Tuesday, July 28, 2009

Why Isn't Nintendo on the iPhone?

According to a ScreenDigest report, the mobile gaming market is on the verge of exploding to a €2.6 billion market, which is European for "our currency is far more valuable than yours ($3.6bn)". It's an area at that EA and Gameloft have seized, enjoying a completely new source of incremental revenue. Even Sega has re-released the insta-classic Sonic the Hedgehog for the iPhone. But where, oh where, is Nintendo in this mix?

Are you in the business of a medium or a larger strategy?

I read a lot of Chuck Palahniuk. When I'm not reading his depraved work I read a lot of case studies. I'm always intrigued with the ones on corporations who've overly focused on a proprietary medium, versus a more holistic view of what their business is strategically about.

AOLBook and Union Pacific Air/Rail
Had AOL been thinking about expanding it's ubiquitous AIM application into more modes of social connection, we'd all be using AOLBook instead of Facebook. Union Pacific Railorad was by far the largest railroad in America during the dawn of aviation, and they were completely married to their rails. Had they decided their business was about moving people and not just moving people on railways they would have seized the opportunity to buy upstart Pan American airlines with their massive capital and of course profited nicely in the long term.

Amazon is about books
Jeff Bezos is clearly a student of business (or professor of I guess), and quickly decided to port their Kindle software to the iPhone application despite it cannibalizing their sales of Kindle hardware. I suspect for Bezos, it was simply realizing they are in the business of selling books, not hardware, thus any method that can potentially bring on more book sales was a worthy effort.

Nintendo is in the hardware business?

Contrast Amazon to Nintendo who despite a highly successful release of their Wii game console has fallen off $45/share since Q4 2008. Console launches are really pricey. Nintendo, Xbox, and PlayStation have all openly commented on taking massive hits in the opening years of a console in the hope that the market grows to a point to fill in the deficit. A great way to fill voids is to simply resell old products, and there's no better opportunity there than to take old NES titles and port them to the mobile market. Like Mario bouncing repeatedly into the coin blocks for easy money, Nintendo with minimal effort could keep ringing the register with sales of its revival games. Nintendo has the opportunity to increase their revenue substantially by simply digging into their game archive and rereleasing classic NES titles (I'm talking about you Zelda). However Nintendo will never concede their titles to a non-Nintendo platform. even to Apple with whom there's always been lurking concept of partnership.

It can be argued that Nintendo, being a console first, would be canabalizing its own business, but I'm not suggesting they port over existing current Gameboy titles (although I think that's still a good idea). Rather I'd emphatically argue that they should release classic Nintendo games for the mobile market which their is no canabalizing factor.

Most EVERYONE between 18-35 carries their cell phone at all times, but few carry their mobile game system, if they even own one. If the video game market was capable of surpassing the movie industry a couple of years ago, the mobile game marketing with it's ubiquitous hardware – the phone – presents a major opportunity. With a mobile gaming market in it's infancy an entree from Nintendo could dominate for years. But they're in the business of selling Gameboys, not games.


  • Illustrating my point, Electronic Arts (EA) released their quarterly filing today and instead of putting Apple in the context of a rival to their mobile partners in the PSP and Nintendo DS, they enthusiastically reported the great successes they were seeing with the iPhone.

    John S. Riccitiello, CEO Electronic Arts
    "Sure, and Eric may pipe in on this a little bit too -- we had a strong first quarter. It’s a business that in many ways is hitting on as many cylinders as we might hope for. We are seeing some really interesting innovation there. Cross play between social networks and iPhones, cross play between smartphones in general and the PC. And we’ve got a number of great products out there."

    Eric F. Brown, CFO Electronic Arts
    "No, I would just say that mobile is part of our overall digital strategy and we talked about growing that composite book of business by 25% overall in the year. Mobile is tracking well year-to-date and the iPhone has been a bit of a platform opportunity for us and this business, you know, we have scale and we operate highly efficiently in this business."

    Peter R. Moore, President EA Sports
    -- mobile but certainly from an EA Sports perspective, from our normal business of course with things like Tiger and Madden on the platform itself, we are also seeing in particular the Apple mobile platform as great extensions with applications from our core games. Most notable will be next week when Madden Online franchise goes live and you’ll be able to check your franchise from your Apple mobile apps as an extension of the core console game, so it’s becoming a big part of our business as well in EA Sports.

    Source: http://seekingalpha.com/article/153765-electronic-arts-f1q10-qtr-end-6-30-09-earnings-call-transcript?page=-1

    By Blogger Donnie, At August 5, 2009 9:48 AM  

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