PART FOUR CASE STUDIES

CASE 11
IT’S-A ME, MARIO! NINTENDO IN 2016 AND BEYOND
Andrew Zur
Melbourne Business School, University of Melbourne

Introduction franchises.14 Miyamoto would go on to create the iconic Mario

Nintendo Co., Ltd (‘Nintendo’) is a Japanese multinational and The Legend of Zelda series.15
consumer electronics and software company headquartered
Game & Watch and arcade games
in Kyoto, Japan.1 Originally a producer of cards and toys,
In 1980, Nintendo released its original handheld video game
Nintendo’s focus shifted in the late 1970s to video game
line, the Game & Watch, developed by long-time Nintendo
consoles and games, with over 670 million hardware sales and
employee and Japanese video game designer Gunpei Yokoi.16
4.23 billion software sales worldwide.2 The company, which
The following year saw the arcade release of Donkey Kong
has created some of the most iconic video game franchises
and ‘Jumpman’, the earliest iteration of Mario, who with his
of all time, including Mario, Pokémon, Donkey Kong and
brother Luigi would go on to become Nintendo’s famous
The Legend of Zelda, is now at a crossroads in 2016 as the
mascot with the 1983 arcade release of Mario Bros.17
industry readies itself to enter the ninth generation of video
game consoles. Famicom/Nintendo Entertainment System (NES)
The 8-bit home video game console, the Family Computer (or
History of Nintendo ‘Famicom’), was first released by Nintendo in Japan in 1983.
Gambling and love hotels The Famicom, known as the Nintendo Entertainment System
From 1889 until 1956, Nintendo solely existed as a playing card (NES) outside of Japan, was released by Mattel in Australia in
company. The firm, first known as Marafuku Company and 198718 and would go on to sell 61.91 million consoles and over
then in 1951 renamed as Nintendo Koppai (Nintendo Play Card 500 million games worldwide,19 with Super Mario Bros. being
Co., Ltd.),3 manufactured and sold hanafuda,4 or ‘flower cards’,5 the bestselling title on the console (40.24 million units).20 The
which are actually still produced for the Japanese market.6 In Famicom/NES launched a number of groundbreaking games,
1963, the company name was changed to Nintendo Co., Ltd to including the platform game Super Mario Bros. and its two
better reflect the changing focus of Nintendo. During this time sequels, the action-adventure role-playing game The Legend of
Nintendo set up a taxi company (Daiya), a love hotel chain,7 Zelda, as well as Metroid, Konami’s Castlevania and Capcom’s
a TV network, a food company (selling instant rice),8 and Mega Man (known as Rockman in Japan). The Famicom/NES
numerous toys including the Ultra Machine,9 Love Tester,10 was part of the third generation or the ‘8-bit era’ of video game
and the Kousenjuu series of light gun games.11 consoles.21

Expansion into video games Game Boy

The 1970s saw Nintendo enter the video game market in Nintendo’s next release came in 1989. Gunpei Yokoi and his
Japan. In 1975, Nintendo secured rights in Japan to distribute Nintendo R&D1 team created the Game Boy handheld system,
the Magnavox Odyssey video game console,12 and it entered the successor to the popular Game & Watch series. The Game
the video arcade game industry with EVR Race (a horse racing Boy and its redesigns, the Game Boy Pocket (1996), the Game
or sports car race game, depending on how the game was Boy Light (1998) and the Game Boy Colour (1998),22 sold
loaded).13 In 1977, Nintendo created and distributed the Color 118.69 million units and 501.11 million games worldwide, with
TV-Game 6 home video game console exclusively for the local Tetris being the handheld system’s biggest-selling game (30.26
market. That same year Nintendo hired the legendary creator million units).23 The Game Boy’s successor, the similarly named
and producer Shigeru Miyamoto (then just a student product Game Boy Advance, released in 2001, and its redesigns, the
developer) who went on to play a major role in the creation Game Boy Advance SP (2003) and the Game Boy Micro (2005),
and production of Nintendo’s most well-known video game sold 81.51 million units and 377.42 million games worldwide.
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 CASE ELEVEN I T ’S-A ME , M A R I O! NIN T E ND O IN 2 016 A ND BE YOND

Super Nintendo Entertainment System (SNES) Nintendo DS and its family, the Nintendo DS Lite (2006),
The 16-bit Super Famicom and Super Nintendo Entertainment Nintendo DSi (2008 in Japan and 2009 in Australia)
System (SNES or Super NES) was the successor to the and Nintendo DSi XL (2009 in Japan and 2010 in Australia),36
Famicom and NES and was part of the fourth generation or have collectively sold 154.01 million units worldwide and a
the ‘16-bit era’ of home video game consoles.24 The console staggering 947.85 million units of software, with New Super
was released in 1990 in Japan and in 1992 in Australia and Mario Bros. the bestselling game (29.93 million units).37
went on to sell 49.10 million units and 379.06 million games Nintendo’s next home video game console was the Wii
worldwide, with the pack-in game Super Mario World being (codename ‘Revolution’) in 2006. Choosing not to compete
the console’s biggest-selling game (20.61 million units).25 with Microsoft’s Xbox 360 and Sony’s PlayStation 3 (PS3) on
Nintendo’s main competitor during this time was Sega’s 16-bit hardware and graphics,38 Nintendo went in a different direction
Mega Drive (or Genesis in the USA) and the firm’s mascot, with the Wii, focusing on motion-sensor technology with
Sonic the Hedgehog. The Nintendo vs Sega and the Mario vs the Wii Remote and Sensor Bar.39 Nintendo also introduced
Sonic rivalry would carry on for the rest of the decade.26 the Virtual Console (a game download service), Wii Shop
Channel, DSi Shop and the now defunct WiiConnect24.40
Virtual Boy, Nintendo 64 and GameCube The Wii was phenomenally successful and sold 101.63 million
The next release for Nintendo, and the last for Gunpei Yokoi, units and 913.13 million games worldwide, with Mario Kart Wii
was the Virtual Boy in 1995. Selling only 770 000 units in Japan being the bestselling non-pack-in game (35.70 million units).41
and the USA (it was not released in Europe or Australia),27 the The Wii Sports pack-in title ‘sold’ 82.68 million units.42
console was considered a critical and commercial failure.28
Following the Virtual Boy, Nintendo’s 64-bit console, the Current: new Nintendo 3DS and Wii U
Nintendo 64 (abbreviated to N64; initially the Ultra 64 and As of February 2016, Nintendo has two products in the
codenamed ‘Project Reality’29), was released in Japan in 1996 marketplace as part of the eighth generation of video game
and on 1 March 1997 in Australia. Both the Virtual Boy and N64 consoles, the Nintendo 3DS and the Wii U, which competes
were part of the fifth generation of video game consoles.30 The with Microsoft’s Xbox One and Sony’s PlayStation 4 (PS4).43
N64 faced a competitive industry, with both the Sega Saturn The handheld video game console, the Nintendo 3DS,
and the Sony PlayStation competing for the same customer successor to the dual-screen console the Nintendo DS, was
base, and ultimately only went on to sell 32.93 million units released in 2011. The Nintendo 3DS enables the user to see
worldwide and 224.97 million games, with Super Mario 64 and play games in 3D.44 The Nintendo 3DS and its redesigns,
being the console’s biggest-selling game (11.89 million units).31 the Nintendo 3DS XL (Nintendo 3DS LL in Japan) (2012), the
Nintendo’s market share slipped again in 2001 (17 May 2002 Nintendo 2DS (2013) and the New Nintendo 3DS & XL (LL in
in Australia) with the release of the GameCube, selling 21.74 Japan) (2015),45 have collectively sold 57.94 million units and
million units worldwide and 208.57 million games, with 264.53 million games, with Pokémon X/Pokémon Y being the
Super Smash Bros. Melee being the bestselling game on the console’s biggest-selling game (14.46 million units).46
console (7.07 million units).32 During the sixth generation of Released in 2012, the Wii U (codename ‘Project Café’),47
video game consoles, Sega had exited the home video game the successor to the very popular Wii, is the first Nintendo
console market following the demise of the Dreamcast,33 and console to support high-definition graphics and utilises the
Nintendo’s direct competitors were now Microsoft’s Xbox and touchscreen GamePad as part of play.48 The Wii U has been
Sony’s PlayStation 2.34 met with slow adoption, with many consumers thinking that
the console is simply an add-on for the Wii.49 Apart from the
Nintendo DS and Wii Virtual Boy, the Wii U has been by far Nintendo’s lowest-selling
Nintendo saw a resurgence in popularity, sales and market video game console, with 12.60 million units and 79.30 million
share in the mid-2000s, during the seventh generation of video games being sold. The current top-selling game is Mario Kart
game consoles,35 with the release of the Nintendo DS and Wii. 8 (7.24 million units).50
The spiritual successor to the GameBoy, the Nintendo DS Nintendo also currently supports the Nintendo eShop
was a dual-screen handheld game console that was released for 3DS (launched 2011) and Wii U (launched 2012),
by Nintendo in 2004 (24 February 2005 in Australia). The which feature downloadable games and applications, and
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 PART FOUR CASE STUDIES

Nintendo Network, which provides online functionality cent) and to fight dementia (61 per cent). Males make up 53 per
for the Nintendo 3DS and Wii U consoles and games.51 cent of video game players, with females increasing to 47 per cent.
In 2014, Nintendo introduced Amiibo, a range of wireless Australian gamers play on average for around 88 minutes a
communications and storage enabled figurines of popular day, males on average for 100 minutes and females on average for
Nintendo characters (including Super Smash Bros., Super 75 minutes (see ). Casual gamers, a term used to describe a player
Mario, Animal Crossing and Splatoon) to be used directly who ‘does not have a long-term commitment to a game and can
with compatible Wii U and New Nintendo 3DS games.52 The approach playing the game on an infrequent and spontaneous
Amiibo line of cards and figures has been extremely popular, basis’,58 play for around 25 minutes a day, or around 10 minutes
with global sales of Amiibo figures topping 31 million units three times a day. In-depth, ‘hard-core’ gamers tend to play for
and Amiibo cards topping 21.5 million sales.53 around one hour per day and tend to be aged in their late teens
and early 20s. Australian adult gamers have spent, on average, 12
Australian society and video games years playing video games, with 50 per cent of Australian gamers
The video game market has expanded away from the traditional having watched walkthroughs or streamed gameplay videos on
home video game consoles and handheld devices. Mobile phone platforms like YouTube, YouTube Gaming and Twitch.59
technology has changed the gaming industry, enabling most In 2014, the Australian video and computer games industry
Australians access to video games. In 2016, more than nine in 10 experienced a 20 per cent increase in sales year-on-year,
households in Australia had at least one device for gameplay,54 reaching A$2.46 billion (A$1.214 billion in traditional retail
with 68 per cent of Australians playing video games.55 The sales and A$1.248 billion in digital sales).60 Console hardware
average age of Australian gamers is now 33 years, with 78 per sales (PS4, Xbox One, Wii U, 3DS) increased 47 per cent year-
cent aged 18 or older,56 49 per cent over 50 years of age, and 39 on-year, with software sales slightly decreasing 5.3 per cent to
per cent aged over 65 years.57 Australian gamers play games to A$614.5 million. Mobile gaming sales increased by 56 per cent
improve thinking skills (89 per cent), to improve coordination to more than A$700 million, with most revenues generated
and dexterity (79 per cent), to increase mental stimulation (76 per through in-app purchases.

FIGURE 1 Average time spent playing video games in Australia

160

140

120

100
Minutes per Day

Females - Casual Play

80 Females - In-depth Play
Females - Total Play
60
Males - Casual Play
40
Males - In-depth Play

20 Males - Total Play

0
1–4 5–14 15–24 25–34 35–44 45–54 55–64 65–74 75–84
Age

Source: J. E. Brand, 2015, Gaming through the ages: Older Australians are embracing video games, The Conversation, http://theconversation.com/
gaming-through-the-ages-older-australians-are-embracing-video-games-44899, 28 July. Creative Commons Attribution, No Derivatives licence.

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 CASE ELEVEN I T ’S-A ME , M A R I O! NIN T E ND O IN 2 016 A ND BE YOND

Competition million games sold.63 For FY2014, revenue for PlayStation,

The industry is currently in the eight generation of video including the PS4, PS3, PlayStation Network (PSN) and PS
game consoles. The main competitors are Sony Computer Vita, increased by 33 per cent year-on-year, accounting for
Entertainment (‘Sony’) with its PlayStation 4 (PS4) home US$11.5 billion.64 While only launching in late 2013, global
console (53 per cent market share) and PlayStation Vita PS4 sales are far less than Sony’s previous entries into the
(PS Vita) handheld system, Microsoft with its Xbox One home home video game console market, with the PlayStation 2
console (28.5 per cent market share), and Nintendo with its (157.68 million units; 1661.95 million games), PlayStation
Wii U home console (18 per cent market share) and Nintendo (104.25 million units; 962.01 million games) and PlayStation 3
3DS handheld system.61 See Figure 2 for the breakdown of (86.33 million units; 951.84 million games) all far outselling the
worldwide shipments of home video consoles. PS4.65

Sony Microsoft
Sony, whose original PlayStation (initially a SNES-compatible Microsoft’s Xbox One has also seen lacklustre sales since its
cartridge/CD console called the ‘Play Station’, two separate late 2013 release, with 19.88 million units and 115.52 million
words) emerged after a disagreement between it and Nintendo games sold worldwide, lower than Microsoft’s previous
in 1991,62 is the clear industry leader. Currently, the PS4 has consoles — the Xbox 360 (85.39 million units; 989.07 million
worldwide sales of 37.19 million units and 212.62 million games) and the Xbox (24.65 million units; 271.46 million
games, with the PS Vita nudging 13.40 million and 54.16 games). Consumer adoption in the Japanese market of the

FIGURE 2 Reported/estimated worldwide shipments of video game consoles

REPORTED/ESTMATED WORLDWISE SHIPMENTS

Life-to-date through end of calendar quarter (millions)

30

PS4
25

20

15 Xbox One
(high/low/mid est.)

10 Wii U

0
Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 Q2’15

Source: K. Orland, 2015, Analysis: Sony pushes past 50 percent of the worldwide console market, Kyle Orland/Ars Technica, July 31, 2015/© Condé Nast,
http://arstechnica.com/gaming/2015/07/analysis-sony-pushes-past-50-percent-of-the-worldwide-console-market/.

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 PART FOUR CASE STUDIES

Xbox One is particularly low,66 with only 70 000 sales since game players. These changes will centre on mobile gaming
the console’s launch in that market. For FY2014, Microsoft saw and online gaming experiences. Nintendo is planning its
a 20 per cent decrease in Xbox revenue, year-on-year.67 entry into the ninth generation of video game consoles with
investments in mobile gaming for smart devices (including
Nintendo
smartphones, phablets and tablets, and smartwatches),75 and
As previously outlined, Nintendo has also seen a huge decrease
a ‘dedicated games platform with a brand new concept under
in market share and sales of its home and handheld consoles.
the development codename NX’.76
Despite being released in late 2012, a year before both the PS4
Nintendo’s partnership with mobile developer DeNA has
and Xbox One, the Wii U has only managed to globally sell
resulted in the smartphone title Miitomo or ‘Mii Friend’77 – ‘Mii’
12.60 million consoles and 79.30 million games, compared
from Nintendo’s free-form digital avatar creator on its Wii U
with the Wii U’s predecessor, the Wii, which experienced global
and New Nintendo 3DS gaming consoles,78 and tomo which
sales of 101.18 million units and 959.31 million games. The
means ‘friend’ in Japanese.79 Miitomo was published by
Wii U has also seen very few third-party developers making
Nintendo and had its worldwide release in March 2016 for
games for the console,68 with 15 of the top-selling games on
Android and iOS devices.80
the console published by Nintendo and exclusively available
Little is known about the NX console except that it will
on the Wii U.69 Sales of the handheld Nintendo 3DS and its
feature industry-leading hardware81 and will not be a ‘new
redesigns have collectively sold 57.94 million units and 264.53
version’ of the Wii or the Wii U.82 Official patents filed by
million games, which again is much lower than its predecessor,
Nintendo in 2015 with the US Patent & Trademark Office83
the Nintendo DS, which experienced global sales of 154.88
suggest that the device, which may or may not be the NX,
million units and 841.75 million games. The Nintendo 3DS
will not feature a disk drive,84 which suggests that the
suffers from the same third-party developer issue, with 10 of
console will focus on online gaming. Nintendo’s strategic
the top-selling games on the handheld device published by
focus with the NX console may in fact attract third-party
Nintendo and exclusively available on the Nintendo 3DS.70
publishers and in turn attract a wider segment of gamers.85
For FY2014, Nintendo posted its first operating profit in four
Whatever the NX is, one thing is known for sure: if Nintendo
years of US$208 million. This has been attributed to the
rushes the NX to market without fully understanding the
success of the Amiibo range of figurines and the ‘blockbuster’
changing needs of the industry, it will suffer the same fate as
sales of Pokémon Omega Ruby/Pokémon Alpha Sapphire (3DS)
its once-rival Sega and be pushed out of the home console
and Super Smash Bros. and Mario Kart 8 (Wii U).71
market. In fact, Nintendo may already be thinking about
Mobile and PC gaming ways to extend the brand past the traditional home video
Global mobile gaming sales, played on Android, iOS (Apple) game consoles, with the development of the aforementioned
and Windows devices, are expected to increase to around Amiibo line as well as with its recent association with
US$25 billion in 2015 and overtake console games.72 Other Universal Parks & Resorts to create ‘spectacular, dedicated
software players in the video game industry include PC experiences based on Nintendo’s wildly popular games,
games mostly played on Microsoft Windows (298.04 million characters and worlds’.86
worldwide sales) and the internet-based digital distribution
gaming platform, Steam, which in 2015 experienced US$3.5 Notes
billion in global sales, or 15 per cent of global PC sales.73 Sega,
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 CASE ELEVEN I T ’S-A ME , M A R I O! NIN T E ND O IN 2 016 A ND BE YOND

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