Nintendo's Shigeru Miyamoto just did an about-face on F2P, so now what?

Perhaps Nintendo's IP doesn't work well with F2P, but from a business perspective, F2P "seems the only way to go right now," says Dr. Serkan Toto. (Cover image: Casey Curry/Invision/AP)

"I do not like to use the term 'free-to-play.' I have come to realize that there is a degree of insincerity to consumers with this terminology," the late Nintendo President Satoru Iwata told Time in 2015.

It's that mindset that led Super Mario Run to use the "free-to-start" model, which didn't go as well as Nintendo management would have liked. Sensor Tower had estimated that the game had generated about $60 million as of last month, but Nintendo President Tatsumi Kimishima had previously gone on record to note that the game had not reached "an acceptable profit point."

Has Nintendo learned anything from Super Mario Run? (Image: Nintendo)
Has Nintendo learned anything from Super Mario Run? (Image: Nintendo)

It's curious then that Mario and Donkey Kong creator Shigeru Miyamoto seemed to turn back time with his comments on free-to-play (F2P) this week. As reported by Bloomberg, the 65-year-old gaming legend has warned his colleagues not to be greedy with the F2P model.  Despite the fact that recent mobile releases Fire Emblem Heroes and Animal Crossing Pocket Camp both utilize F2P monetization (and Fire Emblem has generated five times more money than Super Mario Run at about $300 million, according to Sensor Tower), Miyamoto suggested that Nintendo should be selling its games at fixed prices.

“We’re lucky to have such a giant market, so our thinking is, if we can deliver games at reasonable prices to as many people as possible, we will see big profits,” Miyamoto said at the Computer Entertainment Developers Conference (CEDEC) on Wednesday in Yokohama, Japan.

“I can’t say that our fixed-cost model has really been a success. But we’re going to continue pushing it forward until it becomes entrenched. That way everyone can develop games in a comfortable environment. By focusing on bringing games to the widest range of people possible, we can continue boosting our mobile game business.”

Fire Emblem Heroes fared pretty well with F2P (Image: Nintendo)
Fire Emblem Heroes fared pretty well with F2P (Image: Nintendo)

Miyamoto's comments seem at odds with Nintendo's current plans for the mobile market. Bloomberg points out that the upcoming  Dragalia Lost is being co-developed with CyberAgent Inc., "a publisher that’s been criticized for using aggressive tactics in monetizing games." Moreover, the fixed-cost model is simply not going to reach the "widest range of people possible." 

"Nothing widens the market like F2P - Candy Crush Saga has been downloaded over 2.7 billion times. And most of those will never, ever spend a dime on it," Boss Fight Entertainment Design Director Damion Schubert told me.   

Schubert is one of the leading figures in the F2P industry, having led the transition for EA BioWare's Star Wars: The Old Republic. He suggested that perhaps NIntendo's real problem with the F2P model is that its current slate of IP is not ideally suited to it.

"This is a massively gross oversimplification, mind you, but I suspect that Nintendo as an organization discovered that their lineup of games just wasn't well-suited to the business model.  Combine that with the fact that, fairly or not, things like lootboxes anger a lot of gamers and Nintendo probably figured the best course of action was to lean into the curve and set themselves apart from Sony and Microsoft," Schubert said.

He further explained, "The biggest thing is that F2P doesn't really work well in single-player games - those League of Legends skins and fancy lootbox-unlocked emotes really require a social space where you can show off your new bling, for example. Also, people are far more likely to spend $5 for a skin in a (usually multiplayer) game they think they'll play for a year than even the most gripping single-player experience they think they'll never play again once they kill the final boss in ten hours.

"The only really successful monetization angle for single-player games has, historically, been DLC and you can't make enough money on DLC spenders to make up a box cost. And Nintendo has the best single-player licenses in the world."

I think the crushing commercial failure of Super Mario Run has shown them even the world's most iconic gaming IP can't be successfully sold at a premium price on smartphones

Kantan Games' Dr. Serkan Toto, who closely follows the mobile market in Japan, agrees that Miyamoto's recent comments are "a bit odd" considering that loot boxes have been in Fire Emblem Heroes from day one while Animal Crossing added them in after release.

"Nintendo has always said that they would like to 'experiment' with various monetization mechanics on mobile. I think the crushing commercial failure of Super Mario Run has shown them even the world's most iconic gaming IP can't be successfully sold at a premium price on smartphones," Toto remarked.

"Nintendo more than one time said that Super Mario Run sales weren't 'satisfactory.' There is a reason that all, without exception, scaled mobile game developers globally switched to F2P. I believe Nintendo might still try out alternatives like subscriptions on mobile, but from a business perspective, F2P seems to be the only way to go right now."

As more streaming services incorporate subscriptions, and as Nintendo readies to launch its Nintendo Switch Online subscription, perhaps that's the model Nintendo brass will get more comfortable with. Miyamoto commented to Bloomberg, “It’s necessary for developers to learn to get along with [subscription-style services]. When seeking a partner for this, it’s important to find someone who understands the value of your software. Then customers will feel the value in your apps and software and develop a habit of paying money for them.”

Mario Kart Tour is expected on mobile sometime before the close of Nintendo's fiscal year in March 2019 and will be another big test of Nintendo IP on smartphones. The company has not announced a monetization model. Given Miyamoto's sudden anti-F2P comments, how the company proceeds with Mario Kart could be very interesting to watch. Let's hope Nintendo steers clear of those banana peels.

Editor-in-Chief

James has been covering the games industry since the early 2000s and was most recently the editor of GamesIndustry.biz. He loves Zelda, Metroidvania-style games, action adventure and single-player narratives. He's also the proud father of twin boys and is obsessed with good coffee and Yankees baseball. You can reach him @bright_pixels on Twitter or you can email him at james.brightman@gamedaily.biz.