How Nintendo can capitalize on in-app advertising without annoying players

Now that we’ve had the chance to absorb the news of Nintendo’s expansion into mobile gaming, a few questions arise as we come to terms with exactly what this move might mean for the mobile game industry.

Certainly, the potential for some truly innovative games is top-of-mind. After all, this is the company that brought us such iconic works as Super Mario Brothers, Mario Kart, the The Legend of Zelda. Nintendo is also known for its hardware innovations, revolutionizing the console market with the Wii and dominating the entire portable gaming market for decades from the Game Boy to the Nintendo 3DS.

But while I have no doubt that we’ll see some truly fascinating efforts coming out of Nintendo from a gameplay perspective, it’s the business model the company chooses to support them that keeps me interested.

As any mobile game developer knows, the hardest part of maintaining a successful game studio is generating revenues for its work in a way that does not irritate gamers, those accustomed to playing for free. Nintendo commands a fiercely loyal fanbase with which it has maintained an intimate relationship over the years through both original IP and subsequent sequels. It would be a shame if it squanders that goodwill by stumbling into one of the many pitfalls that litter the mobile gaming landscape.

The most obvious choice Nintendo has to make is whether its games will be free or paid. Nintendo could probably get away with charging for its games given the brand recognition and loyalty it enjoys. But that’s likely going to be limited to its core audience. Isn’t the whole reason to expand into mobile to find new gamers to engage?

Accomplishing that means offering games for free. Now Nintendo could equally just as easily treat its entire mobile game effort as a loss-leader in support of its console business, but I don’t think it would have joined up so closely (and financially) with mobile developer DeNA if that was its only goal.

So that means adding a layer of monetization to free games, which Nintendo has a murky history with already. On one hand, its 3DS game Pokémon Shuffle was largely panned as a me-too Candy Crush Saga clone with a Pokémon brand, and it included the hated energy system that limits the time gamers can play before forcing them to wait or pay to extend their experience.

But its Rusty’s Real Deal Baseball showed how innovating around in-game purchases could work when the spirit of the game is respected. In Rusty’s Real Deal, the free tier enabled gamers to collect items to use in bartering to drive down the price of additional in-game minigames. The act of buying was incorporated into the actual gameplay itself, rather than shoehorned in as an interruption.

Native ads + appropriate brand partners

So that brings us to advertising. If any game developer can figure out a way to make native advertising work in mobile games, it’s Nintendo. The company needs to make a serious commitment to deploying native ads in its games, designing how ads will be incorporated from the gameplay level up, just like it did in-game purchases with Rusty’s Real Deal Baseball.

Doing that right is more than just a technical issue — it’s about branding, too. Nintendo needs to have the discipline to refuse brands offering money to use its platform to reach their audience. Instead, it must work only with the brands that fit authentically in the gameplay environment and with the Nintendo community. Going for quality over quantity creates a scarcity of ad inventory that Nintendo could use to actually drive up rates in a market where rate pressure is trending downward.

And finally, Nintendo should examine how it could integrate the ad experience across the multi-device environment it seems to have planned. If advertising is properly integrated into the mobile experience, and the mobile experience is meant to expand to multiple devices (including portable game devices and consoles), then why can’t the advertising experience expand as well? As already noted, Nintendo has taken stabs at free-to-play monetization strategies on the 3DS, maybe the push into smartphones is just the nudge it needs to experiment with this more broadly.

If Nintendo can bring the same level of innovation to its game monetization strategy as it does its gameplay experience, this deal could create a new template for how mobile games and advertising can work together for others going forward.

When the game’s over, the ultimate judgment is not about how much money was made, but whether the player enjoyed the experience. Nintendo already makes great gaming experiences. Now can it make a great advertising experience as well?

Frank Sinton is the CEO of Beachfront Media, a premium video app creation toolkit and ad mediation platform that allows creators and publishers to distribute and monetize video across any device and any format.