Nintendo's long-awaited Super Mario launch wipes $2 billion off its market cap
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The famous Nintendo's game has finally seen the light outside of the traditional console as it was launched yesterday on mobile exclusively available for iPhone users, though the market reaction was far from positive.

The 127-year old company has long stayed away from smartphone gaming and repeatedly refused licensing its characters to be used in online games. However, after the overwhelming success of Nintendo's (JP: 7974) co-produced online game Pokémon Go, based on the nostalgy around Nintendo's Pokémons popular back in the 90s, the company has finally reconsidered its negative stance towards smartphone gaming and introduced the Italian plumber Mario, one of its iconic characters, to mobile. Nintendo's Shigeru Miyamoto took part in Apple's September presentation, where he announced the Super Mario Run game as one of the partner projects Apple prepared for its customers.

The first game of the franchise, Super Mario Run, follows the similar story line as the original console game and shows the travels of the iconic Italian plumber through three modes: World Tour, Toad Rally and Kingdom Builder. The Toad Rally allows for a multi-player mode whereas the Kingdom Builder lets players create their own levels, both of these non-core levels add some novelty to the main game. The game, designed in a collaboration with DeNa, was launched yesterday exclusively for iOS while Android users will only get their hands on Nintendo's first Mario game next year.

"The nostalgia factor plays a key role here, as an entire generation of gamers suddenly, and finally, finds itself able to play one of their childhood franchises on their phone, two weeks before the holidays," wrote Joost van Dreunen, CEO of SuperData Research, as reported by CNBC.

According to the latest data from Recode, Super Mario Run became the most downloaded iOS app in the United States within just the first hour after the launch. Within that hour, the company has made approximately $1 billion to $1.3 billion in revenues, say the experts. The game also topped download rankings in such countries as the U.K., Germany, Japan and Australia while it debuted in more than 150 countries yesterday, say the researchers.

However, the big question here, and one of the main aspects that disappointed the investors, is the game's price tag of $9.99. Users can download the game for free from the Apple store, yet they will be required to pay a one-time fee of $9.99 to unlock all levels of the game, said the company. Some of the analysts are not sure how that will work out, considering that most of the viral gaming apps, including Pokémon Go, are free to play.

"After a long period of having no clearly defined mobile strategy, Nintendo is entering the mobile games market at an opportune time. Right as the market is cluttered by an abundant offering, the Japanese giant enters with a highly-visible franchise. Beyond the success for Nintendo, other publishers will be watching to see if a $10 premium model will work on mobile from here on out," added Joost van Dreunen, as reported by CNBC.

Stock is down despite top downloads

However, despite topping the Apple Store charts yesterday, Nintendo's stock has slumped almost 5% at today's Tokyo open, pointing that investors don't seem to fully approve Nintendo's move. As the stock dropped to ¥26,225, Nintendo's market capitalization lost almost $2 billion, said Agence France-Presse. Similarly, the shares of Super Mario's co-developer company DeNa slumped by over 7% to ¥2,848.

Nintendo hoped to come on the heels of Pokémon Go's success that significantly contributed to the company's stock rally of over 60% this summer. Yet later, Nintendo stock slipped down while still remaining at a higher level than prior to the Pokémon Go release, as it became clear that Nintendo's role in developing the game was smaller than initially expected.

This was a particularly important result for the company that has struggled to market its newest consoles such as the 2014' Wii U gadget that the company admitted to be a sales "failure". The experts say that this explains Nintendo's switch to smartphone gaming, despite rejecting it for years. After the company failed to create new sources of revenue in the last years, it announced a partnership with DeNa aimed at creating smartphone and tablet games based on Nintendo's intellectual property - the iconic characters.

However, although the analysts expect the number of Super Mario downloads to near 500 million on iOS, this is not a good enough sign for investors. CNBC said that most investors who pushed the "sell" button yesterday were worried about the hefty price tag of the mobile game and whether Super Mario could bring the profits Nintendo expects. As currently most mobile games are free and even a $1.99 or $2.99 fee considered "expensive", Nintendo's decision to charge $9.99 for the full version of the game seems to be a long shot. Most experts estimate the percentage of users that are ready to pay the higher than normal fee for the game to be around 10%, mostly including Nintendo's long-time fans.

Another analyst, David Gibson of Macquarie, is also worried that the biggest part of the audience is likely to be put off by the price tag, especially players coming from the emerging markets. Gibson adds that the idea of charging for the full version of the game is not inherently bad but the price range between $3 and $5 would allow the game to appeal to the broader audience, reports Barron's. While the expert believes that up to one billion users, both from Android and iOS, will download the game in its free version, “not many will pay to unlock the full game except for the core Nintendo fan base.”

CNBC cites the experts saying that Nintendo stock could tumble for another 10% to 15% because the company's business model is not yet well-adapted for mobile gaming and Nintendo mostly bets on the nostalgic feeling around the game to attract the users. However, if the company manages to get a bigger user base than expected by the analysts, Super Mario Run could well become Nintendo's next big hit.

Nintendo plans to go back in time again, now with the cartridge console

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