From Pokemon Go to retro console release, Nintendo mines past for a lucrative future

The video gaming stalwart has revived its old tech and franchises with some success – most notably the incredible global phenomenon that is augmented-reality smartphone game Pokemon Go

PUBLISHED : Thursday, 21 July, 2016, 8:01am
UPDATED : Thursday, 21 July, 2016, 8:27am

The video gaming industry is surging into the future with cutting-edge hardware and photorealistic displays. Sony is on the cusp of releasing a virtual reality headset for its world-beating PlayStation 4. Microsoft says it is working on the most powerful living-room game console of all time. Smartphones have made gamers out of hundreds of millions of people.

Meanwhile, Nintendo, a pioneer of video gaming, said it would release a console it first started selling in 1983: the Nintendo Entertainment System.

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That’s usual practice for the Japanese company, which has long charted its own course. In the past few years, Nintendo’s approach has been to double down on the nostalgia fans feel for beloved franchises such as Super Mario and Zelda rather than break new ground.

Michael Pachter, an analyst with Wedbush Securities, says the company has sharpened its focus on the young audience drawn to its cartoonlike franchises, as well as on “Nintendads” who grew up when the company’s hardware was dominant in gaming and now have kids of their own.

In the past couple of weeks, the bet on the old standards has paid off handsomely.

Shares of Nintendo have nearly doubled in value, climbing 92 per cent since the July 6 release of Pokemon Go, a smartphone version of the pocket monster battling franchise, partly owned by Nintendo, that was first released in 1996.

The new game quickly rose to the top of the charts in the Google and Apple app marketplaces and became a global phenomenon (in those parts of the globe where it’s been launched – Hong Kong isn’t among them yet), leading flocks of people of all ages, looking more intently than usual at their phones, to gather outdoors to play the game. The success of the game was especially noteworthy because there were “no aggressive marketing campaigns” before its launch, analysts with Morgan Stanley wrote in a note to investors.

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It is unclear how much of a hand Nintendo had in creating Pokemon Go, which was developed by Niantic, a company spun out of Google that Nintendo has invested in but doesn’t control. Nintendo has said it is working on its own mobile games, as well as a new console called the NX, but it’s unclear how many games will migrate to the smartphone.

Nevertheless, the runaway success of Pokemon Go has investors speculating on the high value Nintendo’s other beloved characters might have if they featured in games on mobile devices. What kind of a splash could Nintendo make if it opted to put Mario or Zelda on to smartphones for the first time?

The company didn’t comment on its plans. It has previously announced that it will bring the Animal Crossing and Fire Emblem franchises to mobile. As for the NX, the company has said it will be a new console concept, rather than a retread of its previous hardware.

The good week provides some breathing room for Nintendo, a company that found itself in a tough spot recently, hemmed in on one side by a game-console market that analysts say is slipping from its grasp and on the other by a fast-growing smartphone gaming universe the company chose to ignore as a matter of policy.

At June’s Electronic Entertainment Expo trade show, the game industry’s biggest stage, Nintendo’s message was characteristic: the company doubled down on an old favourite, devoting its entire presence to the upcoming Zelda: Breath of the Wild, the latest game in the company’s 30-year-old adventure franchise.

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“Go look at every title Nintendo has launched in the last 15 years, and count all the new franchises,” said Pachter, the Wedbush analyst. “We’ve had Zelda a dozen times, Pokemon a dozen times, Super Mario Brothers, Super Mario Party, Super Mario Kart. They just haven’t come up with anything new.”

On cue, Nintendo explicitly invited fans to “relive past glories” with the NES Classic Edition, a US$60 replica of the classic console that plugs into televisions via an HDMI cable. The console comes with 30 NES games built in, including Super Mario Brothers, Donkey Kong and gridiron stalwart Tecmo Bowl.

Asked how far nostalgia can take the company, Pachter compares Nintendo with a legendarily creative company that went through a rough patch: Disney.

“When Disney lost its creative juice, it bought Pixar, and Marvel and [Lucasfilm],” he says. “Then all of a sudden, they come up with Frozen and Zootopia. Clearly it worked for them.”

And when Nintendo releases the new-retro NES, Pachter says he’s going to be a buyer. “It has 30 games!”