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Nintendo (NTDOY) Takes a Hit as Super Mario Draws Criticism
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Shares of Nintendo Co. Ltd. (NTDOY - Free Report) declined approximately 7.7% last Friday as the world’s leading videogame creating company’s flagship mobile game Super Mario Run received poor reviews from fans and various tech bloggers.
Citing data compiled by Apptopia, TechCrunch revealed that the Super Mario Run game, which released on Dec 15 in Tokyo, saw 2.85 million downloads on the first day on the Apple’s (AAPL - Free Report) App Store which was much higher than the 900,000 downloads it witnessed for the Pokemon Go mobile game. However, unlike Pokemon Go it did not receive positive reviews. The new game received just a two and half star rating out of over 50,000 reviews posted on the App Store.
Fans and various tech bloggers have criticized the company for keeping a hefty price for the Super Mario Run game. The game is free to play for the first three levels, however, after that gamers will have to shell out $10 to download the full version. Fans were also unhappy because the gaming app requires an Internet connection.
Mixed Analyst Reactions
Analysts differ in their opinions. Some analysts are of the opinion that shelling out $10 to download the full version of the game will be too high price for the users, especially of the “developing countries”. Also, the game requires an Internet connection to play which is a major drawback.
Bloomberg has quoted an analyst saying “nostalgic Nintendo players will almost certainly spend. But what matters is if the marginal customer says this is good, yeah, I’ll spend the money.” The analyst expects 200 million downloads by March. However, only 10% are expected to cough up the money for playing the full version of the game. Also, the apparent lack of any new features might “limit” users’ “willingness to pay for the full version”, the analyst added.
On the other hand, media reports quote another analyst who is bullish on the stock and expects a nearly 40% jump in price. Per the analyst, SMR is Nintendo’s creation and so it stands to benefit from the revenues entirely. This however was not the case for Pokémon Go. Pokémon Go was a super hit but had limited impact on Nintendo’s financials as it was created by Niantic in association with Nintendo. Consequently, most of the benefit was netted by Niantic. He expects 500 million downloads of the game by March.
Pushing Hard in Mobile Gaming Business
Nintendo has so far stayed away from mobile games. It finally warmed to the idea of mobile games last year and struck a deal with DeNA to bring five mobile games by Mar 2017. Mittomo, released earlier this year, was the first game stemming from the collaboration. Super Mario was announced by Shigeru Miyamoto, Representative Director of Nintendo and creator of the iconic character, Mario the Plumber at Apple’s keynote address on Sep 7, 2016.
Analysts observe that Nintendo was trying to protect its console business by not letting its well known characters like Mario and Zelda appear on mobile platforms. However, mobile games started emerging as a lucrative business option as titles like Candy Crush and Angry Birds caught the imagination of the world. As per an Apr 2016 report, research from Newzoo estimates the global games market to grow 6.6% to $118.6 billion in 2019, of which $52.5 billion will come from mobile games.
Investors Need Not Worry
Although Nintendo has got poor reviews for its newly released Super Mario Run game, we believe the game will have a positive impact on the company’s revenues. Furthermore, the company’s strategy of shifting its focus toward creating mobile games bodes well for future growth prospects.
Apart from games, Nintendo’s revival of its classic NES console is also a big factor. Though the supply shortage has been a deterrent, Mini NES classic has found many takers. Given expectations of an improving supply trend in the coming days, mini NES is expected to “reign the holiday sales” as per media reports.
Moreover, the company is hoping to turn its fortunes around with its next video game device, Switch, slated for launch in early 2017. Nintendo’s gaming consoles 3DS and Wii U have been underperforming for quite some time and are losing ground to Sony’s PS4 and Microsoft’s (MSFT - Free Report) Xbox one. In fact, Wii U has been the company’s lowest selling gaming console.
Notably, the year so far has been good for Nintendo, which is basking in the success of Pokémon Go. Its shares have generated a return of 57.1% compared with the Zacks Toys/Games/ Hobby/Products industry’s gain of 6.8%.
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Nintendo (NTDOY) Takes a Hit as Super Mario Draws Criticism
Shares of Nintendo Co. Ltd. (NTDOY - Free Report) declined approximately 7.7% last Friday as the world’s leading videogame creating company’s flagship mobile game Super Mario Run received poor reviews from fans and various tech bloggers.
Citing data compiled by Apptopia, TechCrunch revealed that the Super Mario Run game, which released on Dec 15 in Tokyo, saw 2.85 million downloads on the first day on the Apple’s (AAPL - Free Report) App Store which was much higher than the 900,000 downloads it witnessed for the Pokemon Go mobile game. However, unlike Pokemon Go it did not receive positive reviews. The new game received just a two and half star rating out of over 50,000 reviews posted on the App Store.
Fans and various tech bloggers have criticized the company for keeping a hefty price for the Super Mario Run game. The game is free to play for the first three levels, however, after that gamers will have to shell out $10 to download the full version. Fans were also unhappy because the gaming app requires an Internet connection.
Mixed Analyst Reactions
Analysts differ in their opinions. Some analysts are of the opinion that shelling out $10 to download the full version of the game will be too high price for the users, especially of the “developing countries”. Also, the game requires an Internet connection to play which is a major drawback.
Bloomberg has quoted an analyst saying “nostalgic Nintendo players will almost certainly spend. But what matters is if the marginal customer says this is good, yeah, I’ll spend the money.” The analyst expects 200 million downloads by March. However, only 10% are expected to cough up the money for playing the full version of the game. Also, the apparent lack of any new features might “limit” users’ “willingness to pay for the full version”, the analyst added.
On the other hand, media reports quote another analyst who is bullish on the stock and expects a nearly 40% jump in price. Per the analyst, SMR is Nintendo’s creation and so it stands to benefit from the revenues entirely. This however was not the case for Pokémon Go. Pokémon Go was a super hit but had limited impact on Nintendo’s financials as it was created by Niantic in association with Nintendo. Consequently, most of the benefit was netted by Niantic. He expects 500 million downloads of the game by March.
Pushing Hard in Mobile Gaming Business
Nintendo has so far stayed away from mobile games. It finally warmed to the idea of mobile games last year and struck a deal with DeNA to bring five mobile games by Mar 2017. Mittomo, released earlier this year, was the first game stemming from the collaboration. Super Mario was announced by Shigeru Miyamoto, Representative Director of Nintendo and creator of the iconic character, Mario the Plumber at Apple’s keynote address on Sep 7, 2016.
Analysts observe that Nintendo was trying to protect its console business by not letting its well known characters like Mario and Zelda appear on mobile platforms. However, mobile games started emerging as a lucrative business option as titles like Candy Crush and Angry Birds caught the imagination of the world. As per an Apr 2016 report, research from Newzoo estimates the global games market to grow 6.6% to $118.6 billion in 2019, of which $52.5 billion will come from mobile games.
Investors Need Not Worry
Although Nintendo has got poor reviews for its newly released Super Mario Run game, we believe the game will have a positive impact on the company’s revenues. Furthermore, the company’s strategy of shifting its focus toward creating mobile games bodes well for future growth prospects.
Apart from games, Nintendo’s revival of its classic NES console is also a big factor. Though the supply shortage has been a deterrent, Mini NES classic has found many takers. Given expectations of an improving supply trend in the coming days, mini NES is expected to “reign the holiday sales” as per media reports.
Moreover, the company is hoping to turn its fortunes around with its next video game device, Switch, slated for launch in early 2017. Nintendo’s gaming consoles 3DS and Wii U have been underperforming for quite some time and are losing ground to Sony’s PS4 and Microsoft’s (MSFT - Free Report) Xbox one. In fact, Wii U has been the company’s lowest selling gaming console.
Notably, the year so far has been good for Nintendo, which is basking in the success of Pokémon Go. Its shares have generated a return of 57.1% compared with the Zacks Toys/Games/ Hobby/Products industry’s gain of 6.8%.
At present, Nintendo carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>