Sega’s games have been available on iPhones etc for some time. Microsoft’s Smart Glass interface with the XBox 360 is also available on an array of mobile platforms. But one significant hangout is Nintendo. Nintendo are to app games like The Beatles where for iPods. They are sticking with their traditional distribution channels well beyond what might otherwise make sense.
To be sure, in Nintendo’s case that isn’t too crazy. It has sold about 5 million 3DSs in the US alone in its first year since launch. That isn’t a failure although it is a fraction of handheld gaming consoles if we include Apple and Android devices in the mix. But this appears to be a large decline over previous iterations.
That said, it does sell some games. Typically, it appears that each handheld owner buys on average more than one of the Nintendo in-house games. These usually cost about $40 placing them well above the typical mobile gaming price. For the 3DS about 60 million games have been sold so there is a revenue pool of maybe $1.8 billion. The issue of course, this is of a declining segment of the market.
The reasons for the decline are obvious. First, integrated portable devices are winning for overall network effects. Second, even in the children market, parents are attracted by games that cost a few dollars and can’t be lost (a considerable source of stress). There is simply more variety for the price and that price overall is lower.
But the fact that Nintendo has held its own tells us something about the market. Why does Nintendo get away with charging $40 for a game that might cost $7 tops on an iPod touch? The reason is brand. The games are of higher quality and people know that. So they are willing to pay the price. In addition, Nintendo keeps prices high by controlling prices more directly in the ecosystem through license fees. When people buy a DS they are locked in. The same could be said for iPods but Apple have relinquished that sort of pricing control. Finally, unlike iOS games, Nintendo games can actually be resold and the second hand market is healthy.
What would happen if Nintendo offered Mario on the iPhone. In order to replace what it could earn on its own system, it would have to earn $100 million. So if it sold a game for $0.99 it would have to sell 142 million copies. With its brand it may be able to charge several times more. Either way, it would have to be in the top 10 best selling games of all time. That doesn’t sound like a stretch. I am, of course, presuming here that technically iOS could handle a port of the game but it doesn’t seem implausible.
Given all of this, an eventual multi-platform approach to Mario does not seem implausible. But it depends on continuing decline for Nintendo. They have risen, fallen, risen and fallen before. One can only imagine the internal debate on trying to work out if the current fall is permanent or reversible.