Nintendo's first iPhone game has a long-term revenue problem

If you were expecting Nintendo’s first major iPhone game to dominate the charts, earn billions in revenue, and dominate the conversation, think again: While “Super Mario Run” is wildly popular and was downloaded over 50 million times, the game’s reportedly only made around $30 million.

That report comes from mobile gaming analytics firm Newzoo, which told the Wall Street Journal that the game was downloaded somewhere around 90 million times, meaning just over 3% of people who downloaded the game actually bought it. Thus, that $30 million figure.

$30 million sounds like a good chunk of gold coins, but it’s a pittance compared with mobile gaming’s titans: Games like “Clash of Clans” and “Candy Crush” rake in billions annually.

Another cause for concern: Those games are structured around continuous buy-in, where you can keep spending real-world money to get in-game items, power-ups, etc.; “Super Mario Run” is not one of those games. You pay $10 just once, which means there’s no ongoing revenue for Nintendo.

Just a few weeks after launch, Nintendo boasted over 50 million downloads of the game, but that number includes people who downloaded the free version of the game and never paid $10 for the full version.

Worse: The people who didn’t pay for “Super Mario Run” vastly outnumber the people who did — the percentage of non-paying players is somewhere in the ballpark of 97%, according to Newzoo.

Worse still: That’s a slightly higher-than-average “conversion rate” (the percentage of players who download a free game who either buy the game or put money into it) among mobile games.

So, Nintendo’s game didn’t “fail,” in this respect — millions of people are playing “Super Mario Run,” and several million people paid $10 to play the full game. But in terms of generating revenue, the game’s structure is standing in the way; few are willing to pay $10 up front for a smartphone game, or for most smartphone games, on a platform best known for games being either entirely free or between $1 and $3.

Apple’s App Store charts are a great illustration of this. “Super Mario Run” is still topping the “Free” chart, but drops to No. 14 on the “Top Grossing” chart, below free-to-play titans like “Clash Royale,” “Game of War,” and “Candy Crush.” Unsurprisingly, “Pokémon GO” still tops the “Top Grossing” chart — it’s entirely free-to-play, but its developer sells access to in-game items for real-world cash. Nintendo benefits from this, albeit in a small way; only part of “Pokémon GO” development studio Niantic, Inc. is owned by Nintendo (Niantic is a joint venture between Nintendo, Google, The Pokémon Company, and several other investment partners).

Since “Super Mario Run” uses the traditional “premium” payment model — pay a substantial fee up front for full access to a product — the game seems to be languishing on Apple’s App Store. That is, of course, unless you factor in the immeasurable importance of “Super Mario” run as an introduction to Mario for a new generation of game players.

The generation of kids who grew up playing “Minecraft” on an iPad alongside Nintendo’s soon-to-be-abandoned Wii U game console are, assuredly, a major target for Nintendo. These are millions of kids who’ve maybe heard about Super Mario, but have yet to play the Super Mario game that they will forever wax nostalgic about. Or, in the parlance of the market, these are untapped consumers.

In that case, Nintendo is depending an entirely different “conversion rate”: the millions of kids who played “Super Mario Run” on an iPhone to become the kind of consumer who will buy Nintendo’s hardware, like the upcoming Switch console.

Nintendo’s “Super Mario Run” is available now on iPhone and iPad; it’s free to download and try, and $10 to unlock the full game. It’s heading to Android phones at some point in the future.


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