Why Nintendo Shouldn't Release on iOS (Yet)

Recently, some investors have been suggesting that Nintendo start to release games on iOS. They look at the huge market share of iOS, and how many games Nintendo would sell if they started to release games for iOS. I think that it would actually be a poor move for Nintendo to release on iOS, both from a financial and a strategic position.
From a financial perspective, they would make less per title. On their consoles, they own the platform, and get a percentage of every game sold. With first-party titles, they make 100% of whatever they sell. On iOS, they only get a percentage of the games that they sell. Sure they might sell more copies, but economically, it would probably turn out worse.

One thing that will hurt Nintendo is that the distribution model for iOS and Nintendo is very different. If you go to an electronics store, there is a Nintendo section. They have lots of games for the Wii and the Gameboy. They have to show something, and it will be sold by Nintendo (even if it isn’t a first-party title). With iOS, Apple controls what shows up. Unless Nintendo is constantly releasing titles, they won’t stay on top. Sure they could release the next Angry Birds or Cut the Rope, but I can imagine that Nintendo will release larger games with a longer development lifecycle. They will need to adapt to a $1.99 price point if they really want to make it on the app store (ok, I’ll give them $4.99).

Another key strategic issue is platform lock-in. By releasing on iOS, they actually encourage people to stop using Nintendo products. Right now, Nintendo fans keep buying Nintendo consoles for first-party titles. Once they have the console, they are locked in, and keep buying more Nintendo games. If customers can get Nintendo games on their iPad, they won’t have any platform lock-in. Their next game could be a non-Nintendo game, and they will have no incentive to buy Nintendo consoles. Customers will buy whatever Apple tells them to buy. I think that the strategic lock-in issues will keep Nintendo from releasing on iOS until they absolutely have to (financials are so poor that they need to do it to survive).

Even if Nintendo releases different games on iOS than they do on their consoles, moving to iOS will still probably kill them. The reason is that the dirty unwashed masses of casual gamers aren’t loyal, and they don’t keep up on new game releases. When I was a kid, I needed EVERY game in my favorite gaming series. As soon as the next Mario title came out, I bought it the day it was available. Casual gamers don’t care about every new game that is released - they just play a game every so often. My sister loves Cut the Rope - last time I saw her she was raving about it. I emailed her the other day to ask whether she had downloaded the new Cut the Rope game, and she didn’t even know it existed. Maybe she will eventually buy it, but she probably had enough from the first game (I don’t think that she even finished it).

It is a sad day when a gaming company goes from making their own consoles to shipping games on other peoples’ platforms. It happened to Sega, and I wouldn’t be surprised if it happens to Nintendo at some point in the future (especially as the niche they have targeted, casual gaming, moves more towards tablets and mobile phones). But, I think that they should go down that path kicking and screaming.