In a general meeting with the shareholders, Nintendo CEO, Satoru Iwata, provided more details about his company’s thinking regarding the monetization model of its upcoming mobile games. He first reiterated that Nintendo cannot succeed in the mobile world if it simply releases any software title with one of its popular characters or themes from its popular game franchises; the company needs to find a way to stand out among the crowded world of mobile gaming. As for monetization, responding to a question about going either with “one-shot" payments (premium) or free-of-charge but pay for items (F2P), Iwata said that Nintendo will not use the terminology “free-to-play" because it wants its games to be appreciated by consumers, and he feels that using this terminology implies that the game is completely free. Instead, his company prefers the term “free-to-start" because that term aptly describes how a player can begin a game for free but not play it for free. He then stated that one-time payment systems haven’t been doing great on smart devices because of the huge pressure from other developers that has led to a race to the bottom. Since Nintendo wants to “cherish" the value of software, there’s a limit to how low a price it wants to attach to its upcoming mobile games. Nintendo doesn’t believe it should limit its monetization system to one-time payments, although that’s not an overarching principle because different payment systems suit different kinds of software.
Iwata then went into more detail about what he sees as the social issue of F2P games psychologically manipulating players and acknowledged that the profits from these kind of games come from “whales" rather than from the majority of players. Although companies in Japan can make quite a bit of profit by focusing on whales, Iwata doesn’t believe that the same approach would be embraced by people around the world. Since Nintendo wants to make mobile games that appeal to a wide demographic, it needs to be able to reach a broad audience in terms or culture, nationality, gender, and age. Therefore, the company can’t use a tactic that works in Japan and expect to meet the worldwide success it’s searching for. He hopes that Nintendo will develop games that appeal to a wide spectrum of consumers willing to make relatively small payments. He was very insistent on pointing out that Nintendo wants to avoid “whaling" because he felt that it will hurt Nintendo’s brand image.
Finally, Iwata said that Nintendo isn’t planning on releasing many games from this year to the next (his wording) because he realizes that mobile games aren’t like other Nintendo games (where a game has the strongest impact when it’s first released but gradually fades). For him, mobile games are like “services" where the initial player pool might be small, but it expands over time and with it expands the revenue. If a game cannot offer services that evolve even on a daily basis, it cannot entertain consumers over the long term; therefore, Iwata concluded, Nintendo intends to spend sufficient time on the service aspect of each title in order to grow each one of their games substantially before moving to the next one.
What do you think of all this? Is it music to your ears, or a cacophony? Personally, I like that Nintendo appears to be very aware of the realities of the platform it’s entering and is already trying to develop a strategy that will allow it to make the most of it. I wasn’t expecting Nintendo to go full-on premium because, let’s be honest, that would be unsustainable despite what we all wish the truth was. If Nintendo does F2P, sorry, Free-to-Start right by producing constant content at very low prices, I believe it will do very well. We shall see soon, I suppose. If you want to read the whole interview, go here.
