Despite a relatively rocky start, Nintendo may be on the road to finding major success on mobile, especially with the upcoming release of Mario Kart Tour. Revenue data from our partner Priori, which we analyze for our Global Mobile Market Report subscribers, shows that Nintendo generated more than $300 million in gross mobile revenues for the full year 2018. Nintendo’s biggest market on mobile—by a large margin—is Japan, which accounted for 59% of revenues in 2018; the U.S. is second with 27%. Nintendo’s mobile revenues made up roughly 10% of the company’s total game revenues for the nine month period ending September 2018, compared to around 9% for the full year in 2017.

Nintendo released its first major smartphone game at the end of 2016. The company initially struggled to adapt to the market, especially when it came to monetization and user retention. But with its later releases, Nintendo has adapted its strategies to the mobile market. Its most recent game on the platform, Dragalia Lost, is an especially promising sign of things to come for Nintendo. In this article, we’ll look at how the company’s mobile offerings performed in 2018 and what to expect from the company going forward.

Super Mario Run: A Lesson Learned?

December 2016 (March 2017 on Android) saw one of gaming’s most beloved characters jumping onto the platform with the biggest-ever installed base in the world: mobile. With Super Mario Run, however, Nintendo did not embrace the free-to-play monetization strategies synonymous with mobile games—strategies that drive the success of mobile’s biggest games: Clash of Clans, Candy Crush, Fortnite, and more.

Instead, Nintendo stayed close to its roots. Worried that in-app purchases might not resonate with fans of previous Mario games, Super Mario Run has no in-game purchases. Users can download a small portion of the game for free and unlock the full game for a one-off fixed payment. This payment—higher than mobile gamers are used to—does not suit the platform. Although the title had over 200 million downloads in 2018, fueled by significant media attention, it generated around $7 million in revenues in 2018—just 2.4% of Nintendo’s total mobile revenues for the year. In 2018, Super Mario Run was most popular in the U.S., which accounted for 39% of the game’s revenues, followed by Japan (14%). Nintendo even outright expressed that the title did not live up to its revenue expectations.

Fire Emblem Heroes: Emblematic of Nintendo’s Mobile Success

Nintendo’s next major release, Fire Emblem Heroes, launched in February 2017, just two months after the initial release of Super Mario Run. Fire Emblem is also an established franchise—particularly in Japan—but in the strategy/RPG genre, which is now one of mobile’s most prominent game genres. Unlike Super Mario Run, Fire Emblem’s monetization is more typical for the platform. The game is free to play and features an in-game currency (Orbs) that players can use to summon a random in-game character via the gacha monetization method, which is a form of loot box popular in Japan (centered around collecting).

Though it has over 10 million downloads in 2018, this is far smaller installed base than Super Mario Run. Nonetheless, Fire Emblem generated over $200 million in 2018 —more than two-thirds of the company’s entire mobile revenues for the year. The game’s genre, aesthetic, and gacha monetization model resonated with mobile gamers, particularly in Japan, which made up over 54% of the game’s revenues in 2018. Thirty percent came from the U.S.

Animal Crossing: A Crossroads for Nintendo

Animal Crossing: Pocket Camp was released on app stores worldwide in November 2017 (following a soft launch in Australia a month prior). Animal Crossing, part of the social-simulation genre, is another huge franchise for Nintendo, with popular previous editions on the Gamecube (N64 in Japan), DS, Wii, and 3DS. Like Fire Emblem, Animal Crossing features an in-game currency (Leaf Tickets) that can be bought with real money to help players save time. In April 2018, the game introduced loot boxes (Fortune Cookies), showing that Nintendo was willing to test even more monetization options on mobile.

Despite these new experiments with monetization and its higher installed base, Animal Crossing: Pocket Camp failed to make the same impact as Fire Emblem Heroes. Still, Animal Crossing accounted for over $40 million of Nintendo’s mobile revenues in 2018. Japan comprised the vast majority (82%) of these revenues, while 13% came from the U.S. Compared to faster-paced titles, Animal Crossing’s relaxed, slow-paced gameplay does not lend itself as readily to a long-term paid model, on mobile at least.

Dragalia Lost: Success Found with a New Nintendo IP on Mobile

Nintendo’s next mobile release, action RPG Dragalia Lost, was released in September 2018 and generated just under $50 million in 2018. In three months, the game made more revenue than Animal Crossing did in the entire year. What makes this even more impressive is that the game is a brand-new IP and was only available in Japan (66% of revenues), the U.S. (18%), Hong Kong (11%) and Taiwan (5%) in 2018. Despite not having a well-known franchise like Mario, Fire Emblem, or Animal Crossing attached to it, Dragalia Lost was Nintendo’s #2 grossing mobile game for the year.

The game ticks all the right boxes for mobile: it is a fast-paced title that can be played in short bursts. It also doubled down on the gacha monetization model, allowing players to unlock not only characters but also weapons and cosmetics. It was also the first mobile game that Nintendo did not co-develop with DeNA. For Dragalia Lost, Nintendo partnered with Cygames, which has an impressive track record for gacha games. However, it’s worth noting that DeNA does own a minority stake (24%) in Cygames.

The Future for Nintendo on Mobile

This year will see the launch of Mario Kart Tour on mobile, the first Mario Kart title not released on a Nintendo platform (excluding arcades). With its newfound mobile experience, Nintendo is positioned to turn Mario Kart Tour into a hit. Arguably, the franchise has more mainstream appeal than any other Nintendo title, and its fast-paced gameplay is a great fit for mobile, as well as gaming on the go—as shown with the success of handheld Mario Kart titles. If Nintendo can get the monetization right, it may be able to achieve what it couldn’t with Super Mario Run. Of course, Mario Kart’s multiplayer component is a massive opportunity in this respect. With the continued popularity of the Japanese company’s current mobile titles and new releases like Mario Kart Tour, Nintendo’s first billion-dollar year on mobile might just be on the horizon.

Success on mobile can also affect a franchise’s performance across other platforms. Pokémon GO, while not directly published by Nintendo, was one of last year’s highest-grossing mobile games. It has also been a strong part of Pokémon’s renewed mainstream popularity, helping fuel the success and hype of 2018’s Pokémon Let’s Go titles for the Nintendo Switch, in addition to new Pokémon titles launching next year. It is a strong example of leveraging mobile to increase the popularity of franchises on console. Many big console/PC publishers are in the process of making their move into mobile, so all eyes are on Nintendo and its successes and failures on the platform.

Newzoo’s Global Mobile Market Report

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Want to know more? Contact Fabrice Zaumseil, fabrice@newzoo.com.