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Wii U-turn: is Nintendo preparing to sell on iOS following console failure and smartphone boom?

Nintendo has completed a volte-face by announcing it is developing games for iOS, paving the way for a relaxation of its exclusivity policy. Elsewhere, there has been a renewed interest in Nintendo’s core market, and cause a scissor polarity in Nintendo’s consumers.

Pokémon Trading Card Online is now being developed by the company to be played on iPad. This represents a major departure for Nintendo, which has previously focused all of its game production efforts on Nintendo hardware, although it has released iOS apps before.

mario and luigi

A policy of hardware exclusivity previously benefited Nintendo given its strong software offerings, but the sluggish sales of the new Wii U console have made the flaws of the policy apparent. The Wii U has sold 6.68 million units from November 2012 to June 2014, compared with the Sony PlayStation 4, which has shipped over 10 million units and 5 million Microsoft Xbox One Sales since November 2013. While possessing some strong exclusive franchises, Nintendo was comprehensively outdone by other consoles in software sales. In 2013’s top 100 selling games, there are only two Wii U exclusive games in the chart: 2012’s New Super Mario Bros. U at number 94 and the more recent Super Mario 3D World at number 97. Nintendo’s highest entry was animal crossing at 21, but missed out on blockbuster titles such as Grand Theft Auto V, Call of Duty: Ghosts, and FIFA 13 and 14.

The Wii U’s failure has had a deleterious impact on the company’s finances. Between FY 2011 and FY 2014 ending March 31, Nintendo’s net sales have virtually halved from JPY 1.0trn to JPY 571.7bn.  Net income also slid from JPY77.6bn in FY2011 to JPY -23.2bn in FY 2014. Physical console sales declined 31% to 16.3 million units between March 2013 and March 2014.  Leveraging the strong franchises Nintendo has in the tablet/smartphone category could be a move to recuperate some of the revenue being lost by the Wii U’s performance, and has been lobbied by some of Nintendo’s investors.

This may be a pre-emptive strike by Nintendo, predicting that smartphones are here to stay and that they will soon surpass handheld consoles in terms of strategic markets. In Nintendo’s home market, Japan, the 3DS comfortably outsells the Sony PlayStation Vita, and it was one of the best-selling consoles in the UK for 2013. However, handhold consoles are still dwarfed by smartphone mobile gaming in Japan, with even the home consoles sales below.

It would also chime with the policy of “Gaming Population Expansion”, attempting to create enjoyable games regardless of age, gender, or gaming experience. Within Nintendo, there appears to be friction regarding this approach. Shigeru Miyamoto, who was behind some of Nintendo’s most successful game franchises, recently criticised what he called “passive” gamers.”[These are] the sort of people who, for example, might want to watch a movie. They might want to go to Disneyland,” Miyamoto said. “Their attitude is, ‘okay, I am the customer. You are supposed to entertain me.’ It’s kind of a passive attitude they’re taking, and to me it’s kind of a pathetic thing. They do not know how interesting it is if you move one step further and try to challenge yourself [with more advanced games].”

It remains to be seen whether Miyamoto’s passive gamers will take up his challenge to delve into games further. Nintendo has a deluge of new titles appearing in H2 2014, which it will hope to improve performance, and Wii U sales have only picked up tentatively between March and June 2014 following the release of Mario Kart 8, one of the most venerable exclusive franchises in the Nintendo arsenal. It may not be long before Super Mario is seen on the iPad if Nintendo cannot reverse its console decline, and it will further alienate the core that Miyamoto is so keen to appeal to.

For more on Nintendo, please take a look at our Case Studies:

Nintendo Co., Ltd: Innovating in a reactive market

Microsoft Xbox: How Microsoft challenged the dominance of Nintendo and Sony

Alternatively, check out our Company Profile on Nintendo

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