Nintendo, Two Years Later

Two years ago, I wrote about NIntendo and the console market. I wrote a follow-up a year ago. I'm doing it again this year. I'm going to cover the same two points I covered in the last follow-up:

1. Did mobile devices kill the console market?
2. Can Nintendo survive without making mobile games?

Did mobile devices kill the console market?

Here's the quote from Asymco's article that triggered this whole discussion:

The implications are that Nintendo, Sony and Microsoft are beyond the point of no return in this industry. Gaming, as a business, cannot be sustained as a platform independent of a general purpose computer. Like other "applications" that used to have systems built around them conforming to their needs the dedicated-purpose solutions came to be absorbed into the general-purpose platforms. And the modern general purpose computer is the smartphone.

Two years later, what does the data tell us? 26 months after its launch date, the PS3 had sold around 20 million consoles. Today, after the same amount of time, the PS4 has sold over 33 million consoles. The Xbox One, a console generally not seen as a huge success, is also outselling its predecessor. Currently at slightly over 18 million consoles sold, its predecessor had sold just under 16 million consoles at the same point in its lifespan.

The one console that is failing to outdo its predecessor — by a huge margin — is the Wii U. Currently, it stands a bit under 12 million consoles sold, with monthly sales numbers trailing the PS4 and Xbox One by quite a margin.

I think it's fair to say that the console market has not become unsustainable, given that two of the three major consoles are outselling their predecessors.¹ Mobile gaming has not displaced console gaming; the two serve different markets.²

Can Nintendo survive without making mobile games?

When I made the prediction³ that Nintendo would not enter the mobile games market, I based that on three premises.

1. Nintendo can make a healthy profit selling first-party titles for its own consoles.
2. There is no market for the kinds of games Nintendo makes (high-quality games sold at high prices) on the iOS App Store.
3. Dedicating resources to App Store development is an opportunity cost for Nintendo. It makes more sense to develop Pikmin 3 for the Wii U and sell a million copies at 60 bucks, than to dedicate those resources towards developing a Pikmin game for the iPhone, sell it for 6 bucks, and hope that they'll sell ten million copies.

I think those premises are correct. Nintendo is now back to being consistently profitable, without mobile games. There is still not a huge market for paid high-quality games on iOS. And the Wii U's installed base is now large enough that Nintendo can consistently sell around a million copies of their own first-party titles, with some outliers like Splatoon or Super Mario Maker selling substantially more.

What I did not consider (apart from the Pokémon franchise) is that Nintendo could simply opt to develop cheap or free-to-play games for iOS (the kinds of games that can do well on iOS), and outsource part of the effort to a third-party. I don't know if that's what people were expecting when they were asking for Nintendo to make mobile games, and it's probably not what they were hoping for, but it seems to be what we're getting.

Conclusion

There's still a console market. Mobile devices didn't kill it. Nintendo can be profitable on its own platforms, but that hasn't kept them from also starting to work on mobile titles. Unfortunately, we probably still won't see a "real" Nintendo title — a full Mario Kart or New Super Mario Bros title, for example — on iOS anytime soon.