• Bloomberg


“Super Mario Run,” Nintendo Co.’s first foray into the world of mobile gaming, might be encountering some growing pains.

Even though the game debuted at the top of download rankings in 62 countries, it was the highest grossing game in only five, according to researcher SensorTower. Nintendo shares dropped as much as 5.6 percent in early trade in Tokyo, wiping out almost $2 billion in value. Partner DeNA Co., which helped develop the title, fell as much as 7.9 percent.

The game, which features the company’s iconic character running across a scrolling landscape to rescue Princess Peach, provides free access to the first three levels, but requires a $9.99 payment to unlock the remaining 21 and other features. That model is a departure from the world’s most profitable mobile games, which are free-to-play but encourage users to buy items. “Super Mario Run” also came out late in the day, and users aren’t expected to start paying until they finish the first levels.

“Having a fixed price tag means profit will be limited because smartphone games make big money through free-to-play features,” said Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities Co. “Still, the low revenue rankings, especially in Japan, may be because the game was released only” a few hours ago, he said.

“Super Mario Run” was released globally at 1 p.m. Thursday in New York and 3 a.m. Friday in Tokyo, according to Nintendo. It was seventh in revenue rankings in the U.S. and 107th in Japan, the world’s second- and third-largest app markets.

“I wouldn’t be surprised if players choose to see how much enjoyment they can wring out of those first three levels as possible before making the decision to drop $10,” said Randy Nelson, head of mobile research at SensorTower.

The release is the first full test of what the Japanese game maker can achieve after years of eschewing the thriving mobile app market. While Nintendo gave a hint of its potential with the success of “Pokemon Go” earlier this year, that title was only partly its own creation. “Super Mario Run” was developed mainly by Nintendo, with some assistance from partner DeNA. Expectations have swelled since the Kyoto-based company announced a strategic shift toward embracing mobile in March 2015, adding almost $20 billion to its market value.

The key question is how “Super Mario Run” will fare compared with “Pokemon Go,” which clocked up more than 500 million downloads and became a major social phenomenon earlier this year. “Pokemon Go” also made an estimated $600 million in its first three months, according to App Annie, by encouraging users to buy virtual trinkets that help them collect pocket monster characters faster.

“There’s likely some lag introduced in revenue by the fact that users don’t feel the same impetus to monetize quite as quickly as with ‘Pokemon Go,'” SensorTower’s Nelson said. “I expect that it will soon hit top grossing in more countries.”

Atul Goyal at Jefferies Group sees 500 million downloads by the end of March, with 10 percent of users paying for the full version. “As the market is able to better understand the importance of these strategic moves, the earnings estimates will move up over time,” Goyal wrote in a report.

Yet amid the euphoria, some are already discovering holes in execution. Macquarie Securities analyst David Gibson finds it puzzling that the game requires an internet connection and worries that the $10 price tag for the full version might be too aggressive, especially for users in developing countries.

“Nostalgic Nintendo players will almost certainly spend,” said Gibson, who is estimating about 200 million downloads by the end of March, with a 10th of users paying $10 for the full version. “But what matters is if the marginal customer says this is good, yeah, I’ll spend the money.”

For now, the initial list of places where “Super Mario Run” will be available doesn’t include China, which accounts for a quarter of all app revenues, according to Newzoo. The decision to release the title first on Apple devices also runs the risk of alienating gamers on Android, which runs about two-thirds of the world’s 2.3 billion smartphones, according to the researcher. A version for Google’s smartphone software will be released sometime in 2017, Nintendo said, without specifying a date.

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