It is not often that publicly traded companies admit mistakes or failures. It is even rarer for organizations to abandon a large market segment. But in a surprising twist of events, Nintendo recently admitted that its mobile games strategy has produced disappointing results. According to a Bloomberg report, the company is even considering abandoning the mobile industry altogether. In this latest Industry Analysis feature, the staff at GamingROI examines why Nintendo’s mobile strategy failed. Let’s dive in.

What’s Working and Who’s “Winning”

It is no secret that the mobile video game industry is enormous. Over the past decade, the percentage of overall revenue attributed to mobile gaming has increased from 20 percent to nearly 60 percent. As gaming becomes more convenient and available on mobile devices, consoles and personal computers continue to decline. While the industry is ripe for additions to the mobile games library, where are players spending the most money?

It should come as no surprise that the majority of the market-share is segmented into three regions: North America, Europe, and Asia. The latter represents nearly 50 percent of the global revenue, and Nintendo remains a key influence in all three markets. This evidence suggests that Nintendo mobile games should be faring much better; however, the result is the opposite. A closer examination of genres provides captivating insights.

Casual, puzzle, and arcade games remain the most popular genres across all regions with over 50 percent of active player-bases. While Nintendo does not have strong representation in the most popular mobile genres, the company’s recognized brands, such as Animal Crossing and Mario, should compensate for a lack of popularity.

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Where Nintendo Mobile Games Went Wrong

The industry is large and growing, and Nintendo has a presence in the three most valuable regions. Why is the company’s mobile game strategy failing? After much debate and detailed analysis, the staff at GamingROI identified three mistakes Nintendo made with its mobile games strategy.

Inconsistent Revenue Model

Paid applications, monthly subscriptions, and in-app purchases are the most successful mobile video game revenue models. According to TechCrunch, in-app purchases account for almost 95 percent of revenue. However, less than 0.5% of mobile players purchase in-app content. In addition, over 70 percent of mobile players prefer to watch an advertisement in exchange for in-app purchases. Nintendo not only employs mixed approach but also refuses to consider advertising revenue. Two of the company’s most popular games, Fire Emblem Heroes and Animal Crossing Pocket Camp, offer a monthly subscription model. This approach is contradictory to proven monetization methods. While the recent releases of Mario Kart Tour and Dr. Mario World correct this flaw by offering in-app purchases, mobile players still prefer to watch advertisements in exchange for the additional content.

Lack of Brand Recognition in Key Regions

While the Asia market remains the most lucrative, Nintendo does not have a presence in the most important regions. Over 25 percent of global revenue is from China; however, Nintendo has been unable to penetrate this market. In addition, Nintendo continues to neglect high-growth countries, such as India, Russia, Brazil, and Mexico. Although the company is succeeding in established markets, Nintendo has yet to generate brand recognition in flourishing regions. While some of its flaws are attributable to laws and restrictions, Nintendo has yet to employ a robust marketing campaign. Regardless of the reason, the Nintendo brand is not “winning” in the areas poised for the highest growth.

Popular Genres

While the industry routinely classifies Nintendo’s fan base as casual, mobile players are in an entirely different category. The three most popular genres include the Casual, Puzzle and Arcade genres. However, Nintendo’s current mobile game library includes just one of those genres: Dr. Mario World. The remaining titles are spread across racing and adventure games, which captivate less than 15 percent of the overall mobile player audience. A smarter approach would be for Nintendo to embrace the arcade genre. Iconic titles, such as Tetris, Mario Bros. and Donkey Kong, are ideal candidates for arcade ports. When coupled with in-app purchases or an advertising strategy, these legendary titles could give Nintendo mobile games a second life.

Conclusion

But we want to know what you think. Do you agree that Nintendo should adjust its strategy for mobile games? Should the company abandon this segment entirely? Do you also believe that Nintendo will not launch mobile games in the future? Let us know in the comments below or the social media links on the right. Also, be sure to check out our other news items on Pokemon, Modern Warfare, Capcom, Blizzard and more.

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