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There's an interesting new bit of insight into Nintendo's model for mobile games. A lot of investors and shareholders have been egging Nintendo on to adopt the free-to-play model for their mobile games, but they've reluctant to do so. So will Nintendo mobile games go free-to-play in the future? Well, probably not. Why? Brand integrity. Let's back up and explain how Nintendo came to this decision.
According to the Nikkei, Nintendo's Super Mario Run was off to a hot start when it launched for the iOS but then tapered off quickly. The profits weren't quite as strong for the game as investors had hoped, and even Nintendo's new president Tatsumi Kimishima commented that the game didn't meet their expectations.
The big hold-up with Super Mario Run's potential profit margin breakthrough was due to the fact that the game was not free-to-play. You could download a trial and if you liked it you could spend $10 to unlock the full game, paying only once to get your hands on the entire experience. This meant that there was no way to make residuals off whales and no way to maintain revenue perpetuity from returning gamers.
Typically, most free-to-play games keep gamers hooked by having them return to the cash shop for microtransactions. This usually includes buying new health potions, mana potions or unlocking new gear or outfits or accessories for characters.
In fact, Nintendo used the free-to-play model for Fire Emblem Heroes, where gamers could spend real money to unlock random heroes in the game. This is a method that proved to be quite the financial success for Nintendo and lit up the eyes of investors hoping to see more games like this on mobile devices. The title managed to curb stomp Super Mario Run in terms of short-term gains and revenue.
Nintendo, however, are steadfast in avoiding that model. According to the Nikkei report, a Nintendo senior official revealed to them that Fire Emblem Heroes was actually an "outlier". The free-to-play mobile game that got off to a hot start and has continued to prove to be successful for Nintendo is not the business model they're attempting to pursue.
According to Nintendo, they prefer the Super Mario Run buy-once-to-own model instead.
One of the things that Nintendo prides itself on is ensuring that their games equate to quality. They were the ones who literally saved the gaming industry after the crash back in 1983, utilizing the Nintendo Seal of Quality as an assurance to consumers that the product was designed and made to be of a certain quality and that it was not a cheap or poorly made product.
Nintendo has maintained this stance for many of their first-party titles throughout the years, and they want to continue to maintain this philosophy even while they make mobile games.
Essentially, they see free-to-play games as something that degenerates the integrity of a brand when it's overexposed or over-saturated. They've opted to use free-to-play models sparingly in order to retain brand integrity for characters and franchises like Super Mario, Super Metroid, Kirby, and Donkey Kong. Nintendo made it known to Nikkei that mobile gaming isn't there for them to replace their traditional consoles and portable devices, but rather as a buffer to reach a wider audience to bring them toward Nintendo's own proprietary hardware, like the newly launched Nintendo Switch. It's a smart a move even though it's costing them a bit of profit in the short term.