Nintendo Could Make $2.5B from Game Services

Nintendo Could Make $2.5B from Game Services

Nintendo had a phenomenal year in 2017, with the release of the Switch helping drive its hardware sales up, and accounting for 60 percent of the company’s revenue for last year. In total, Nintendo’s revenue grew by 172% from what it was in 2016, to an estimated $9.2 billion. Now a market researcher states that Nintendo could increase its revenue even more by continuing to branch out into mobile games, digital sales, and offering its own subscription for online services.

The market research company, Newzoo, says Nintendo can increase its revenue by an estimated $2.5 billion through its own subscription service, digital sales, and continuing to venture into mobile territory by releasing more titles and supporting current ones. While the company is currently in these markets, Nintendo’s revenue is much lower than Sony or Microsoft’s. Where Nintendo saw 60 percent of its revenue from hardware in 2017, Sony only saw 34 percent of its revenue come from hardware, with Microsoft having it account for 26 percent.

In a press release, Newzoo stated, “Most remarkable is that Nintendo generated these revenues with hardware and full-game sales only. The contribution to revenue from its smart-device business (responsible for Nintendo’s mobile games) is negligible at 3 percent of all gaming revenues while subscription revenues and revenue from in-game transactions are almost non-existent.”

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First party titles like The Legend of Zelda: Breath of the Wild and Super Mario Odyssey were huge selling points for the Switch last year. Nintendo looks to keep their games as reasons to own the Switch, with a Pokemon title being in development for the console, which may sway more potential buyers into picking up the system.

While Nintendo itself has never seen much success with its own online networks, Sony and Microsoft’s subscription services, Playstation Plus and Xbox Live Gold, bring each company a good portion of revenue each year. The subscriptions for those services usually run about $60/year and each one has millions of subscribers. On top of allowing gamers to play online multiplayer, there are other added benefits like free monthly games. Nintendo’s own Switch Online service will be releasing later this year.

Digital sales for Nintendo only account for 16 percent of its revenue, which is also smaller than Sony and Microsoft, and even smaller than developers who have in-game transactions, like Blizzard or EA. The company is also continuing to make its way into the mobile market, with a new Mario Kart title being developed for mobile platforms.

Newzoo also said that, with the success of the Switch, this year could end up being the year Nintendo will be able to break into the areas of subscriptions, digital sales,, and mobile to increase their revenue even more.

Source: Newzoo (via Venturebeat)


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