Super Mario Run Payment Model Disappoints Investors Despite Record Downloads

At long last, Nintendo is beginning to embrace the massive market that is mobile gaming. The company's early involvement in bringing its iconic characters to smartphones has been nothing short of incredible—there was Pokemon Go, the mobile title by Niantic that licensed Nintendo's IP and created a gaming frenzy, followed by Nintendo's own Super Mario Run, which notched 5 million downloads in 24 hours. So why is Nintendo's stock dropping?

Fickle investors, is the short answer. A longer answer involves the mobile title's payment structure. Super Mario Run is free to download, but after completing a few levels, the games asks users to pay $10 to unlock the remaining content. This is a deviation from most mobile games that offer in-app purchases in smaller increments. Nintendo's all-or-nothing approach is reminiscent of the early days in PC gaming before there was the DLC model—demos featuring a level or two were common, and then it was up to the gamer to decide whether to go out and purchase the full experience for one lump sum.

Super Mario Run

Investors are apparently concerned with how that approach might affect Nintendo's potential profit from the mobile title. Their concern is a reflection of gamers who have downloaded Super Mario Run and subsequently left a negative review. As it stands, the game has just a 2.5 out of 5 star rating on iTunes.

"The problem is not that they expect you to pay past a demo. The problem is the price they're charging. For a game with little content, entirely recycled assets save for a few animations, and grind-heavy game play to see that little content, $10 is EXORBITANT. And people will pay it, because they like Mario or they like Nintendo," reads one of the negative user reviews.

Super Mario Run did not hit the top spot in Japan, though it did climb to the top in the United States and other parts of the world. Nevertheless, the reaction to Nintendo's payment model is pushing the company's stock price down. Shares of Nintendo declined 7.1 percent in Tokyo Stock Exchange before the closing bell. That pushed Nintendo's losing streak in the stock market to five consecutive days, with its share price tumbling 16 percent during that period.

Not everyone agrees that the payment model in Super Mario Run is a bad thing.

"There seems to be a lot of hatred surrounding this game's $10 price tag to unlock all the levels. I cannot disagree more. This is Nintendo thumbing their nose at the new ways of making money on phone apps which involve filling the app with ads and begging you for micro-transactions every five minutes. Instead, Nintendo thankfully asks you for $10 up front and then leaves you to enjoy the game. And that $10 is very well worth it," reads a more positive user review.

Super Mario Run is available now for iOS devices in iTunes. A version for Android will be available soon, though Nintendo has not announced a specific launch date.

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