Nintendo is snubbing the chance to earn nearly $3bn in the next seven years by not bringing its IP to smartphones.
That’s according to a piece entitled “Nintendo’s $2.7bn mobile games opportunity that’s never going to happen” by SuperData Research.
“By all accounts, the notoriously proprietary-only publisher and device maker is floundering in an increasingly cross-platform and digital world,” it claimed. “A dogmatic approach to a changing, digital world may, in fact, spell its demise. The truth is that Nintendo’s business can’t simply redirect and adopt a free-to-play model. But there is a potential salvation in moving towards mobile and licensing of intellectual property
“Porting Mario, Zelda and Pikachu to smartphones would yield Nintendo an estimated $1.5bn in its first year. Based on historical sales figures on iOS and Android, we developed a bull and bear earnings scenario. Factoring in Nintendo’s premium brand equity and an average market price of $8.41 resulted in a low of $940m and a high of $2.7bn in sales.
However, the firm also identifies a key weakness in this strategy – the threat it would pose to its existing hardware.
“Once initial demand is satisfied, sales will drop off steeply. Worse, Nintendo’s business model is based on its (formerly) highly profitable hardware sales,” it added. “With its key software living on the iPhone and Android there would be no need to buy a Wii or 3DS and would undermine its profitable handheld market and change the Nintendo ecosystem.
“To survive, Nintendo will have to evolve. No doubt, Nintendo will have to let go of its fully integrated, proprietary nature, and ensure it maintains relevance in a growing cross-platform world. Now, for the first time in its history, does Nintendo seem ready to make a change. The company has been slow to adapt. But the market is saying it’s time.”