I’m not sure that Nintendo’s much heralded free-to-start (F2S) monetization model was worth the wait. It was a year-and-a-half ago that it was first touted, with Nintendo CEO, Satoru Iwata’s famous statement that indicated Nintendo would not be hunting for whales.
The F2S model goes all the way back to when games magazines came with CDs stuck to the front, containing the first few levels of a game to try out to encourage you to invest. However, with the accumulated learnings from free-to-play (F2P), maybe there would be a new twist that will transform the online game economy.
Gone in 60 seconds
Whether F2S or F2P, you still need players to reach the gameplay and make it through the on-boarding with enough of a positive sentiment about the game to make a payment, more so in F2S, as once they’ve reached the pinch point, they have very few options ahead of them.
Not only has Super Mario Run ignored advances in F2P commercial best-practices, it’s overlooked the importance of a slick on-boarding process to retain players, with many bemoaning that the game set-up was at least as challenging as the trial content. In F2P, the first 60 seconds are critical, so the last thing they should have done was to encourage players to leave the game environment to link accounts or negotiate a giant list of countries that’s more comprehensive than Kofi Annan’s Rolodex.
While the SMR release is arguably the biggest this year in mobile, and is already at No. 1 in 138 territories out of 150 in their first few days’ trading, there is an overwhelming sense of lost opportunity from clunky on-boarding and the use of F2S. This is a sentiment that investors have upheld with a 4.2 percent launch day drop in the value of Nintendo, equating to a fall of 140.5 billion yen ($1.196 million).
Whole base monetization
It’s like Nintendo has skipped a generation and not had to learn the hard lessons of player retention. The main flaw in the F2S model is that it fails to account for monetization of the whole player base, with a defined mix of IAP, ads and social user acquisition.
With SMR, Nintendo is in a privileged position where there’s been enough hype over the game for it not to have to find the $3-4 per user for acquisition that most have to pay.
The vast majority of publishers do have to pay for user acquisition and inefficiently discarding non-payers isn’t an option for them. In F2P, you have an average conversion rate of around 2%, let’s say SMR has a fantastic 10% conversion rate, that’s still 90% of players being discarded with little reason to return.
Ideally, all acquired players need to contribute, and that is achieved by giving non-payers an experience that provides them with enjoyable progress to encourage their repeated return. Specifically, the social acquisition tools in SMR feel dated, with Facebook & Twitter friend invite options being hidden away in favour of email and text. The game lacks a gifting option for friends, and the potential to visit a friend’s Kingdom would encourage mutual gameplay. It’s feels like a throwback to the days when post purchase retention didn’t matter.
In Super Mario Run, there is a one-off purchase that provides access to all six tour worlds, rally tickets, and in-game currency coins. This maybe leaves the door open to future purchases of tickets and coins further down the line, albeit Nintendo has not shown any inclination towards this. Nintendo doesn’t have the player acquisition problems that most developers face; if it did, the publisher would undoubtedly be more generous with their non-paying players. In F2P you would try to retain your non-payers and optimize their value to the game.
Comparing F2P with Nintendo’s F2S, the amount of game available to non-payers is quite limited in SMR, and they could easily give players more time to enjoy the game before pushing for first payment. Players are pressurized to monetize before exploring game elements like Toad Rally, the Bonus Game House, and Kingdom customization. DeltaDNA’s experience in F2P is that players who pay later pay more, and so forcing early conversion is detrimental to long-term monetization. With such a limited amount of free content, it should be essential for Nintendo to clearly signpost all that it has within its on-boarding process, before to pressing for first payment.
The bottom line
No doubt in the early days, the Mario fans will provide a healthy conversion rate, but that situation is likely to look very different in the early new year. Conversion rates in F2P are in the order of 1.8 percent on Android and 2.6 percent on iOS. The average revenue per paying user in F2P is around $26, whereas SMR only charges $10. No doubt, Nintendo will take a view on the revenue achieved from the launch and look to see if it can repeat the trick with releases of future worlds down the line; but we would expect they would need to add some more interest into the gameplay with these releases to provide sufficient value and bring-back lapsed players.
If the SMR F2S model is to outperform F2P without additional IAP, with a $10 price, it will need to consistently achieve conversion rates that outperform F2P by a factor of three, a tall order indeed with the current on-boarding and early payment mechanisms currently utilized.
Caring about conversion rates might not come naturally to Nintendo, but with $3 billion wiped off its market cap since the game launched, you can be certain that its investors care considerably. Nintendo is a business and will be under pressure to select the optimum monetization model for each game. It will need to justify to why it didn’t go down the premium route or F2P route, instead selecting a new path. Price and conversion rate are critical factors in that evaluation, but they probably couldn’t charge any more, so that leaves conversion and therefore player retention being the key to success.
Super Mario Run is making the poor players do all the work and trading on the brand, rather than delivering a compelling experience. This is a very “old school” approach and unfortunately won’t maximize the opportunity to give Mario fans and potential fans a great gaming experience.