Share A LinkedIn icon Share by linkedin An email icon Share by email

KEY POINTS Mario Kart Tour and Dr. Mario, Nintendo's most important mobile push, will launch this summer.

Nintendo has moved slowly in offering iconic intellectual property on mobile.

The Super Smash Bros., Mario and Zelda titles have retained top spots among the bestselling console and PC games in recent years.

Google's Stadia streaming service and the Apple Arcade app are among the new video-game threats.

Nintendo designer Shigeru Miyamoto with characters Luigi (left) and Mario (right). Miguel Riopa | AFP | Getty Images

Mario may win many races, but Nintendo has been slow when it comes to mobile gaming. The planned release of Mario Kart Tour and Dr. Mario on mobile this summer will be a big test for the company, long a dominant player in the video-game console and game software markets. Nintendo's strategy of integrating characters core to its legacy in mobile is a hesitant step for a company that appreciates the value of the smartphone industry but is cautious of "letting go" of one of its most valuable assets, said Joost van Dreunen, founder and CEO of SuperData, a Nielsen company. But van Dreunen thinks this time there is a good chance Nintendo gets it right. "Nintendo's ecosystem relies on its IP and its subsequent fan loyalty. ... If it were to sell away titles to mobile, they would effectively be selling away control of its greatest asset," van Dreunen said. Its experiments in mobile to date have had mixed results. Augmented reality phenomenon PokemonGo! attracted millions of fans but was part of a larger strategy to convince consumers to buy the Pokemon console games that were introduced a year after the mobile release. The game itself was developed by Niantic, a gaming start-up that was spun out of Google and in which Nintendo is a strategic investor. Nintendo also is a part owner of Pokemon, and the mobile game allowed Nintendo to experiment with the Pokemon IP, said GamesIndustry.biz writer Rebekah Valentine, noting that it "included several mechanics that were tested out and included in the console version." Nintendo's Super Mario Run was a free mobile game based on the Super Mario franchise that required users to pay for additional levels. The move got a mixed reaction from players, with only a small portion of gamers opting for the pay-to-play option. The release of Dr. Mario and Mario Kart Tour on mobile already was postponed once in 2019, from March. It comes at a crucial juncture for the company.

The financial backdrop for Nintendo

Nintendo stock has fallen by roughly one-third in the past year. In recent history its shares fluctuated around the release of its blockbuster Switch console, a hybrid console that can be played on the move or connected to a TV. A huge revenue driver for Nintendo since its release, tens of millions of Switch units have been sold since its March 2017 release. Switch was the bestselling video-game console in the U.S. in 2018 and reached the highest annual sales for any hardware platform since Sony's PS4 in 2015. After its first year on the market, Nintendo had to double Switch production. The launch of the Switch in March 2017 triggered a major move up in Nintendo shares that peaked in early 2018, but the shares have given back most of those gains as even the juggernaut Switch sales slowed. Shares recently rallied after the Wall Street Journal reported that Nintendo is set to release two new versions of Switch "as early as this summer." Meanwhile, the "smartphone, royalty and other revenue" category detailed by Nintendo in earnings reports has at most made up 6 percent of Nintendo revenue in recent years. Hardware has ranged on a quarterly basis from 49 percent to 67 percent of revenue in recent quarters, with software making up the difference. Its share of the top 20 bestselling console and PC games market dipped from roughly 30 percent in 2017/2018 to an estimated 24 percent in 2019, according to Deutsche Bank estimates. In a recent recommendation of Nintendo shares to investors, Deutsche Bank cited the two smartphone game titles slated for mid-2019 as one of the drivers, but said the moves come amid a softer overall market for games software, and "after a dry spell and substantially diminished investor expectations." The bank's analysts added that investors' expectations are so low that "mobile gaming can be considered an incremental positive." Nintendo declined to comment ahead of the planned summer release.