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Dec. 16, 2016 5:13 a.m. ET
Super Mario has started running and jumping on iPhones. But Nintendo needs to do more to sprint ahead.
The long-awaited “Super Mario Run” arrived on iOS devices Thursday, and the game jumped to the top of Apple’s charts within hours. Yet investors sent shares of Nintendo, the creator of the Italian plumber, down the drain Friday, falling more than 4%.
Expectations for the game, the first mobile game featuring the iconic character, have been high following the “Pokémon Go” frenzy over the summer. The pocket-monster catching game was a smash hit and had sent Nintendo’s share price to its highest level since 2010. Nintendo didn’t develop the game, but owns minority stakes in the companies that did. “Super Mario Run” is developed by Nintendo in-house, with the help of another Japanese company called DeNA.
Disappointing for investors is the game’s payment model. The first few levels of the game are free and the rest is available for a one-time fee of $9.99. The pricing plan was known ahead of the launch, but some may have held out that there would have also been some in-app purchases, the kind that power revenue for most mobile games.
The in-app payment model has proved to be massively money-generating since a small number of enthusiastic players, nicknamed whales, are willing to pay a huge amount on these in-app items. Since the whales will keep sinking money into the game so long as they are hooked, the free-to-play model can bring in revenue years after the game’s launch. Supercell, for instance, generated $2.3 billion of revenue last year with a big part coming from “Clash of Clans,” launched in 2012.
The payment model for “Super Mario Run,” on the other hand, caps the upside potential. Players only need to pay once. Getting $2 billion in revenue would require 200 million paying users, which seems high. The game will likely still bring a decent boost to its earnings. And Nintendo has two more mobile games in the coming months. But for Nintendo to truly succeed in smartphones, it will need to experiment on its mobile revenue strategy.
Write to Jacky Wong at [email protected]