Paid or Freemium: The Case of Super Mario Run
Almost two years ago, in March 2015, Nintendo first announced its partnership with DeNA to produce games for smartphones. Since then, we have been waiting for a Super Mario game for our iPhones, contemplating not only what kind of game it will be, but also how big of a success it could become. Pokemon Go revealed the immense power of a vintage Nintendo IP and we were certain that Super Mario had even more potential.
In November 2016, Apple started the most powerful teaser campaign a mobile game has ever had by promoting the upcoming Super Mario Run (SMR) in the App Store and encouraging players to sign-up for it before launch. A month later, on the 15th of December, Super Mario Run was launched worldwide on iOS and the numbers were jaw-dropping. 10 million downloads during its first day. 90 million downloads before a month had gone by. And revenues of over $30M during its first month. All this while being exclusive to iOS.
Yet despite such a spectacular launch, many analysts became pessimistic about the game’s chance for long-term success. The reason for this pessimism is the fact that SMR is not a freemium game. It’s free to download, but after just a few levels (minutes) of gameplay, the player encounters an incredibly steep $10 paywall, which pushes the vast majority of those 90 million players - 87 million to be precise - to uninstall the game.
While I personally believe in the superiority of the freemium model compared to the paid model, I do disagree with the pessimism of the analysts bashing Nintendo. The way I see it, Super Mario Run made four decisions which allowed it to gain an extraordinary return on investment while making a game that they're masters at.
This post examines what are the elements that speak for paid model over free-to-play with Super Mario Run as an example.
The Game
Super Mario Run is a vintage platform game categorized by two-dimensional graphics and a player controlled character jumping or climbing between solid platforms at different positions on the screen. There are two key usability components, which allow SMR to play beautifully on touchscreen devices. Firstly, the touch controls are simplified and streamlined to allow the game to be played using only one hand. As Mario auto-runs, a player is only controlling the jumping of the character. Secondly, the usability breakthrough is the session length as SMR caters to all kinds of session lengths from super short to hours long. By limiting each level to only 90 seconds, the game fits perfectly to the common short mobile session. At the same time, there are no mechanical restrictions, such as lives, to keep players from binge playing Mario for a much longer session if they choose to do so.
Super Mario Run has two different game modes: the single player World Tour and the asynchronous race mode called Toad Rally. Some people consider kingdom building another mode, but since there's no gameplay involved with the building, I don't consider it a game mode.
The game itself is divided into two different play modes. The first one is theWorld Tour, which essentially is a classic single-player mode consisting of 24 well designed and highly polished levels – barring the monotonous boss battles. The levels are very easy to beat. Yet the true challenge lies in mastering each level by collecting all the colored coins. And there are several levels of mastery for each level. After collecting the first set of five Pink Coins in one run, the level is then populated with Purple Coins, which are in harder-to-get places and require more experienced Mario-jumping. Collecting all Purple Coins in one run will finally populate the level with Black Coins, which are close to impossible to collect in a single run. In addition to mastery, the replay value of each level is further increased by regular Coins the player earns from passing a level. These regular Coins are consumed in kingdom building, which is more of a decorative part of the game.
The second play mode isToad Rally, which is a new type of asynchronous player-versus-player race. In Toad Rally, the player competes against another player in a number of Coins they collect per run. The levels players compete in are set in the same theme as the World Tour levels. This means that when a player progresses in the World Tour they unlock more competitive levels for Toad Rally (up to six different competitive levels). Each Toad Rally consumes a Ticket, which a player can collect through daily bonus games, and receive as gifts. Winning a Toad Rally gives the player more Toads, which then leads the player to level up and unlock new buildings. Losing a Toad Rally, on the other hand, cause the player to lose some of their Toads.
Overall, Super Mario Run is simple to learn but challenging to master. It’s a game that caters to both the millions of Mario fans looking for that nostalgic feeling, and to the millions of players who have never owned a Nintendo device.
1-1 Free-to-Start instead of Free-to-Play
Super Mario Run is free to download but after only three 90-second levels a player is presented with a $10 paywall that unlocks the remaining 21 levels. This paywall was received as a disappointment not only by the players but also by the market (WSJ: Nintendo Shares Fall After ‘Super Mario Run’ Disappoints). From a business perspective, there are two problems with the free-to-start model:
Firstly, a paywall immediately pushes away the overwhelming majority of the players who downloaded the game. Pay-or-leave is, in my opinion, pretty much an outdated business model that focuses on immediate returns and fails to recognize the value of growing an active user base. While most of the players may not monetize directly they are crucial for overall monetization of the game.
Secondly, a paid model sets a lid the potential lifetime value of a customer, as it’s close to impossible to monetize players who already paid for the game. What this means is that there’s little point in continuing to develop new content for a paid game as there’s no additional revenue to be gained from doing so. Players who chose not to pay for your game will not be swayed by the incremental addition of new content (as the cannot access it from behind the wall), while players who already paid for the game will not only refuse but could become outraged if you asked them to pay for the additional content. Just remind yourself when developers of Monument Valley asked for $2 for additional content. And it's important to remember that once players run out of content, they quit the game.
Super Mario Run operates under a Free-to-Start business model, where the available gameplay is essentially blocked by a paywall after getting a taste of the game.
Considering the limitations of the paid model, as well as the simple fact that the freemium model has proven to be much more successful than the paid model on mobile devices, one could argue that Super Mario Run should have been a freemium game. Yet to be a successful freemium game, the game must master three key components:
First, the core loop, which has a player playing an element of the game, such as matching candy or raiding other player’s castles, to progress in the game. The second component is the restriction mechanic, which slows down a player’s progress through a timer. The third key component is the monetization mechanic that allows a player to skip the restricting timer mechanic by spending money.
This breakdown of a game into three components is theoretical and doesn’t consider the craftsmanship, know-how, and luck that any good free-to-play game requires succeeding. Nevertheless, when these three key elements are aligned, polished and perfected, you have a good shot at a successful free-to-play game. A game that limits the speed at which players move through the content while monetizing those players who want to play more.
Super Mario Run doesn’t have a core loop. The game has levels and coins, sure. But a player doesn’t actually need the coins to progress in the game. The game has also no restriction mechanics, such as lives. Players can play through all of the levels in an hour or two without ever having to wait for anything. And when there’s no restrictions or rewards for mastery, there’s absolutely no demand for timer skips or boosters.
In my opinion, by making the game paid instead of free-to-play, Nintendo chose the perfect business model for their product, that was designed from the ground up to be a paid game. It is easy to argue for the free-to-play model, but it’s also easy to argue against it after generating 90M downloads and $30M in under a month on iOS alone.
2-1 Avoid Content Treadmill
Finishing all the 24 levels in Super Mario Run takes a player about two hours. There’s an option to master the levels by trying to collect all the colored coins, a task that likely excites only a very small fraction of the players (that, by the way, have no in-game option to brag about mastering the levels).
In addition to the World Tour, there’s the asynchronous player-versus-player mode Toad Rally. Winning these races rewards the player with Toads that unlock new decorations for players to purchase and place in her Mushroom Kingdom. To purchase the decorations, a player will eventually need to replay World Tour levels to earn coins. The loop may sound good on paper, but in practice, it turns quickly repetitive and pointless. After all, players purchase decorative items and skins only when other players can see them. Why decorate something that no-one will ever see?
After a couple of hours and $10 later, most of the players are done with Super Mario Run. And that’s just fine for Nintendo. At least they don’t have to maintain a team to crank out new levels for an audience that keeps on beating them in a record time.
Angry Birds 2 is a slingshot game like all the other classic Angry Bird games, except that it has lives that act as a restriction mechanic as well as boosters that help a player to pass tough levels. While these are the monetization mechanics, it's really the fact that the game has close to 1000 levels, which enables and empowers these monetization mechanics. In comparison, Super Mario Run has 24 levels, which is barely enough for a good tutorial.
One could argue that a more sustainable approach would have been the Angry Birds 2 model, where you add a restriction mechanic in the form of lives while continuing steadily to add more levels to the game. With a constant stream of new content, there’s more to play and when there’s more to play, you’ll have players playing the game for a longer time. An increased lifetime leads to an increased number of players per day, which again leads to an increase in revenue.
The major con with the free-to-start model is that it obliterates the player base once they hit the paywall. Yet the big pro with the model is that the developer is disincentivized from adding content to the game post launch. You can read more about ways to avoid content treadmills on Deconstructor of Fun.
3-1 Set Ultra-Premium Price Point
The $10 price for a paid game is extremely steep and, frankly speaking, Super Mario Run by no means justifies its hefty price tag. Just compare it to games likeOceanhorn orBanner Saga, which for $5 offer not only exponentially more content but an arguably more interesting gameplay, a better narrative, and far more polished graphics. And while we’re talking about value in paid games, all the classic Angry Birds games stand as the benchmarks offering hundreds of handcrafted levels for merely a dollar.
Games like Oceanhorn and Banner Saga can be considered as AAA mobile games. And yet these games cost only half of what Super Mario Run charges. But then again, the price elasticity between 5 and 10 dollars is likely so small, that Nintendo did the right thing with its ultra-high price point backed by tremendous IP value.
But if you’re Nintendo, you made the absolute right call by demanding $10 for SMR. With downloads soaring to over $90M and conversion rates at 3 percent, yielding over $30M in one month on a game that doesn't require any marketing from the publisher nor live operations from the developer.
The best part about the ultra-premium price point is the ability to skim the market. I predict that in a few months, SMR will be offered with a whopping 50% discount, allowing the game to essentially increase its conversion and increase the lifetime revenue by an additional 20 to 30 percent.
4-1 Offer Just Enough Social
Super Mario Run has two solid yet underdeveloped social components making the game feel just social enough to incentivize playing after hitting the paywall. See normally you’d quit the game and uninstall it if you chose not to pay after hitting the paywall. In SMR you can continue playing the Toad Rally, which I believe helps to increase the conversion.
The main social component in SMR is the Toad Rally, where players asynchronously race against each other. Even though this is social gameplay, it doesn’t quite feel like it. Sure, I see the ghost of my opponent and in the end-screen, the winner takes all the toads. But how come no-one races me while I’m away? And what is that ghost player anyway? Is it the last run on this level by that player in World Tour or is it that player’s run Toad Rally?
As stated previously in the post, Toad Rally suffers from not having a meaningful goal. Collecting Toads to unlock decorations is far less exciting than a global leaderboard or a traditional tournament mode. And then there’s the issue of bit unclear design where the player just doesn’t know how the whole asynchronous race works.
The second important social component is the ability to play with friends. Super Mario Run offers this ability but it’s provided in a vintage Japanese way, where the player must send URL codes sent via SMS or email to invite her friends. There is a Facebook and Twitter integration that is very poorly executed, where each invitation must be done one at a time instead of simply connecting the game to Facebook and seeing all your playing friends.
Super Mario Run has both Twitter and Facebook integrations. Yet the way these social networks are integrated is plain bad, as the player has to invite Facebook friends one by one after connecting the game to Facebook. But then again, the role of social in Super Mario Run is to let you know that all of your friends are playing this game (and thus nudge you to make the purchase) instead of having you play the game with your friends.
Inviting friends to play SMR with you is a pretty substantial chore with no benefit to anyone. The only benefit seems to be that I can earn Rally Tickets by racing my friends. The downside with racing your friends is that you won’t get any Toads. In other words, racing friends is utterly meaningless since your friend won’t know you raced her and you won’t get anything useful for racing her either.
To sum it up, Super Mario Run is just as social as it needs to be. It’s clear that Nintendo didn't try to create a game where players raced each other in a competitive setting. The goal of this limited social features is to buy just a few more sessions from players who are unsure about dropping $10 on a game.
If the Goal Was $, Nintendo Nailed it
Overall, both visually and gameplay-wise, Super Mario Run is a fun little game. It doesn’t feel as fresh nor as pretty as the already four-year-old Super Mario Bros U for Wii U. The amount of content is also a drastic disappointment especially given the steep $10 price tag. Again, in comparison, Super Mario Bros 3 that launched in 1988 had 8 worlds each with at least half-a-dozen hand-crafted levels, not to mention 8 different Mario transformations all the way from traditional Super Mario to Frog and Hammer Mario.
Super Mario Run doesn’t convert into a free-to-play game either. It’s not only that the game lacks a core loop, restriction mechanics, and monetization hooks. It’s because you couldn’t add those essential free-to-play components to SMR even if you wanted to due to the lack of content.
The free-to-play model wouldn't have worked with Super Mario Run because the game has an extremely small amount of content. There are no core loops or restriction mechanics that could make the existing content of 24 levels last for more than a day or two without profoundly frustrating the players.
Nintendo has gotten a beating for Super Mario Run, which I understand. But from a sole product perspective, what they’ve done is not only successful but also right. They knew the limitations of the game and that it wouldn’t convert into free-to-play. They also knew that they would receive a strong marketing push from the platforms, combined with a strong pull for a Mario game. Based on these known points, Nintendo made the call to go for an ultra-premium price point and optimized the design to convert the maximum number of players after which they will slash the price and get a second surge of revenue. With $30M of revenue and counting for an investment of maximum two million, you can’t really argue against this decision.
While the freemium model is and will be superior to the paid model on mobile, sometimes there's a case to be made the paid model as well. Games that offer very limited content with low replay value are likely to struggle despite implementation of a solid core loop. In those cases going with a paid option may be a very viable option, which can offer surprisingly good return given that Apple and Google do the heavy lifting of actually promoting the game.
Overall, Super Mario Run was a great first move from Nintendo on mobile and I can't wait for their upcoming mobile titles.
