Nintendo Does Not Need Smartphones

Nintendo has been receiving an increasing amount of pressure lately to take their franchises to smartphones and tablets. Investors looking to make a quick buck have been urging Nintendo to abandon the handheld hardware market and begin development for Android and iOS operating systems. Nintendo, under the lead of president Satoru Iwata have resisted this call to quit.

Iwata responded last September to this issue:

This is absolutely not under consideration. If we did this, Nintendo would cease to be Nintendo. Having a hardware development team in-house is a major strength. It’s the duty of management to make use of those strengths. It’s probably the correct decision in the sense that the moment we started to release games on smartphones we’d make profits. However, I believe my responsibility is not to short term profits, but to Nintendo’s mid and long term competitive strength.

It is of the prestigious opinion of LaserLemming.com that not only is Iwata completely correct, but these investors are extremely short-sighted on the matter. Developing for these operating systems would prove extremely profitable for Nintendo in the short term. In the long term, it cheapens Nintendo’s franchises, fractures the user base, creates games of varying quality, and ultimately takes Nintendo down several pegs in the business world.

The 3DS XL is set to release August 19th in the U.S.

Let’s take a brief moment to look at some numbers. Below are the current known cumulative sales of the DS, 3DS, and PS Vita:

  • Nintendo DS- 151 million units sold since 2004
  • Nintendo 3DS- 17 million units sold since 2011
  • Playstation Vita- 1.8 million units sold since December of 2011

Nintendo has moved quite a few dual screen handhelds in the past 8 years. And not to rain on Sony’s parade, but the Playstation brand isn’t exactly slowing Nintendo’s handhelds down at the moment.

So they’ve sold a lot. What does this mean? These sales are not only evidence that Nintendo is doing well in the portable market. The numbers are also evidence of a healthy dedicated handheld market overall.

The Nintendo DS came out at a time before the smartphone boom. Texting was a relatively new concept to many people and the majority of games played on a phone already came pre-installed on said phone (Snake II anyone?). The 3DS was born into a very different world. By 2011, playing games on the go had become easier than ever. Before the App Store and Google Play (previously known as the Android Market), those looking to game on their cell phone were limited to slow, clunky games at relatively high prices.

This was once the most popular mobile game available.

Apple and Google made such constrictions a thing of the past. Not only could developers create games for phones with faster processors and slicker graphics, they could price them however they wanted (including the price of “free”). Because of this, we now live in a world where many of us have more games in our pocket than we know what to do with.

This would seemingly be a much scarier market for Nintendo (and Sony) to introduce new hardware into. Especially when you consider that games on the 3DS and Vita typically range from $30 – $50 compared to the average price of $1.24 for a game on the iPhone App Store. On top of that, the ability of play games and make calls on one device creates the idea that carrying something else around is a hassle. Nobody in their right mind would want to carry around another device when they can satisfy their gaming and social needs with just one.

Yet the 3DS is outselling the DS in year-to-year sales. 17 million units of relatively expensive hardware is nothing to scoff at in a market that supposedly has no more use for such things. Apparently the world isn’t ready to give up dedicated handhelds just yet.

Developing for smartphones means developing for a fractured user base. This is why some games run great on one phone and simultaneously run terribly on another (and let’s not even get into how much worse these games would play without buttons).. Sure Nintendo has plenty of old games that could probably run decently on just about any smartphone, but doing so would cheapen the IP. No company is going to release a game for the iPhone for $30 or $40 and expect it to sell a million copies. They are forced to sell their games cheap, no matter how much time and money was actually put in to their development.

The exception. Not the rule.

Nintendo entering the market would be no different. Their games would need to be sold for a few dollars at most. And while I think that the Nintendo of today could learn a thing or two about price drops, this is not the answer. The company could easily afford to charge a buck or two for their old ROMs and make a lot of money, but it would forever change the way their future games are created and sold. Consumers cannot expect to get AAA game content at gum stick prices.

And that’s an  optimistic take on the situation. Most iPhone games/apps make very little money- if any. Kontain writes:

Apple CEO Steve Jobs has said, the App Store has generated more than $1 billion in revenue for developers. That sounds like a big number. But in this context it’s not. One billion dollars in revenue for the approximately 225,000 apps is $4,444 per app–significantly less than an app costs to develop.

Now Nintendo would likely be an exception to this but these numbers give you a better picture of the situation. They also lead to one big question:

WHY?

Why would Nintendo want to abandon the money train that is the DS/3DS in favor of letting Apple and Google tell them what to do? If anything, jumping ship is a last minute resort that a company can do at any time. If the 3DS stops selling well (which it did), Nintendo could drop the price (which they did). The same applies to games. Now if all else fails and Iwata is burning his last dollar to keep warm, then the smartphone market might start looking like a  pretty good way to save the company. At the moment, however, the idea is a terribly thought out scheme with the sole intent of making short-term shareholders some quick cash before they move on to the next company.

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