Nintendo Believes Free-To-Play is Killing Their Business

A recent Q&A between Nintendo’s CEO Satoru Iwata and the Nintendo investors was released and translated, stating how the “Free-To-Play gaming market is killing their business and revenue.” This is pretty understandable since Free-To-Play games are widely available, but the real question is why Nintendo is taking such a large hit from this model.

Why is Free-To-Play bad for Nintendo?

One of the many reasons Nintendo is a bit baffled by the Free-To-Play games is the fact they don’t really have any. If you want to play a Mario game, you’ll have to first purchase the system, then buy the game.

We’ve all experienced Free-To-Play games on our mobile devices and systems, probably because we already own the hardware. I bet you if we had to buy an entirely different hardware to play the Candy Crush Saga, not nearly as many people would put time into it.

Of course, Nintendo’s CEO Satoru Iwata put it a bit more eloquently in his Q&A.

Although people may actually be spending more money (to play games on other devices not dedicated to video games), it is less visible, so the hurdle we have to clear in order to encourage them to purchase dedicated game systems has comparatively become higher. As with games that are free-to-play, or “free-to-start” as we like to call it, there is a tendency within the entertainment industry to make gaming as easy as possible to start playing. Because our hardware and software are integrated, we first need consumers to purchase our hardware to get our business off the ground, a challenge I outlined when I talked about changing the way we sell our products. Our mid-term goal would be to give an answer to this question in a way that had never been seen before.

Nintendo’s Recent Financial Hurdle

Another reason Nintendo might be looking harshly at Free-To-Play games is because they’ve hit a recent problem in their revenue system. During the previous year (2013), over a 9-month period Nintendo lost nearly $15 million dollars. This is mostly because they over-estimated their Wii U and Nintendo 3DS sales. Iwata even cut his pay for the next five months in order to ease losses.

How does Nintendo Plan to Bounce Back?

During the Q&A, Satoru Iwata also put out a few plans Nintendo has to come back from this recent revenue development. Many of his plans revolve around the release of new games like Super Smash Bros. on the 3DS and Mario Kart 8 on the Wii U. Iwata hopes that with these new games, Nintendo will push the purchases of the consoles up.

How do you feel about this blame game? What about Nintendo’s future plans? Comment!