Over the past 20 years, Nintendo [NTDOY] has failed almost as often as it has succeeded. But following a series of disappointing hardware releases – with graphics and gameplay lagging behind Microsoft’s [MSFT] Xbox and Sony’s [SNE] Playstation – the Japanese firm’s Switch console is on track to sell 20 million units by the end of 2018, making it the fastest-selling games console ever released in the US.
The Switch can be used at home or on-the-go, and has played a big factor in taking Nintendo’s share price from the post-Wii console lows of ¥11,500 ($103) in 2015 to ¥49,590 ($445) in January 2018. The console’s success is partly why Nintendo is turning its attention to an area of gaming neglected by its rivals: mobile.
“From what I can see, smartphone games are the ones I want to expand the most.” | Shuntaro Furukawa, Nintendo CEO
“From what I can see, smartphone games are the ones I want to expand the most,” said Shuntaro Furukawa, Nintendo’s new CEO, in May. Following Nintendo’s slow entry into the mobile gaming market in 2016, Furukawa is aiming to grow the company’s smartphone games portfolio into a $900m business.
To do this, the gaming giant plans to release two to three new smartphone games each fiscal year, with the goal of making the business the third of Nintendo’s three gaming pillars that generate significant profit – the others being the Nintendo Switch and the Nintendo 3DS.
Nintendo owns much greater intellectual property – a portfolio of internationally recognised characters – than its rivals, which can be quickly rolled out in mobile games. And just as the likes of Donkey Kong and Kirby are better suited to small console screens than Sony or Microsoft’s graphics-heavy games, they’re also perfect for phone screens.
Nintendo has already been responsible for the fastest-selling mobile game of all-time, Super Mario Run, and the second, Pokémon Go, released in July 2016. Nintendo owns just under a third of The Pokémon Company, earning it $115m in Q3 2016 through Pokémon Go. The hit game was the first catalyst in a price revival from the lows of 2015.
Size of business Nintendo hopes mobile will become
Monetising mobile games will be a challenge, but one that can ultimately prove fruitful. King, the Swedish developer behind Candy Crush, makes nearly $2bn worth of sales annually.
While the long-term outlook looks bright, the Japanese gaming giant hit a 52-week low of ¥34,510 ($310.50) in July, which has been blamed on a lack of new game releases and delays in the delivery of Switch consoles.
So the pressure is now on to release new games and maintain momentum, with big titles like ‘Pokémon: Let’s Go’ and ‘FIFA 19’ in the pipeline for the Switch and ‘Mario Kart Tour’ coming to mobile. If these titles prove a success, the next few years may be some of Nintendo’s best.
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