Taking Nintendo intellectual property and characters to smartphones
Nintendo was founded on September 23, 1889 by Fujasiro Yamauchi in Kyoto for the production of handmade “hanafuda” cards. Nintendo Headquarters are still located in Kyoto (you can see the Nintendo headquarters building from the Kyoto railway station).
The Chinese characters used to write Nintendo’s original Japanese company name in Japanese mean something like “leave the responsibility to heaven or to god”.
Nintendo has been through many pivots during its more than 100 years history, and Nintendo can afford to take its time to do things right, and it did when smartphones started disrupting industry sector after industry sector, and did not stop disrupting the games industry.
Nintendo has a home advantage – the epicenter of the global games industry is in Japan, and not surprisingly, Japan is by far the world’s No. 1 biggest smartphone games market by cash income (other markets are bigger in terms of free downloads, but Japan is No. 1 globally in terms of cash revenues). So Japanese game companies have a big home advantage.
The No. 1 company ranked by gross revenues of the combined total iPhone + Android app market is also a Japanese company.
Yesterday, March 18, 2015, Nintendo announced to join forces with DeNA to jointly develop smartphone games including subscription based game services as a platform to leverage Nintendo’s iconic intellectual properties and characters.
Do you understand the big picture of Japan’s games industries, which drive the global game market? Make sure you do – and read our report:
i-Mode’s popularity soon exceeded any expectation: Docomo for some periods had to limit new subscriptions.
With Steve Jobs’ love for Japan, and Apple’s intense supplier relationships with Japan, its not farfetched to see connections between i-Mode and iPhone, in particular the i-Mode ecosystem and Java-based i-Appli’s are forerunners of today’s apps and apps-ecosystems.
At that time there was no Wikipedia, and Docomo had no English-language website at all, so our company Eurotechnology Japan KK’s information was more or less the only English language information openly available about i-Mode. We were bombarded by requests from many major semiconductor firms, telecom operators, investment banks, students and world-famous business schools for our i-Mode report and related business development and strategic work.
Today 5 of the global top-10 top-grossing Apps are Japanese
While Docomo never managed to capture global value from inventing and first introducing the mobile internet, the No. 1 top-grossing company globally, and five of the top-10 globally top-grossing Apps for iOS and Google-Play combined are Japanese (source: App-Annie).
Japan’s app market is the world’s largest in terms of cash revenues
Its also no coincidence that in terms of cash value, Japan’s is the world’s largest app-market for iOS and Google-Play combined, bigger than the US market and the Chinese market in terms of cash value. (source: App-Annie).
App-Annie’s data to our knowledge only cover the iOS and Google-Play app-stores, not the i-Mode and other mobile internet businesses, so Japan’s actual mobile app economy is even larger than App-Annie data show.
i-Mode is still alive and kicking – and a big business for Docomo
i-Mode is still today the mobile internet system for Docomo’s traditional flip-phones which are still an important part of the market, and recently made headlines since sales for traditional flip-phones were rising, while smartphone sales were (temporarly?) dropping.
i-Mode (and EZweb for KDDI, and Yahoo-mobile for SoftBank) will still be important business for some time to come in Japan.
Mobile payments Japan, e-money and mobile credit (200 pages, pdf file)
In business the first-comer does not always win the game
Japan’s NTT-Docomo tested two types of wallet phones, manufactured by Panasonic and SONY with 5000 customers between December 2003 and June 2004, and introduced mobile payments and wallet phones on July 10, 2004 – over 10 years ago.
ApplePay therefore could be developed based on over 10 years of experience with mobile payments in Japan. ApplePay is expected to be introduced for the USA market in October 2014, and we can expect Apple to introduce ApplePay to other markets including Japan in due course.
It will be particularly interesting to see how ApplePay and the already established mobile payment and NFC payment ecosystems in Japan will integrate.
Japan is No. 1 globally in terms of iOS AppStore + Google Play revenues, bigger and faster growing than USA
10 out of 25 top grossing apps in Japan are of foreign origin
Japan game market report (398 pages, pdf-file)
AppAnnie showed that in terms of combined iOS AppStore + Google Play revenues, Japan is No. 1 globally, spending more than the USA. Therefore Japan is naturally the No. 1 target globally for many mobile game companies, and 10 out of 25 top grossing apps in Japan are of foreign origin!
Many foreign game companies have failed and given up. Foreign game companies that have recently given up in Japan include Zynga and Habbo Hotel. EA has given up twice, and is now undertaking the third entry to Japan. To understand some of the key mistakes foreign companies make in Japan, read our blog about why Vodafone failed in Japan.
Lets have a look at the list of top grossing games in the Apple iOS AppStore today. Out of the 25 top grossing games in the AppStore, 10 are by foreign originating companies. Can you guess which these are by reading the list below?
So Japan is certainly not a “closed market”. Actually, it is obvious that Apple does not discriminate in any way against foreign companies in Japan.
Interestingly, neither Nintendo, nor Rovio’s games, such as Angry Birds appear among the 200 “top grossing games” in Apple’s iOS Japan AppStore.
Apple iOS AppStore-Japan “Top Grossing” games ranking – 10 out of the 25 top grossing apps in Japan are by companies of foreign origin
Can you guess which 10 are by companies of foreign origin?
Flappy bird Angry Birds ultimate disruption: flappy bird effortlessly flaps to to the top of ranks, while Angry Birds are watching angrily from the sidelines
Disruption of Japan’s games sector: in a previous blog post we showed that just three newcomers (Gree + DeNA + Gungho) produce more profits than the top 9 traditional game companies combined.
Lets look at some more disruption from the perspective of Japan’s iPhone App store. Lets look at Flappy Bird vs Angry Birds…
Flappy bird Angry Birds ultimate disruption: iOS Japan AppStore “free” games ranking
February 3, 2014, in the “free” ranking in the games section of the iPhone AppStore, we find LINE dominating.
And newcomer Flappy Bird has overtaken Angry Birds by a long margin. Angry Birds Go! appears on rank No. 97 – which actually in Japan is not that bad, given the huge revenues in Japan – as App Annie has shown, Japan’s the world’s biggest grossing apps market both for iOS and Android – so No. 97 in the world’s biggest App market is not that bad.
SIM free iphone japan finally arrive in Japan – directly sold by Apple.
SIM-lock free iPhone 5s and iPhone 5c are now officially sold via the Japanese section of the official Apple.com webstore.
It has been official policy recommendation (not regulation) by Japan’s General Affairs Ministry (総務省) for Japan’s mobile operators to sell SIM-free mobile phones, or to remove the SIM-lock of phones when requested by customers. However, Japan’s mobile operators have been very shy to follow the Ministry’s recommendation, and particularly Japan’s operators did not follow this recommendation for the iPhone.
Apple has now taken the step to offer SIM-free iPhones (model 5s and 5c) officially via the apple.com webstore in Japan.
This is a further step on the way of disruptive innovation sweeping through Japan’s mobile phone sector, which evolved from NTT monopoly and leased phones, via step-wise liberalization, entry of newcomers, and now domination by three groups NTT-DoCoMo, KDDI/AU and Softbank.
SIM-free iPhone sales in Japan- What will be the implications?
For customers, it will be much easier now to switch operators in Japan under the Mobile Number Portability (MNP) program keeping their iPhone. It will be seen, whether operators follow up with their number portability procedures to include the iPhone, which was not the case until recently.
For customers, roaming and international travel will be easier, customers will be able to use their Japan-bought SIM-free iPhone on foreign networks inserting local foreign operators’ SIM cards. Japanese operators might lose some limited amount of roaming income (which has never been very high, unlike in Europe).
For operators, churn under the Number Portability Program is likely to increase, increasing competitive pressure on operators to differentiate via radio connectivity, customer service, and innovative services.
How to get and use a SIM-free iPhone in Japan?
We have not yet done this ourselves, but what we hear is:
Buy a SIM-free iPhone from the Apple online Apple-store (apparently SIM-free iPhones are not available from operator stores or physical Apple stores). Take care, the models may differ depending on which operator you want to use the iPhone on, i.e. Docomo or KDDI/AU or Softbank. Better check with the operator about prices and conditions before you purchase the SIM-free iPhone, just to be sure.
Take the iPhone to a mobile operator store (i.e. Docomo, KDDI/AU or Softbank, depending on which type of iPhone you have bought), subscribe for service and get a SIM-card for the iPhone.
There are also some mobile virtual operators (MVOs) in Japan, i.e. operators which purchase capacity from Docomo, Softbank or KDDI, and then retail this capacity to end users. Check their conditions, service speed, bandwidth etc before you buy.
SoftBank aims for global No. 1 position…acquiring SPRINT on the way to the top
SoftBank: towards global No. 1 with a 300 year vision
To understand SoftBank, and the planned SPRINT acquisition, you need to understand Masayoshi Son – and Masayoshi Son says: “I am a man – and I want to be Number 1”. SoftBank announced FY2012 financial results a few days ago – read below and in our SoftBank-report for analysis, but lets first look at Masayoshi Son.
Yes, Masayoshi Son threatened the Japanese Telecomms and Postal Ministry to set himself on fire inside the Ministry
A few years ago, the Chief-Editor of BusinessWeek visited Japan to interview Masayoshi Son, and the night before the interview over dinner he asked me to suggest interview questions. I suggested to ask if it is true that Masayoshi Son threatened to set himself on fire inside Japan’s Government Ministry for Telecommunications if he is again refused the telecommunications license he needed to build a telecommunications business. Masayoshi Son’s answer: “yes, its true, I threatened to set myself on fire inside the Ministry – but I did not bring any fuel along into the Ministry”. This story shows Masayoshi Son’s passion and extreme determination – and my suggestion became the headline of the article in BusinessWeek – and can still be found online here.
Faced with such passion and determination, Vodafone never had a chance in Japan – can you imagine the Chairman of Vodafone coming over from London to Tokyo to threaten to set himself on fire inside Japan’s telecommunications ministry? Not to mention the demanding customers: several times I personally saw complaining Japanese customers shout down Japanese Vodafone-staffers until these burst into tears and had to be consoled by Vodafone-coworkers… unbelievable, but true.
Japan can be tough for foreign companies…
BusinessWeek: “Apple would never talk to a “small fry” like SoftBank”. Really?
SoftBank aims for global No. 1 position: Japan’s most successful venture start-up – with a 30 year and a 300 year plan
SoftBank had already received a spectrum license and had intended to build up a mobile phone network from zero, when Masayoshi Son grasped the opportunity to acquire Vodafone’s struggling Japan operations – the former Japan-Telecom and J-Phone. Almost overnight Masayoshi Son arranged US$ 15 Billion in loans to fund the acquisition.
The acquisition was announced on Friday March 17, 2006, and the following Monday, Masayoshi Son moved all the remaining staff (minus most expatriates) from the Vodafone-Atago-office to Softbank’s offices in Shiodome, and shut down the Atago-offices to make a clear break. It took Masayoshi Son only a few months until it was clear that the turn-round will be successful. And now with the planned SPRINT acquisition, Softbank is on track to target global No. 1 position.
SoftBank aims for global No. 1 position: Learn more about SoftBank, Masayoshi Son, and his 30/300 year vision for SoftBank
Report on “SoftBank today and 300 year vision” (approx 120 page, pdf file)
The photograph of Masayoshi Son is used under Creative Commons license according to Wikipedia.
Copyright details are:
Description English: Masayoshi Son on July 11, 2008
Date 11 July 2008, 12:11:02
Source iPhone 3G Masayoshi Son Masaru Kamikura (http://www.flickr.com/photos/kamikura/2658524938/)
Author Masaru Kamikura (http://www.flickr.com/people/20119192@N00) from Japan
This file is licensed under the Creative Commons Attribution 2.0 Generic
Japan introduced the mobile internet with i-Mode in 1999, while i-Phone and friends are now getting the rest of the world hooked onto the mobile internet.
Games used to be played in game parlors, and some of Japan’s game giants were originally and still are game parlor machine makers – a round of Dance-Dance-Revolution anyone? Next came consoles, cassettes and handhelds, taking the growth momentum out of game parlors, and establishing a pattern of growth by generations (today we are in the 7th Generation). Nintendo broke the cozy generation pattern where pixels and MHz increased in predictable ways from Generation to Generation without much other fundamental change. Nintendo took games sideways into the blue oceans of motion sensors and to the silver generation, women and other previously non-gaming majorities, while Xbox and SONY kept slugging out the generation game.
We have been analyzing the Tokyo Game Show for many years – at the 2004 Tokyo Game Show, when SONY gave previews of the PSP – actually, I was personally much more interested in DoCoMo’s huge exhibition village setting a stage for about 15 mobile phone gaming partners.
Since i-Mode started mobile phone games in 1999, online and mobile phone games combined have essentially outgrown the video game software sector in 2009, and are certain to grow much more in coming years – the iPhone is not slowing mobile phone based gaming down…. Those who only count video game cassettes and consoles, certainly don’t see the rapid mobile and online growth – and complain about shrinking markets.
Is Nintendo now being blind-sided by mobile phones and app-stores?
I don’t think so: not blind-sided – but strongly affected. Actually, Nintendo’s CEO and games developer Shigeru Miyamoto tell us they want to make their DSi’s central to everybody’s lives – with built in cameras, payments, app-stores, navigation. Essentially everyone on planet earth has a mobile phone, or will soon have one, or two. Many of todays phones in people’s hands can’t yet play games nicely – but DoCoMo’s phones do – and iPhones do also. Thats why we already see a lot of mobile gaming in Japan. Imagine the day when most mobile phones on planet earth can play games nicely? Will that day come?
Will people upgrade to a DSi? or to a PSP? or to a better mobile phone? Apple and DoCoMo are both proof that people do pay for downloading games from i-Mode or i-Tunes app-stores – and that’s exactly the growth we see in the Figure – you don’t see that growth if you count only the number of game cassettes and consoles sold. In any case we may not see an 8th generation console – people might upgrade their phones instead – or use Skype on their PSP.
A few hours ago (Oct 22, 2008, 6am Tokyo Time) APPLE announced 4th Quarter and Full Year results – we are here updating our comparison between APPLE and NINTENDO. With 6.9 million iPhones sold in APPLE’s 4th Quarter (July + August + September 2008), APPLE has achieved 2.76% market share of all mobile phones globally.
APPLE strongly accelerates lead over NINTENDO in term of sales (see figure below) – even more dramatically, if we take into account that the iPhone in 4th Quarter now accounts for 39% of APPLE’s sales. APPLE accounts for iPhone sales in terms of a subscription model over two years because of free software updates for iPhones. If we would use APPLE’s non-GAAP figures, which book iPhone sales fully at the point of sale, then APPLE’s sales lead over NINTENDO would be even stronger.
In terms of margins we see the opposite trend: NINTENDO‘s lead over APPLE in terms of higher margins expands (see below).
Tetsuzo Matsumoto (Senior Executive Vice-President and Board Member of SOFTBANK MOBILE Corporation),
Gerhard Fasol (CEO, Eurotechnology Japan KK) and
Dennis Normile (Japan Correspondent of SCIENCE Magazine, and FCCJ)
discuss about the future of Japan’s mobile phone market.
“Will the iPhone trigger a turning point in Japan’s mobile phone industry?” (Foreign Correspondents’ Club of Japan, Tokyo Wednesday, August 13, 2008, 12:00-14:00)
(Photo: Copyright Foreign Correspondents’ Club of Japan, used with permission)
How many iPhones did SoftBank sell in Japan during July?
Our estimate: between 75,000 – 125,000. Read on about how we arrived at this estimate.
Net growth of mobile subscription numbers in Japan (Japan’s mobile market grows by about 5.5 million per year – for more analysis read our JCOMM-Report).
How did we arrive at the estimate of 75,000-125,000 iPhones sold in Japan during July?
When we analyze the Figure above, we can see that SoftBank‘s subscriber numbers increased by 158,900 during June 2008, and the monthly increase jumped to 215,400 during July 2008. We can also see that for no other month except for March 2006, March 2007, and March 2008 was there such a jump (in Japan March is the month of peak mobile phone sales, because new jobs traditionally start with the beginning of the financial year on April, 1). Since SoftBank did not introduce any other spectacular phones during July 2008, we can safely assume that most of the 56,500 net increase jump from June to July are iPhone sales to new subscribers, or new subscriptions for second phones, or number portability users moving over from DoCoMo or KDDI. However, this number would not count current SoftBank subscribers who are upgrading existing subscriptions from a previous older phone to an iPhone. Since we are not aware that SoftBank announces this number, we need to estimate it. If we assume that there were equal numbers of new subscriptions for iPhones as replacements, we would arrive at an estimate of 100,000 iPhones sold during July 2008 in Japan. If we estimate, that this second assumption has a +/- 50% error margin, then we arrive at an estimate of between 75,000-125,000 iPhones sold in Japan during July 2008.
Our estimate: about 640,000 – 1 Million iPhones may be sold in Japan during 2008:
If we assume that iPhone sales in Japan will continue at the current rate, then we can estimate that between 640,000 – 1 Million iPhones could be sold during the remaining part of 2008 in Japan, which would be about 1.2% – 2% of mobile phones sold during 2008.
In a terse one-line press announcement “SoftBank today announced it has signed an agreement with Apple to bring the iPhone to Japan later this year”. (Of course we are talking about the 3G i-Phone, because Japan has almost switched off the 2G networks, and has essentially stopped selling 2G phones for a couple of years now. The current initial 2G iPhone uses GSM and therefore cannot work in Japan, which has no GSM).
iPhone’s main competitors in Japan will be SHARP and KDDI’s design series, at least for the forseeable future – an entirely different story than in any other country in the world… read below.
Competing in Japan will be an entirely different story for the iPhone
Japan’s cell phone is entirely different than anywhere else in the world – recently some people including Japanese Government officials have used the nickname “Galapagos islands” for Japan’s insular and very advanced cellphone market. Indeed, our company in a project for the European Union Government documented in details how Japan’s cellphone services are 3-5 years ahead of Europe’s, ie a large range of cellphone services common in Japan have not yet been introduced in Europe.
For this reason, while the current 2G iPhone is at the high priced top-end in the US or in Europe, in Japan the 2G iPhone does not even work, because Japan has no GSM and essentially has not been selling any 2G phones any longer for a couple of years now. Many mobile services, which Japanese phone users have become accustomed to, are missing from the current 2G iPhone. Japan therefore will be a benchmark, and we expect that selling the iPhone in Japan together with Japanese customer feedback will help Apple to dramatically accelerate iPhone development. Competing in Japan will make the iPhone stronger we believe.
Google, Apple, Nokia, HTC, Vodafone and are winning the driver’s seat of the global internet revolution. DoCoMo, KDDI and SoftBank essentially stay inside Japan for now – limiting their growth prospects and leaving global opportunities to others.
GOOGLE with Android and APPLE with iPhone are reaching for the driver’s seat of the global mobile data revolution. Global companies including GOOGLE, Vodafone, Apple and NOKIA grow to US$ 100s Billion valuations, while local companies NTT, DoCoMo, KDDI and SoftBank remain essentially limited to Japan’s market for now. Smartphone maker HTC increases impact – including in Japan.