Market Insight

Nintendo's inaugural mobile app highlights need to carefully approach crowded market

October 30, 2015  | Subscribers Only

Steve Bailey Steve Bailey Principal Senior Analyst, Games

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Nintendo has announced its first mobile app, Miitomo, due for launch in March 2016. Miitomo is a 'communication application' rather than a traditional game, and features a freemium business model enabled by in-app purchases. Players can create their own 'Miis' (Nintendo avatars), that can interact with other Miis created by friends in a variety of virtual scenarios.

Our analysis

The announcement of Miitomo is in line with how we'd expect Nintendo to approach mobile. It's the ideal toe-dip for the company, and its fanbase. The first thing people did on the Wii and 3DS consoles was to create a personal, social presence, and Miitomo is Nintendo replicating that entry point for mobile. 

We do not expect this app to be a rousing standalone success, but instead an exploratory effort, one whose longer-term role will be complementary to a broader catalogue of games.

The markets responded negatively upon announcement of Miitomo, part because it was arriving later than anticipate, but also because expectations seem to surround Nintendo launching into exploring mobile iterations of its biggest franchises sooner rather than later.

We take the opposite view. Nintendo is primarily an IP company, and the greatest risk facing the company is dilution of that IP. Anyone expecting a Super Mario freemium title before the year is out will need to throttle those hopes. Nintendo has little experience in both bringing its titles to mobile, as well as the freemium business model. Its movements on these fronts will be cautious, certainly in the near-term.

Nintendo has the potential to carve itself a unique and profitable position on mobile, but the journey there may frustrate any investors expecting immediate success. Having to navigate those expectations while preserving the value of its IP, is going to be the key challenge for Nintendo on mobile.


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