TOKYO: Nintendo said it would work with compatriot DeNA to develop its titles for mobile devices. Yesterday, the stock barely traded as buy orders swamped sells. It closed up 21 percent.
Nintendo’s move marks a big strategy reset. The company had resisted opening up its titles for fear of undermining hardware sales. This approach was failing. In the nine months to December Nintendo’s hardware sales declined one-fifth year on year. Sales from software came to $1.7bn, or nearly half of the total, by virtue of holding flat.
The change of tack may be late but it is in the right direction. Mobile gaming analyst Newzoo expects 2015 revenues from games played on tablets and smartphones to reach $30.3bn, up a fifth year on year. Console revenues are likely to make only $26.4bn.
Still, going mobile does not always make gold coins for game developers. Online vendors take a huge cut of the revenues for apps they sell – as much as 30 per cent. Newzoo estimates that 2015 gaming revenues at Google and Apple, $3bn and $4bn respectively, will far outstrip Nintendo’s software sales.
Other producers of mobile hits, such as Finland’s unlisted Rovio (Angry Birds) and US-listed King (Candy Crush), have struggled to maintain momentum. After increasing revenues by 23 times between 2010 and 2012, Rovio’s top line stalled in 2013; earnings halved. The company is now gambling on a feature-length Angry Birds film due for release in 2016.
King has fared slightly better, with Soda Saga piggybacking the popularity of Candy Crush. In 2014, earnings rose a tenth year on year but rising costs left profits barely flat.
Perhaps more illustrative of the potential for Nintendo is Electronic Arts. That company was also slow to open popular titles such as Fifa and Madden NFL to gamers beyond the console, only succumbing last year. In the December quarter, digital revenues rose a third year on year to $540m; losses were reversed.
