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Superdata: Nintendo could make $2.7B in 7 years by going mobile

People in this thread are accepting these figures as accurate because they don't want Nintendo to go mobile.

If the figures were instead being used to justify an argument for something they didn't like, they would be eviscerating the methodology.
 
Yaoibot said:
I don't know what the solution to Nintendo's dilemma is, but it needs to be disruptive (and I don't mean waggle), as all current scenarios are indicating a sizable contraction in their business.
Click to expand...

I continue to believe they need non-gaming revenue streams. Their eggs are not all in the same basket, but those baskets certainly are all in the same kitchen. I think Nintendo can add mobile, third party, shore up handheld, console, some or all of the above, but the long-term health of the company shouldn't be 100% about the gaming business.
 
A lot of people seem to miss the distinction between hardware revenue and profit. Yes, selling Wii U and 3DSs generates a lot of revenue.

The Wii U apparently is still sold for a loss. Likewise, for a while after the price cut, the 3DS was sold for a loss. The days of Nintendo having a fat margin on hardware are over.
 
Plinko said:
I still don't see why they're reluctant to put older VC games on mobile.

Would they play like crap? Yes, they probably would. But they'd still sell. Plus, it wouldn't really take sales away from their handhelds/consoles.
Click to expand...

One, they're reluctant to put older VC games on even the 3DS or Wii U. Much less mobile.

Two, if the games sold and played like crap, that would be damaging to Nintendo's reputation for software quality, which is one of the only things they actually have going for them right now.
 
Superdata is looking for a research analyst who has a working knowledge of Excel (not statistical software like SAS) and will "impress us with a ridiculous high-score in your favorite game, your vintage NES console, your unbeatable Magic deck, your GTA V fan art, etc".

Sounds like they're the real deal.
 
tokkun said:
People in this thread are accepting these figures as accurate because they don't want Nintendo to go mobile.

If the figures were instead being used to justify an argument for something they didn't like, they would be eviscerating the methodology.
Click to expand...

This is certainly true, but that is what the topic is. People are posting their responses as if this were a reasonably accurate projection. I don't put a lot of stock in the numbers, but I don't have the tools to debunk them, and, one or two gaffers aside, anyone who says they do in this thread is bullshitting.

Also, for such an extremely speculative thing as this, there's really no "good" way to predict what their sales will be. Any projection isn't going to do much better than a dartboard.
 
Nintendo should consider getting into feature film.
I imagine Pokemon did wonders for Nintendo. Imagine if they made big budget feature films with their best IP.
 
SuperPac said:
Kind of ridiculous that it doesn't seem to say how many titles would need to be released and at what price point. Also wouldn't take into account changes in the mobile market that seem to happen every 6 months making it slightly unlikely it would be a growing business unless Nintendo staggered releases in some way.

Any developer who's ever released a mobile game knows there's a big spike at release followed by a sharp decline and long plateau. There's no growing business in releasing all titles at once and watching them all plateau at the same time.
Click to expand...
How many billions have you made at Adult Swim??
 
Randolph Freelander said:
That's a bit of a false dichotomy, because consumers are already making that choice even without Nintendo games on mobile.

The idea here isn't that if Nintendo goes mobile, it could damage their handheld line. The idea is that their handheld line is already damaged. Going forward similarly isn't about preserving profitability of the past, it's about maximizing profitability of the future, a future which might not include a profitable handheld business.

Nintendo simply cannot act with a DS mindset when they do not live in a DS reality. They need to project what reality will be in 5 years, 10 years, and then adjust to maximize profitability within it.
Click to expand...

This. People act like nintendo' handheld line are untouchable guaranteed cash cows. I'm sure at some point people felt this way about Nintendo's home console business too. Yeah the 3DS is making money and moving systems, but there are clear signs of decline in the market. If Nintendo just take that market for granted they could find the 3DS' successor having many of the same problems the GameCube and Wii u had before it. Nintendo and any other company would be wise to recognize these shifts and be proactive rather than just waiting until the bottom falls out of the market.
 
I'm all for a third party Nintendo or at least a handheld focused one, but they have much better options than releasing port of games on mobile, they sure can use some of their IPs to provide some mobile games but those need to be designed with mobile in mind.

Not having to worry with hardware would give Nintendo the freedom to try different things with new/old IPS, but it won't be a simple transition.
 
leroidys said:
This is certainly true, but that is what the topic is. People are posting their responses as if this were a reasonably accurate projection. I don't put a lot of stock in the numbers, but I don't have the tools to debunk them, and, one or two gaffers aside, anyone who says they do in this thread is bullshitting.

Also, for such an extremely speculative thing as this, there's really no "good" way to predict what their sales will be. Any projection isn't going to do much better than a dartboard.
Click to expand...

I think there are some obvious criticisms of the model that anyone could make.

Has the model they are using to predict this revenue ever been predictively validated?
How many examples of classic games being ported to mobile do they have to draw on? Is the audience buying Final Fantasy re-releases from the 1990s really the same audience that would be buying Mario and Pokemon?
Is it fair for the model to only consider Nintendo releasing their existing catalogue, then never releasing new games ever again?
Why does releasing games on mobile preclude them from continuing to develop their own hardware? Couldn't the release DS-era and earlier games on mobile and continue to make current generation games exclusive to 3DS?
 
Randolph Freelander said:
That's a bit of a false dichotomy, because consumers are already making that choice even without Nintendo games on mobile.

The idea here isn't that if Nintendo goes mobile, it could damage their handheld line. The idea is that their handheld line is already damaged. Going forward similarly isn't about preserving profitability of the past, it's about maximizing profitability of the future, a future which might not include a profitable handheld business.

Nintendo simply cannot act with a DS mindset when they do not live in a DS reality. They need to project what reality will be in 5 years, 10 years, and then adjust to maximize profitability within it.
Click to expand...

I think this is pretty reductive. The casual crowd has very little brand loyalty for their time wasters. We've seen this already, as with the unprecedented exodus from the Wii platform. If nintendo jumps in to phone development in 5 years when the 4DS and Wii Z tank, people aren't going to say "fuck that mario shit, I only buy angry birds/candy crush/whatever games on my iPhone."

I think that people are over eager to predict smartphones subsuming all other gaming. In fact, in many markets' smart phones are reaching a saturation point. It is entirely possible that we are approaching the apex of smartphone gaming growth. I certainly may regret the last prediction, and I by no means stand by it 100%, but I am just contesting the common wisdom that smartphone gaming is the only viable future.

Further, the companies that are doing well in smartphone games are ones whose entire business structure is based around the concept. To match that business model, (extremely low dev costs/time, profit massively off of exploiting peoples impulses and hooking whales), Nintendo would have to overhaul their company to such a degree that they would in no way resemble the company they are today. That kind of software and Super Mario 3D world are almost as different in nature as 3D world and Microsoft Office, another massively profitable piece of software. Of course, nobody suggests that nintendo make productivity software despite the massive market, for the simple reason that it's completely ridiculous. To me, Nintendo adopting a f2p garbageware business model is just as ridiculous.
I know this analogy sucks, but it's the best I can do on my short break.

tokkun said:
I think there are some obvious criticisms of the model that anyone could make.

Has the model they are using to predict this revenue ever been predictively validated?
How many examples of classic games being ported to mobile do they have to draw on? Is the audience buying Final Fantasy re-releases from the 1990s really the same audience that would be buying Mario and Pokemon?
Is it fair for the model to only consider Nintendo releasing their existing catalogue, then never releasing new games ever again?
Why does releasing games on mobile preclude them from continuing to develop their own hardware? Couldn't the release DS-era and earlier games on mobile and continue to make current generation games exclusive to 3DS?
Click to expand...

You're suggesting throwing in additional parameters, which would make the predictions even less tenable. I think that narrowing it down to the most oft repeated suggestion, that nintendo release legacy titles, is reasonable in this case.
 
I like how they are charting for 7 years of growth in mobile when we don't even know the long term prospects OF mobile yet.

Certainly 7 years ago you'd be very unlikely to predict (remembering that 7 years ago, the original iphone would still be 4 months from launching) that the mobile market would be as it is... to say for certainty that in 7 years the mobile market will be strong enough to support Nintendo with those kind of sales is fairly ridiculous.
 
I do not support this hole notion that Nintendo should go mobile, but if they did and their games are free to play then we are fuck beyond belief. Micro transactions - think about it Pokemon with micro-trans it would be hell in wheels, or Mario with it no more 1ups, you have to pay for lives.
 
Guevara said:
A lot of people seem to miss the distinction between hardware revenue and profit. Yes, selling Wii U and 3DSs generates a lot of revenue.

The Wii U apparently is still sold for a loss. Likewise, for a while after the price cut, the 3DS was sold for a loss. The days of Nintendo having a fat margin on hardware are over.
Click to expand...

Well that's it, right.

A hardware company has the following expenses:
- Hardware R&D
- Software R&D
- Hardware cost
- Digital server costs, ongoing

They have the following sources of income:
- Licensing revenue from third parties selling games (digital or physical)
- Software revenue from 1st party software
- Profit potentially made on hardware nearer to end of life cycle

In a world where you have no hardware profit and greatly declining licensing revenue, your software revenue needs to cover everything. Meaning that not only does Hypothetical Mario 64-2 need to cover its development costs and make a profit in terms of ROI, it also needs to cover missing licensing revenue and hardware costs.
 
Plinko said:
I still don't see why they're reluctant to put older VC games on mobile.

Would they play like crap? Yes, they probably would. But they'd still sell. Plus, it wouldn't really take sales away from their handhelds/consoles.
Click to expand...

They won't even put them on the 3DS/Wii U at a decent pace. That should tell you how much Nintendo really cares about doing it.
 
Plinko said:
I still don't see why they're reluctant to put older VC games on mobile.

Would they play like crap? Yes, they probably would. But they'd still sell. Plus, it wouldn't really take sales away from their handhelds/consoles.
Click to expand...

Because it's not as easy as you think it is and it would cut the knees off of a big reason to buy their platforms. To play their games.
 
leroidys said:
I think this is pretty reductive. The casual crowd has very little brand loyalty for their time wasters. We've seen this already, as with the unprecedented exodus from the Wii platform. If nintendo jumps in to phone development in 5 years when the 4DS and Wii Z tank, people aren't going to say "**** that mario ****, I only buy angry birds/candy crush/whatever games on my iPhone."

I think that people are over eager to predict smartphones subsuming all other gaming. In fact, in many markets smart phones are reaching a saturation point. It is entirely possible that we are approaching the apex of smartphone gaming growth. I certainly may regret the last prediction, and I by no means stand by it 100%, but I am just contesting the common wisdom that smartphone gaming is the only viable future.

Further, the companies that are doing well in smartphone games are ones whose entire business structure is based around the concept. To match that business model, (extremely low dev costs/time, profit massively off of exploiting peoples impulses and hooking whales), Nintendo would have to overhaul their company to such a degree that they would in no way resemble the company they are today. That kind of software and Super Mario 3D world are almost as different in nature as 3D world and Microsoft Office, another massively profitable piece of software. Of course, nobody suggests that nintendo make productivity software despite the massive market, for the simple reason that it's completely ridiculous. To me, Nintendo adopting a f2p garbageware business model is just as ridiculous.
I know this analogy sucks, but it's the best I can do on my short break.
Click to expand...

To be clear, it is not my prediction that handheld gaming completely goes the way of the dodo bird. However, it is certainly my assertion that handheld gaming has declined for each of the past 5 years, as it's verifiable. Hardware and software shipments are down year after year for Nintendo's overall handheld line, as they have for the console line, and revenues have similarly fallen each year. It is also my projection that they will see further declines over the next 2 years, as the 3DS is most likely at its peak during the current fiscal year.

The reality of now is that the handheld market is smaller than it was, which means potential profitablity is smaller than it once was. It is on Nintendo, certainly not me, to project if the 3DS will be the floor from which they can rebuild, or if with the next handheld the market will further contract. They cannot continue to primarily exist in a contracting market, they have to return to growth.

Again, I do not argue for a turn to mobile. I will argue its merits in general terms, playing devil's advocate to a degree, and if they do go mobile, I say go all out and with no misguided notion that it will draw people to core titles on other platforms, but I will not openly demand it because what do I know, I'm just a programmer, not a business analyst intently studying the market. That's on Nintendo. My only strongly-held opinion is something I stated earlier in the thread and in others, that they find revenue streams that have nothing at all to do with gaming, because this business is changing and they need some insulation from it.
 
Stumpokapow said:
Well that's it, right.

A hardware company has the following expenses:
- Hardware R&D
- Software R&D
- Hardware cost
- Digital server costs, ongoing

They have the following sources of income:
- Licensing revenue from third parties selling games (digital or physical)
- Software revenue from 1st party software
- Profit potentially made on hardware nearer to end of life cycle

In a world where you have no hardware profit and greatly declining licensing revenue, your software revenue needs to cover everything. Meaning that not only does Hypothetical Mario 64-2 need to cover its development costs and make a profit in terms of ROI, it also needs to cover missing licensing revenue and hardware costs.
Click to expand...

Even if we strip out the revenue that Nintendo derives from hardware sales and their licensing fees. And we just look at the revenue from 1st party software sales. Nintendo would still be a huge chunk of the entire revenue generated from the mobile platforms. The iOS app store did $10 billion in revenue in 2013. Nintendo as a whole did $6.3 billion. In 2011, Nintendo did over $10 billion in revenue. If Nintendo leaves the hardware business to become strictly a software company, I think they would be doing it way to prematurely. I don't think the app store can support Nintendo as it currently stands and I don't think the economics of the app store can support the way Nintendo develops and prices their software.

As a game, I would hate for Nintendo to get into the predatory practice of the F2P model that is currently in place in the mobile space. I don't want to ever have Nintendo's developers not thinking about ways to bring joy to their customers but instead ways to monazite their customers.
 
Let's break down how much 2.7 billion is over 7 years in terms of Nintendo products:

$2.7bn in revenue is ~$386 million per year over 7 years.

At $50/game, that's 7.72 million in game sales per year
At $169/console (3DS), that's ~2.3 million consoles per year for 7 years
At $249/console (Wii U), that's ~1.55 million console sales per year for 7 years.

How much of each item goes to Nintendo? Unsure. Someone else can clarify.

Feasible without going the "mobile route"? Absolutely.
 
Randolph Freelander said:
To be clear, it is not my prediction that handheld gaming completely goes the way of the dodo bird. However, it is certainly my assertion that handheld gaming has declined for each of the past 5 years, as it's verifiable. Hardware and software shipments are down year after year for Nintendo's overall handheld line, as they have for the console line, and revenues have similarly fallen each year. It is also my projection that they will see further declines over the next 2 years, as the 3DS is most likely at its peak during the current fiscal year.

The reality of now is that the handheld market is smaller than it was, which means potential profitablity is smaller than it once was. It is on Nintendo, certainly not me, to project if the 3DS will be the floor from which they can rebuild, or if with the next handheld the market will further contract. They cannot continue to primarily exist in a contracting market, they have to return to growth.

Again, I do not argue for a turn to mobile. I will argue its merits in general terms, playing devil's advocate to a degree, and if they do go mobile, I say go all out and with no misguided notion that it will draw people to core titles on other platforms, but I will not openly demand it because what do I know, I'm just a programmer, not a business analyst intently studying the market. That's on Nintendo. My only strongly-held opinion is something I stated earlier in the thread and in others, that they find revenue streams that have nothing at all to do with gaming, because this business is changing and they need some insulation from it.
Click to expand...

I definitely agree with that last part. I'll be interested to see what the additional leveraging of their IP is going to turn out as (assuming the nikkei information is correct.)
 
Dark Octave said:
Just going to leave a taste of Nintendo's future here for those who missed it in the other mobile thread:

tumblr_lw8f05gQYT1qjyqixo2_1280.jpg


Enjoy and happy gaming :)
Click to expand...

Eh.... Nice designs, but no thanks.
 
Gannd said:
Because it's not as easy as you think it is and it would cut the knees off of a big reason to buy their platforms. To play their games.
Click to expand...

Has there ever been any proof that people bought Wiis to play older VC games? How about 3DS/Wii U?
 
Plinko said:
Has there ever been any proof that people bought Wiis to play older VC games? How about 3DS/Wii U?
Click to expand...

If Nintendo did a better job with the service and had a richer catalogue of games, people would.
 
monlo said:
Let's break down how much 2.7 billion is over 7 years in terms of Nintendo products:

$2.7bn in revenue is ~$386 million per year over 7 years.

At $50/game, that's 7.72 million in game sales per year
At $169/console (3DS), that's ~2.3 million consoles per year for 7 years
At $249/console (Wii U), that's ~1.55 million console sales per year for 7 years.

How much of each item goes to Nintendo? Unsure. Someone else can clarify.

Feasible without going the "mobile route"? Absolutely.
Click to expand...
Thats without mentioning that the 2.7 billions are their best case scenario. Lol.
 
Plinko said:
Has there ever been any proof that people bought Wiis to play older VC games? How about 3DS/Wii U?
Click to expand...

The Wii's time has certainly passed, but the Virtual Console was a huge draw during its prime. Take a look at this old press release:

REDMOND, Wash., June 1, 2007 – Nintendo is giving video game fans a way to access their favorite classic games, all without leaving the comfort of their homes. And gamers have responded en masse as the library of downloadable game classics continues to grow. The upcoming addition of Zelda II™ – The Adventure of Link® on June 4 marks the 100th classic game available on the Wii Shop Channel. And since going online Nov. 19, owners of Nintendo's hot Wii™ video game system have downloaded more than 4.7 million classic games from Wii's Virtual Console
Click to expand...
 
Gannd said:
Even if we strip out the revenue that Nintendo derives from hardware sales and their licensing fees. And we just look at the revenue from 1st party software sales. Nintendo would still be a huge chunk of the entire revenue generated from the mobile platforms. The iOS app store did $10 billion in revenue in 2013. Nintendo as a whole did $6.3 billion. In 2011, Nintendo did over $10 billion in revenue. If Nintendo leaves the hardware business to become strictly a software company, I think they would be doing it way to prematurely. I don't think the app store can support Nintendo as it currently stands and I don't think the economics of the app store can support the way Nintendo develops and prices their software.

As a game, I would hate for Nintendo to get into the predatory practice of the F2P model that is currently in place in the mobile space. I don't want to ever have Nintendo's developers not thinking about ways to bring joy to their customers but instead ways to monazite their customers.
Click to expand...

You're making a weird assumption that Nintendo would only develop games for the App Store in this scenario.
 
Plinko said:
Has there ever been any proof that people bought Wiis to play older VC games? How about 3DS/Wii U?
Click to expand...

My Wii purchase was 50% Twilight Princess and 50% virtual console (with the wii remote being a sideways nes pad) based.

Earthbound on Wii U was also a significant incentive, and I bought a DSi for the inevitable GBA roms (hard lesson there).
 
Plinko said:
Has there ever been any proof that people bought Wiis to play older VC games? How about 3DS/Wii U?
Click to expand...
This was a thing in Japan. I remember Wii booklets that would advertise VC and nothing but VC over there - it helps that the VC library in Japan is much better, I guess.
 
Stumpokapow said:
Well that's it, right.

A hardware company has the following expenses:
- Hardware R&D
- Software R&D
- Hardware cost
- Digital server costs, ongoing

They have the following sources of income:
- Licensing revenue from third parties selling games (digital or physical)
- Software revenue from 1st party software
- Profit potentially made on hardware nearer to end of life cycle

In a world where you have no hardware profit and greatly declining licensing revenue, your software revenue needs to cover everything. Meaning that not only does Hypothetical Mario 64-2 need to cover its development costs and make a profit in terms of ROI, it also needs to cover missing licensing revenue and hardware costs.
Click to expand...
Yes. And they could sell a lot more of that profitable first party software if they weren't stuck on the unprofitable or barely-profitable hardware.
 
miksar said:
The research also mentions three potential scenarios for Nintendo: 1) porting existing games to mobile; 2) licensing IPs to mobile publishers; 3) launching a smartphone app to drive customers to drive customers to its existing business. It seems the third one is definitely happening.
Click to expand...

Why not model the only strategy that makes sense?

Which is to create mobile specific games leveraging their stable of characters and IP but developing gameplay and experiences from the ground up that suit the target devices.
 
KojiKnight said:
I like how they are charting for 7 years of growth in mobile when we don't even know the long term prospects OF mobile yet.

Certainly 7 years ago you'd be very unlikely to predict (remembering that 7 years ago, the original iphone would still be 4 months from launching) that the mobile market would be as it is... to say for certainty that in 7 years the mobile market will be strong enough to support Nintendo with those kind of sales is fairly ridiculous.
Click to expand...
For real. 7 years is nuts. And why such an arbitrary number? Why not 5 years, or 3 -- something close enough for us to actually be able to predict with a degree of accuracy?
 
Gannd said:
Even if we strip out the revenue that Nintendo derives from hardware sales and their licensing fees. And we just look at the revenue from 1st party software sales. Nintendo would still be a huge chunk of the entire revenue generated from the mobile platforms. The iOS app store did $10 billion in revenue in 2013. Nintendo as a whole did $6.3 billion. In 2011, Nintendo did over $10 billion in revenue. If Nintendo leaves the hardware business to become strictly a software company, I think they would be doing it way to prematurely. I don't think the app store can support Nintendo as it currently stands and I don't think the economics of the app store can support the way Nintendo develops and prices their software.
Click to expand...

Your post here underscores a different truth: Nintendo cannot operate as if 2011 revenue is a given, since we live in a world where 2013 revenue is markedly lower. (And FY3/2011 was lower than FY3/2009.) Along those lines, Nintendo cannot operate under the assumption that if they stay the course, revenue in 2018 will be in line with 2013. It's not about how Nintendo did in the past, it's about is the business model now sustainable and about how well equipped they are to deal with the future.

Again, for those dead certain that there's nothing wrong with Nintendo's present business that a little advertising wouldn't fix, that 40 years of gaming profits don't lie, consider that Nintendo's present business has led them to 5 consecutive years of revenue declines (including projections for FY3/2014) and 3 consecutive years of operating losses (ditto). What they're doing now is unacceptable and cannot continue, and it doesn't matter how well it worked from 1974-2009. They have to adapt to tomorrow, just like they had to adapt in the past when their prior business models were no longer the best way forward.
 
Glass Rebel said:
I wonder how shareholders would react to Nintendo shutting down a significant part of their business, one that employs several hundred people and makes up a big chunk of their assets.
Click to expand...

Sounds like they are hoping for it:

"Nintendo shares are up 50% since early June. Now given it's had really poor numbers over that time those aren't investors betting on earnings, those are investors betting on big strategic change."

http://video.ft.com/3112000979001/What-next-for-Nintendo-/Companies​
 
Shoehorning traditionally designed games into a pure touchscreen control format is an absolutely horrific idea and should never be done.
 
Glass Rebel said:
I wonder how shareholders would react to Nintendo shutting down a significant part of their business, one that employs several hundred people and makes up a big chunk of their assets.
Click to expand...

If it projects to increase sustainable profitability, they'd react pretty well.

It's not about preserving headcount. It's not particularly about preserving revenue, if the cost of generating that revenue means that the revenue isn't sufficiently profitable. It's only about a sustainable business model that better positions Nintendo for the future.
 
They could make $2.7B if they stop making games like Pokemon Battle Revolution, Pokemon Ranch Channel, Pokemon Rumble and make Pokemon Snap and Pokemon Stadium 3.
 
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