Nintendo may release more microtransaction smartphone games

Nintendo seeks to use mobile as a source of recurring earnings to supplement quarterly growth, and this typically means microtransactions will be involved in some form.

Mobile gaming is the industry's most lucrative segment and remains a strong source for consistent revenue for titans like Tencent, NetEase and Nexon. Mobile is expected to earn over $70 billion in 2018, or 51% of total yearly earnings, and Nintendo wants to see its latent smartphone gaming business grow with that number. To do this, we expect Nintendo to continue embracing the free-to-play model with its future games and infuse more gacha-style microtransactions for maximum exposure and accessibility and earnings potential. This strategy is working well and Fire Emblem Heroes made 72% of Nintendo's mobile earnings in 2018.

In a recent interview with Nikkei (as translated by Nintendo Everything), Nintendo President Shuntaro Furukawa says he'd like to release more mobile games with more guaranteed revenue-generating models.

Do you expect fluctuations in business performance to continue from here on?

"I'm thinking about little ways we can reduce that kind of instability," Mr. Furukawa answered.

"I'd like to increase the (amount of) games on smartphones that have a continuous stream of revenue. We're also dabbling in theme parks and movies - different ways to have our characters be a part of everyday life. I'm anticipating a strong synergy like that."

Right now Nintendo plans to release up to three smartphone games a year. Lootboxes should be a part of this plan as an engagement mechanism going forward, and we should see less reliance on the free-to-try business model used with Super Mario Run.

Mobile games also bring strong accessibility and exposure to Nintendo's brand and aren't just a way to make money. Anyone can download a free-to-play mobile title to their phone and play it on-the-go, and this kind of ready availability will fold more everyday consumers into Nintendo's franchises and marketing, making them more likely to buy into the Switch console ecosystem.

"Our plan is to introduce applications at a rate of around two to three titles a year," Nintendo President Shuntaro Furukawa said in a recent company Q&A.

"As for future smart-device business plans, we intend to use our existing IP in addition to new IP like Dragalia Lost as we continue to develop applications that are relevant to different user demographics."