Nintendo recently reported earnings for its fiscal third quarter of 2017, including data related to the company's two-year-old smartphone game business. In the report, Nintendo confirmed that its smart device and intellectual property related earnings increased from 10.6 billion yen (about $98 million) in the nine months ended December 31, 2016 to 29.1 billion yen (about $267 million) in the same period in 2017.
While this includes income from Nintendo's smartphone games as well as royalty income, Bloomberg reported that Nintendo's smartphone game profits specifically grew from 8.8 billion yen in the year-ago quarter to 11.2 billion yen this fiscal quarter. The only smartphone game that launched this fiscal quarter for Nintendo was Animal Crossing: Pocket Camp, which is said to have generated $17 million globally and reached a download number of 22 million since its launch in November. The other major smartphone game to debut from Nintendo in 2017 was Fire Emblem Heroes.
Nintendo said it plans to get its players to continue returning to and enjoying previously released iOS and Android games through ongoing updates, not including the recently confirmed imminent shut down of its first iOS app Miitomo.
In our smart-device business, consumers not only continued to enjoy Super Mario Run and Fire Emblem Heroes, which became available for download during the previous fiscal year, but also had fun with Animal Crossing: Pocket Camp, released globally during October and November. Smart devices and IP related income were up to 29.1 billion yen (172% increase on a year-on-year basis).
In our smart-device business, we will focus on operations that encourage more consumers to continue to enjoy playing the applications that they have downloaded
Although Fire Emblem Heroes and Animal Crossing: Pocket Camp are free-to-download apps, they're believed to net Nintendo more of a profit in the long run thanks to players who become enticed to spend money on in-app purchases. Alternatively, Super Mario Run is a free-to-start app where users can play a few levels and then must spend $9.99 to gain access to the full game.
At one point, Nintendo described the freemium model of Fire Emblem Heroes as an "outlier" in its overall smartphone game plan and that it prefers Super Mario Run's pay-once structure, but so far that's been the only app to go that route. Additionally, the company's previous earnings report mentioned Super Mario Run had yet to reach an "acceptable profit point" around 10 months after launch.
Otherwise, Nintendo's earnings report detailed a huge success for the company's Switch console, selling 12.13 million units from April to December 2017 and now totaling 14.86 million units sold to date. Upon this report, Nintendo increased its operating profit outlook from 120 billion yen to 160 billion yen for the year ending March 2018, and bumped up the Switch sales forecast from the already-surpassed 14 million units to 15 million units for the same period.