brand awareness.

“Needless to say, now that we are challenging ourselves in this new business area, we hope that hundreds of millions of people will use and enjoy these products.” – Iwata (March 2015)

Iwata clearly views the mobile space as a way to massively increase Nintendo brand awareness to hundreds of millions of people globally. That’s truly massive. It’s from this point that Iwata really hopes to suck people in to their core business model by offering, what is described as, premium games on their more traditional gaming platforms.

“Nintendo has made this decision because we have concluded that the approach of making use of smart devices is a rational way for us to encourage even more people around the world to recognize the great value of the wonderful game software available on our dedicated game systems.” – Iwata (March 2015)

“Also, it’s even more important for us to consider how we can get as many people around the world as possible to play Nintendo smart device apps, rather than to consider which payment system will earn the most money.” – Iwata (Time Interview March 2015)

The bottom line here is that Iwata is banking on using mobile games as not just another aspect of their business, but more importantly as a way to pull people into their traditional premium business model by leveraging their strong characters and worlds. How will they do that? I’m not entirely sure. But they will likely have some sort of advertising in their mobile games for these premium products.

Nintendo’s mobile strategy likely won’t end here either. As previously stated, Nintendo and DeNA are working on a Membership Service that will run on smart devices. My guess is that the account based Membership Service would take advantage of Nintendo Network IDs, and I fully expect to see these mobile products connect in such a way. Nintendo could reward mobile players by giving them special items, costumes, DLC, and more for use in their home console games. It all adds more incentive to make the jump and, with the account system in place, is something that should be easy to implement.

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So what else could Nintendo have in store for the mobile market? It wouldn’t shock me to see companion apps for the premium content they offer on their traditional gaming platforms. Imagine a mobile app for Mario Kart TV or a way to spectate (and maybe bet in-game currency on) Super Smash Bros. matches. Or it could be as simple as a way to check online leader boards. The possibilities are endless and could give fans a way to conveniently connect with their favorite pieces of gaming software while on the go.

Over a year ago Iwata also mentioned the following:

“The environment in which our users can download paid software is one example of where we should aim to make more off-device improvements than on-device ones.” – Iwata (Jan. 2014)

Because of this statement, I fully expect to see mobile applications that allow users to buy digital games that will automatically and remotely download to the user’s home consoles. It’s another way to entice mobile players to make the jump, and it makes it much easier for current core gamers on-the-go to make impulse buys.

Additionally, Iwata has stressed that he will be very protective of the Nintendo brand and image seen on game applications on mobile devices. He recently said in an interview with Time:

“On the other hand, Nintendo does not intend to choose payment methods that may hurt Nintendo’s brand image or our IP, which parents feel comfortable letting their children play with.” – Iwata (Time Interview March 2015)

With everything mentioned here it should be no surprise that Nintendo isn’t abandoning the traditional games market, though I will go more into that on the next page.

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Talkback

EnnerMarch 30, 2015

I enjoyed the speculation on the NX platform. While others were thinking whether it would be one hybrid device or two devices, few would have guessed a digital platform that could support three or more dedicated video game consoles.

OtoMarch 30, 2015

Well researched & thought out article. Most detailed analysis I've read.  Could this be a cloud based platform viz a vi what's been announced by competitors? Pushing out content to multiple devices. Maybe a set top box connecting a handheld to the tv?


Do you envision any attempt by N to get into the VR space?

TLZMarch 30, 2015

Great thought out article.


I think what you said is what's going to happen.  Tbh as a physical medium advocate, I feared this day would come.  It's inevitable, I know, to go down this route.  As long as this keeps them strong, I guess that's the way to go.  So yes, conclusion is they're most likely going down the IOS and Android route.  One platform for all, different devices to play on using the one account.  The better the hardware, the better the experience, obviously.  And this is why, imo, the Wii U isn't dead.

LouieturkeyApril 07, 2015

I"m with TLZ.  I have a feeling they are going to start releasing yearly or bi-annual hardware that gets obsoleted every 4-5 years or so.  So each game that is created is scaled to whatever hardware is being run, just like how iOS platforms are configured.

I'm not sure how I feel about that, but if the entry price for the new hardware is not too expensive, I could get used to it.

Ian SaneApril 08, 2015

Quote from: Louieturkey

I"m with TLZ.  I have a feeling they are going to start releasing yearly or bi-annual hardware that gets obsoleted every 4-5 years or so.  So each game that is created is scaled to whatever hardware is being run, just like how iOS platforms are configured.

I'm not sure how I feel about that, but if the entry price for the new hardware is not too expensive, I could get used to it.

If they do that why are we bothering with a dedicated videogame system?  I have to deal with that kind of crap with computers and phones and I already own those things for non-gaming reasons.  If hardware updates every year then I'll just become a PC gamer.  I already own a PC and will always own one so I have to play catch-up with hardware all the time I might as well do it there.  The whole selling point of dedicated videogame systems - the whole reason they have ever been successful at all - is that you buy it once and every game works the same on it for the next five years or so.  If you remove that then a console is just a restrictive PC and a handheld is just a restrictive mobile device.

In the age of smartphones the future sustainability of dedicated videogame systems relies on them being an alternative to phones - for a gamer that wants something more tailored specifically for videogames.  Making game systems MORE like phones makes no sense.  They need to be different to justify their separate existence.

itsgoodmetalApril 09, 2015

Phenomenal read. Almost sounds like the author dug through garbage to find these Iwata quotes from way back. Good job.

ThunderRazorMay 13, 2015

Great article.  I totally agree with NX basically being an OS/archtecture.  To me this is a really good thing.  We should be able to upgrade our Nintendo device but be able to seamlessly keep playing our games with our current save data on them.  I don't think this will mean that Nintendo will release replacement hardware every 1-2 years.  Nintendo makes games that are meant to last for years and years, unlike Call of Duty and most current developers where they actually want you to stop playing after 1 year.  Nintendo's games age well.  I feel that Ice Climbers is more highly regarded now than when it was originally released.  Nintendo knows that playing their backlog is a huge strength and having the NX be an OS/architecture will allow consumers to experience a great many games day one of new hardware releases.  Nintendo thinks in the 5 year and longer span when they design games; they don't want their games to feel old after just a few years, instead they want them to feel like classics and keep their charm.  Nintendo won't need to upgrade their hardware every 1-2 years because they don't ride the hype bubble like other developers.  A similar 5 year window should still do Nintendo fine.


However, we might see them launch more varieties of hardware with a staggered release every year: small handheld (phone like / DS), large handheld (tablet like), small home console (Wii like), large home console (PS4 like).  Buy the system that meets your current gaming needs and you should still have access to a large number of excellent games that were made on the NX platform.  This will also allow Nintendo to compete against iOS, Android, and other gaming systems with strength.

Ian SaneMay 13, 2015

Quote from: ThunderRazor

However, we might see them launch more varieties of hardware with a staggered release every year: small handheld (phone like / DS), large handheld (tablet like), small home console (Wii like), large home console (PS4 like).  Buy the system that meets your current gaming needs and you should still have access to a large number of excellent games that were made on the NX platform.  This will also allow Nintendo to compete against iOS, Android, and other gaming systems with strength.

Four platforms?  That would certainly surprise me if Nintendo did that!  So I guess the idea is that they make one game and it scales down depending on the platform?

I'm concerned that such an idea would result in games being designed primarily for the lowest-hardware with only superficial improvements for the "enhanced" versions.  New hardware doesn't just make for prettier graphics.  You can have larger areas, improved AI, improved physics, more items on screen at once.  Those things affect gameplay so you can't just remove them from the lesser hardware and expect it all to work right.  The new SSB doesn't have Ice Climbers because Nintendo admitted they had issues with making them work on the 3DS.  Considering they could work on the Gamecube they clearly could work on the Wii U but because of the limitations of the 3DS the game on the superior hardware was compromised.  An NX game that works on all platforms is effectively a handheld game, unless you make multiple different games which goes against the whole point of the idea.  You could cut loose on a console game but then make it exclusive.

Depending on what course of action Nintendo takes that could also make certain platforms appear to lack value.  Let's assume it's just a console and handheld to keep it simple.  So Nintendo makes every game with the handheld primarily in mind so the console just gives you prettier versions of the same game.  That's not useless but it isn't THAT great of a selling point.  Okay, so let's assume Nintendo makes console exclusives that really push the hardware and cannot be scaled down?  Well then the handheld has less value because it's basically the exact same games but less and relies entirely on the portable nature to give it value.  Neither option is completely worthless and if all the saves and such are shared between all the devices it is very cool for someone that owns both.  But I think less people will own both than they do now where they might do so entirely go play the Nintendo exclusives on each platform.  One of the two platforms will be the fringe product.  They won't be able to give each one enough value to expect both to be popular, like the DS and Wii were.

My fear is that Nintendo would go with the handheld as their base platform and their console games will feel "small" but with good graphics.

The Ultra Mind SolutionAugust 07, 2015

I have scoured the web and this is by far the most insightful analysys I've read on Nintendo's future, Well worthy of clicking through. I believe congratulations is in place.

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