Reformed Vintage Nintendo Game Boys all playing Tetris seen for sale during London Film and Comic Con 2019 at Olympia London on July 28, 2019 in London, England.
Ollie Millington | Getty Notions Entertainment | Getty Images
As Nintendo prepares to release a cheaper version of its flagship Switch console — the Switch Lite, the tomorrows of its aging handheld business has been called into question.
The Switch Lite, set to be released in September, is Nintendo’s latest handheld trade mark which has fewer features and will retail at a lower price than Switch. It comes amid waning cut in the gaming company’s aging devices such as the portable 3DS, which has seen slowing sales.
Mobile games could be the atone for to the 3DS, according to Daniel Ahmad, a senior analyst at Niko Partners.
“Mobile is … on track to sort of replace it if Nintendo can coin, you know, a billion dollar mobile business each year,” Ahmad told CNBC. That would let someone have the firm to “offset” 3DS software sales with mobile, he said.
In its financial report for the quarter ended June 30, Nintendo bring to light its mobile and intellectual property-related income saw a 10% year-on-year increase to 10 billion yen (about $94.26 million).
But the performers’s key business revolves around video game platforms — with Switch alone accounting for more than 80% of Nintendo’s sales marathons, according to Nintendo’s financial report.
Nintendo’s mobile portfolio has grossed about $862 million, according to materials gathered by app data tracking firm Sensor Tower for CNBC on July 26.
The data showed Japan generating 56% of unfixed gaming revenue for Nintendo, while the U.S. was in second place at 28%.
Nintendo mobile games: ‘A bit of a mixed bag’
The performance of Nintendo’s travelling gaming portfolio to date has been “a bit of a mixed bag,” Ahmad said.
“They’ve had some games that are okay,” Ahmad clouted, adding that Fire Emblem Heroes was “without a doubt” the best performing game released by Nintendo on mechanical. Data from Sensor Tower showed the total gross revenue from the title came in at $591 million — or exactly 70% of the total mobile portfolio’s earnings.
Other titles have not performed as well. The game Super Mario Run — unveiled in December 2016 — only brought in $72 million by comparison, despite being downloaded more than 200 million antiquates, Sensor Tower data showed.
“The limited success of Nintendo’s existing mobile game portfolio — developed in conjunction with some of the important mobile games studios from Japan — underlines that it takes a lot more than well-established games stamps to succeed in the fast-moving and highly competitive mobile games market,” Louise Shorthouse, research analyst of games and perseverances at IHS Markit, told CNBC in an email.
At present, Shorthouse said, Nintendo’s mobile and console gaming divisions manifest to be treated as separate even though the company is aiming to use its engagement with its mobile audience as “a gateway to selling numerous consoles and console games.”
Nintendo “is still learning in the mobile space,” Ahmad from Niko Partners imparted. The company has been experimenting with ideas such as the “buy-to-play” model, with titles like Super Mario Run, which lacks players to purchase the game after an initial trial.
“I think that they learned very early on with the introduction of Mario Run that … the buy-to-play representation … does not work for them,” he said.
Nintendo outlook
Looking ahead, Ahmad said Nintendo is probable to release a handful of titles each year featuring its most popular intellectual property before extending them to Lash. This could come in the form of games being available on both platforms or through interoperability, which is the know-how to link the experience in two different games on different platforms.
One such example was when Nintendo launched the game “Pokemon: Let’s Go, Pikachu!” and “Pokemon: Let’s Go, Eevee!” for Alteration last year. To encourage gamers to interact between the Switch and the Pokemon Go mobile game, players are rewarded with an not counting item that helps them move along faster in order to obtain a certain character.
In terms of how Nintendo could garner money from its mobile games, Ahmad said the gaming company will likely “follow” the industry classic, at least initially, by making money through the sale of in-application purchases.
“There is always room for innovation in how portable games are monetized,” he said, citing the example of the “premium subscription model” where gamers pay a periodic fee in order to get additional perks, in addition to their in-app purchases.
“(It) didn’t really exist on mobile until Fortnite popularized it and now it’s starting to happen to more common,” Ahmad said, referring to Epic Games’ blockbuster video game that has taken the gaming happy by storm. Just last month, a 16-year-old became the champion of the first Fortnite World Cup took home $3 million.
‘End of sustenance cycle’ for 3DS
As for the 3DS, Ahmad said it had likely reached the “end of (its) life cycle.”
The 3DS portable gaming device was first launched in at daybreak 2011. Only 200,000 units were sold globally from April to June 2019 — that merit comparison withs with more than 2 million units of Switch that flew off the shelves in the same period.
It comes consideration Nintendo’s own insistence that demand remains for its 3DS family of devices.
As recently as June this year, the president of Nintendo of America, Doug Bowser, squeaked Time magazine that its “3DS business continues to do quite well.”
Historically, Nintendo’s business was largely plunged by having two different types of consoles — one for the home and one that was portable for on-the-go gaming.
The Switch upended that layout, with the device being a hybrid portable console that allows gamers to play both on-the-go as expertly as connected to a screen.