Subscription Billing Blog

Nintendo toys with free trials – should you?

 

Nintendo, one of the world’s oldest, most successful video game companies, recently released its latest console to great anticipation. The system was sold out across several retailers, and its launch game, “The Legend of Zelda: Breath of the Wild,” is en route to becoming a fan favorite. Yet the Switch comes with one catch that’s left fans agitated rather than celebratory: The online gameplay feature will change from a free trial to a subscription service for all users in the fall. Although this move upset Nintendo’s fans, it’s a maneuver that will provide them with more options in the long run.

A switch for Nintendo

Nintendo’s previous console, the Nintendo Wii U, was far less successful than its competition, Sony’s Playstation 4 and Microsoft’s Xbox One. According to VG Chartz, the Wii U sold 13.8 million units as of Jan. 2017, compared to the Xbox One’s 28.3 million units and the Playstation 4’s 54.8 million units, despite the fact the Wii U came out a year before the latter two consoles. The general consensus among fans was Sony and Microsoft offered better consoles and games, resulting in higher sales. Still, Wii U fans enjoyed the fact that their console was the only one that did not charge for online play. This feature was touted as a testament to Nintendo’s superiority.

That will change in the next few months, however. Switch users currently have access to free online play, but soon all players will have to subscribe regardless of what console they use. Upset fans have taken to voicing their displeasure across the internet in response.

Looking at the evidence, it appears Nintendo is taking a risk. Not only is it suddenly charging for a service that was previously free, but it’s also removing an advantage it had over its competitors. In fact, Nintendo may be taking a step backward by restricting access to its online library of classic games. As Polygon pointed out, online subscribers get a free monthly download of a Nintendo Entertainment System or Super Nintendo Entertainment System game via Virtual Console. However, customers can only play the game unrestricted for one month. After the time period is up, they will have to purchase the game to continue playing. The implication is that people who purchased these games virtually on other platforms – such as the Wii U or the 3DS – will have to buy them again for the Switch.

Monetizing to provide value

Nintendo’s decision to charge for online play wasn’t a blatant attempt to extract more money from its customers like many assumed. Rather, it falls in line with the company’s plans to provide additional value to its fans. 

“Nintendo plans to increase its online offers but needs money to do so.”

Shinya Takahashi, Nintendo’s general manager of Entertainment Planning and Development, and Yoshiaki Koisumi, deputy general manager, gave an explanation of the company’s reasoning in an interview with Japanese gaming magazine Fanmitsu, a translation of which was later published on Nintendo Everything. The two explained how Nintendo has plans to increase its online offers, but it needs money to do so.

“We’ll be maintaining the online service and providing new services that we haven’t had up until now, and there are costs associated with those,” Takahashi said, according to Nintendo Everything. “We’d also like to maintain a stable playing experience and provide proper support.”

This statement hints at an incredibly important concept: Nintendo can’t sustain online play based on console sales alone, despite its strong numbers. The Switch retailed for $300 when it first launched on March 3 and, according to Business Insider, sold 906,000 units over the following 28 days. It’s doubtful all of these customers will also use the online play service, but even a small percentage requires significant resources on Nintendo’s part. 

Such resources cost money, and the best way to raise revenue for a continues service such as online gaming is through subscriptions. While the transition may ruffle feathers, it is arguably a strong move on Nintendo’s part. With additional subscription revenue, the company can invest in a better online experience for players.

About Author

Kevin Cancilla

Kevin Cancilla

Kevin is an industry veteran with extensive experience in strategic marketing for enterprise software companies and SaaS-based businesses. His 15-plus-year track record includes developing integrated multi-channel marketing programs and partnerships that yield financial results, expand the customer base, increase market share, and build brand affinity. Prior to joining Vindicia, Kevin held senior marketing positions at STEALTHbits Technologies, Tripwire, Epicor, Baan, and Adobe Systems. He holds a BSBM degree in marketing and business management from the University of Phoenix.

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