Nintendo Turns to Its Hit Franchise In Its Quest to Rescue Earnings -- WSJ
September 09 2016 - 3:03AM
Dow Jones News
By Takashi Mochizuki
TOKYO -- Mario the plumber pulled off two global publicity coups
within three weeks, taking a starring role at the Rio Olympic
Games' closing ceremony and at Apple Inc.'s latest iPhone
introduction.
Now comes what may be the mustachioed videogame hero's most
difficult feat: boosting profit at the company that created the
character, Nintendo Co.
The Kyoto-based videogame maker sent the creator of Mario,
Shigeru Miyamoto, to Apple's event Wednesday in San Francisco,
where he stood beside Apple Chief Executive Tim Cook and announced
"Super Mario Run."
The free-to-download action game, to be released for Apple
devices by December, has a flavor similar to that of the original
console series and is optimized for smartphones. A version for
Google parent Alphabet Inc.'s Android operating system is also
planned.
On Thursday, Nintendo shares jumped 13% to Yen27,955 ($274.77)
in Tokyo trading. Investors have long called on Nintendo to take
its popular game franchises to smartphones as a way to cover
declines in its console business. Nintendo has struggled to stay
profitable in recent years.
The Mario smartphone game should bring in revenue quickly for
Nintendo because players have to pay if they want to enjoy all of
the game's levels. While Nintendo didn't release pricing plans,
smartphone versions of popular console games from companies such as
Square Enix Holdings Co. generally cost roughly $10 to $20.
Even more important is the publicity, because Nintendo is
preparing to start selling a new console code-named NX by next
March.
The willingness of Mr. Miyamoto, a legend among videogame fans,
to appear on stage with the head of the company that is partly
responsible for Nintendo's troubles shows how the Japanese company
needs to expose its characters to consumers who aren't currently
videogame devotees, and lure them to Nintendo game consoles and
software.
In addition to casual clothing and a luxury watch featuring
Nintendo characters, Nintendo has teamed up with Universal Parks
& Resorts, a unit of Comcast Corp.
"Smartphone games, theme-park projects and all other
character-licensing deals are just a marketing tool for Nintendo to
let people become interested in its console games," said Hideki
Yasuda, an analyst at Ace Research Institute.
The iPhone game announcement was the second surprise after the
Summer Olympics closing ceremony, when Japanese Prime Minister
Shinzo Abe appeared as Mario, popping up on a stage in the
plumber's hat of the popular character.
The idea for Mr. Abe's stunt came not from Nintendo but from
organizers of the 2020 Summer Games in Tokyo, said a spokeswoman
for the organizing committee. She said the committee had "no idea"
the iPhone game was in the works and simply chose Mario as a
globally recognizable symbol of Japan.
The challenge now for Nintendo is leveraging all the attention
into sales of the next-generation NX console, which it has said
will go on sale by March. The company hasn't given any details on
the NX, but people familiar with the matter say it is likely to be
designed for use both as a living-room console hooked up to a
television and as a portable device to carry around town. Analysts
said they expect Nintendo to release NX details by early
October.
Rivals are already beefing up their products ahead of the NX
introduction. Around the same time Nintendo was touting its
smartphone game on Wednesday, Sony was introducing a less-expensive
version of its PlayStation 4 console for casual users and a
high-end version for hard-core fans. Sony has sold more than 40
million units of the PlayStation 4, while Nintendo's Wii U,
introduced a year before the PlayStation 4, has sold 13 million
units so far.
Analysts said it would be difficult for Nintendo to take back
market share because Sony and Microsoft Corp. tend to lock game
players into their own systems by offering network-based services
such as downloads of new games. Nintendo is trying something
similar with an online community called My Nintendo.
In addition to the Mario game and a communications app called
Miitomo that is already available, Nintendo and partner DeNA Co.
plan to introduce two more smartphone games by March 2017,
featuring Nintendo franchises "Animal Crossing" and "Fire Emblem."
Nintendo's Mr. Miyamoto said previously that smartphone games would
become an important revenue source for the company.
Tokyo-based game consultant Serkan Toto predicted "Super Mario
Run" would generate at least one billion downloads globally. That
would follow the success of Pokémon Go, a smartphone game developed
by Google spinout Niantic Inc. and Nintendo affiliate Pokémon Co.
On the Apple stage Wednesday, a Niantic executive said Pokémon Go
has been downloaded more than 500 million times globally.
There are signs the Pokémon Go publicity has translated into
sales of more traditional hardware and software. Sales in Japan of
Nintendo's 3DS hand-held device and Pokémon games for the 3DS
increased after the Pokémon Go hoopla, according to industry game
data provider Famitsu.
Write to Takashi Mochizuki at takashi.mochizuki@wsj.com
(END) Dow Jones Newswires
September 09, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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