How Super Mario conquered the world + Nintendo biz strategy
Consumers are loyal to IP
The Agenda:
Opinion
How Super Mario conquered the world + Nintendo biz strategy [IP, Japan]
Super Mario: Human beings value good IP.
Critical vs. audience reviews: The question of intent.
The movie actually did take risks.
Impute: Manga/anime’s influence on Japanese gaming IP.
Kyoto and Osaka: Art over efficiency.
vs. Dungeons & Dragons: Art clashes with business realities.
Mario was always cross-platform.
How to premiumize your business, yourself, your kids.
Streaming: IP above all. [Streaming, IP]
Cinema recovers [Hollywood, IP]
Sonic the Hedgehog buys Angry Birds [Gaming, IP]
Join me on Notes! [Tech]
Monday Motivation
Be unique, and enjoy the process. (Shigeru Miyamoto, creator - Super Mario Bros., The Legend of Zelda, Donkey Kong, Star Fox, Pikmin)
Hello everyone and welcome newcomers! :) Before we begin: This particular issue means a whole lot to me.
I quit my equities research analyst job almost a decade ago to launch what would become Cross Platform/Business Samurai/my app, based on the predictions that 1) tech would move into entertainment, and there would be a war for entertainment IP, 2) coding would become more accessible to more people, and 3) manga/anime was going to get more popular globally. It’s clear now to many that all three have occurred, but during most of this ten-year stretch, it wasn’t, and the vast majority of people I encountered were not taking me seriously.
One of the things that kept me going was Nintendo. With its focus on quality and new ideas, the company was always a role model for me, both as a creative and businessman, and I watched in awe and inspiration as the company proved so many people wrong with the success of the Switch. Anyway, on with the newsletter!
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Opinion
IP
How Super Mario conquered the world + Nintendo biz strategy [IP, Japan] NOTE: SPOILERS
a. Super Mario: Human beings value great IP.
As of this writing, The Super Mario Bros. Movie continues to break records and has grossed over USD 400M in the US and USD 866M worldwide - and it hasn’t yet opened in South Korea nor Nintendo’s home, Japan. Overall, it is projected to make over USD 1B, on a production budget lower than many Pixar films, despite so-so reviews from critics. Worldwide appeal across generations, about a fat, mustachioed, working-class Italian-American, created by Japanese.
Why?
In short, because people love the IP. Time and time again, Nintendo kept working on Mario, releasing hit game after hit game, successfully executing blue ocean strategy multiple times, while being very protective of the IP. Humans appreciate great art.
b. Critical vs. audience reviews: The question of intent.
Given the disparity between the box office numbers and audience reviews on one end vs. critic reviews on the other, I think we should look at where both sides are coming from. Professional critics are looking at plot, etc. And I think we can all agree that the plot of the Mario movie was pretty basic.
But what audiences were paying money for was to interact with the characters and world - the IP - they’ve loved since childhood. The plot is serviceable enough, but the characters look and act in accordance to what we’re all familiar with, and the same goes for the setting. Since 1) Nintendo’s management’s intent was first and foremost for a wider audience to engage with the IP, and 2) some are predicting an 82% jump in Mario sales, I’d say, mission accomplished. I’d also say a similar, nostalgia-based tactic was executed by Disney with Star Wars: The Force Awakens.
Two parties, watching this movie with different intent.
c. The movie actually did take risks.
Given Nintendo’s heavy involvement with the movie and how it sets up the status quo of the games, many may see it as the definitive origin story of Mario and Luigi, and also, surprisingly, of Princess Peach. For Nintendo, this is actually a major step forward, since the approach to most Mario games has intentionally been plot-light, with some very notable exceptions. I mean, the movie straight-up introduces the Mario family!
The movie also set up an intentionally dangling plot point - who is Princess Peach? Chekov’s gun has to fire, if not in this movie, then maybe in the following movies that Miyamoto-sensei is hinting at. Though I hope Nintendo invests more in the characters/plot going forward, because eventually that is what’s going to keep audiences coming back.
d. Impute: Manga/anime’s influence on Japanese gaming IP.
Anecdotally, I’ve read/listened to reviews that mentioned that the film is “vibrant” and/or “colorful”. This is no accident, IMO.
Per Maxime Eyraud’s piece for Naavik, the creative roots of the Japanese gaming industry come from the anime industry, in contrast to the US gaming industry, whose roots lie in Silicon Valley. Mario’s creator himself, Shigeru Miyamoto, originally wanted to be a manga artist, and also ended up drawing the Japanese cover to the original Super Mario game:
source: nintendolife.com
See how vibrant the art is? Gee, it almost looks like the movie!
Not long after, Nintendo even hired a professional animator from Toei Animation, Yoichi Kotabe, who initially came to work every day just doodling whatever came to mind, “drawing a lot of stuff that no one could use”, but ended up refining the Mario characters’ looks.
In my view, manga/anime is, for historical reasons, a highly-developed product that is very good at appealing to people, and this appeal transcends national boundaries. Don’t believe me? Then why is manga/anime taking over the world?
Remember the principle of impute: People judge a book by its cover.
e. Kyoto and Osaka: Art over efficiency.
Wait a minute. Nintendo, a gaming company, hired a professional animator who initially wasn’t drawing anything anyone could use? How is this an efficient way to run a business? Ah, perhaps Nintendo was rolling in cash, perhaps it was the bubble economy, perhaps both. But still… hiring an artist - for art’s sake…
In his book Disrupting the Game, former Nintendo of America chief Reggie Fils-Aimé discusses the importance of Kyoto, where Nintendo is headquartered. The former capital was historically renowned for its craftsmanship, and this “Kyoto craftsmanship” is fundamental to Nintendo.
Kyoto. The city also played a major role in Japan’s influence on Steve Jobs. I am beginning to believe the city is on the same level as Paris as an historic center for art. France, BTW, is the largest importer of manga.
Anyway, this culture of “Kyoto craftsmanship” is perhaps why fans have to wait years until the next Mario and Zelda vs. some other gaming IPs which are pumped out every year (nothing wrong with that, just a different approach to business). A dedication to the art, to getting things right. Like what John Sculley was saying about both Apple and Japan, “We will take our time and do it right.”
Like Apple’s iOS store, A24’s films, and LVMH’s production process, there is a significant amount of curation in Nintendo’s products. Per Jeremy Snead, Nintendo doesn’t “really focus on what the marketplace is asking for or wants.” I think this is key when the product you are making is, fundamentally, art. It may be that you cannot make art via focus groups.
Lastly: Miyamoto isn’t the only Nintendo staffer who originally wanted to work in the arts. So is the composer of Mario’s iconic music, Koji Kondo, who was recently profiled in the WSJ. Interestingly enough, Kondo is a graduate of Osaka University of the Arts, along with three other major figures at Nintendo. A quick look at who else graduated from this university yields quite the roll call, including the creators of Evangelion and Ghost in the Shell. Jeez, why is nobody writing about Osaka University of the Arts and its outsized contribution to global culture?
f. vs. Dungeons & Dragons: Art clashes with business realities.
As discussed last week, I thought the other cross-platform IP that just launched a movie, Dungeons & Dragons, did an excellent job. Unfortunately, it doesn’t look like it performed well financially. Not only that, its production budget was significantly higher than Mario’s.
The parallels between D&D and Mario are obvious, with both IPs originating from gaming and having US cartoons in the 80’s. IMO, one key difference is, once more, the influence of manga/anime on Nintendo, which decided to create characters/mascots that would appear in every iteration of the IP henceforth.
As a result, the calculus for transferring these game IPs to cinema, a medium of passive consumption, is distinct between the two. Mario’s characters are known and loved, so you don’t really need to focus on getting the audience to love them. For D&D, you have to get the audience to love its brand-new characters in one movie. Which may be why D&D’s plot/characters are more developed, and both its critic and audience ratings are high.
In an ideal world, D&D’s strong showing would have spread via word of mouth and it would’ve become a sleeper hit. But why, oh why, did Hasbro decide to release D&D right before Mario came out? With both movies out at the same time, which IP is going to dominate the cultural conversation? In art, just as in business, the distribution strategy matters as least as much as the product quality. I am mystified by this decision on Hasbro’s part, maybe there was a reason for this, but regardless, I really hope they make more D&D movies with these characters, who I have become quite fond of.
g. Mario was always cross-platform.
Some may consider the Mario movie to be Nintendo’s first real foray outside of gaming since the 1993 movie. But within Japan, perhaps bringing things full circle, Nintendo has been releasing a Mario manga since 1991 up to this very day.
As the success of the Marvel Cinematic Universe proves, it’s best to test your IP’s stories in a lower-cost medium (comics, manga), before launching the IP in a high-cost medium (film). I wonder if Star Wars’ current struggles has at least partially to do with management eschewing all the previous storytelling and worldbuilding that had gone on in the novels, comics, etc.
Nintendo followed the path of the former. As much as the new movie evolves Princess Peach’s role from a damsel-in-distress to a heroine in her own right, the concept had actually been done before, both in games and in manga.
Do you want to see Princess Peach really kicking ass? Then you should read Super Mario Adventures!
h. How to premiumize your business, yourself, your kids.
What key takeaways from Mario/Nintendo could help your business, or you/your children’s prospects in the job market?
To summarize:
Focus on consistent quality, which the market may not be able to articulate ahead of time.
Restrict supply.
Protect your brand. Sometimes, that means being polarizing.
Think about distribution strategy.
[Artisanship at scale. Cultural globalization.]
Streaming
Streaming: IP above all. [Streaming, IP]
Yahoo Finance had a great segment about US streaming. Deloitte is seeing 44% industry churn over the last six months, and is higher among Millenials and Gen Z. The discussion then goes to “churn and return”, meaning cancel and then return to a streamer within six months. People sign up for “compelling, unique content”, and, with younger generations (who BTW prefer online interactions), they are actively engaging with cross-platform IP. “Flexible fandom”.
Hollywood
Cinema recovers [Hollywood, IP]
The US box office is inching closer and closer to pre-pandemic levels, helped by Mario (see above). Analysts are expecting the trend to continue through the summer, with the most-anticipated movies being IP.
Gaming
Sonic the Hedgehog buys Angry Birds [Gaming, IP]
Meanwhile, Nintendo’s old rival Sega is making moves too, buying Angry Birds creator Rovio. On one hand, Sega will use Rovio to get into mobile gaming, while Rovio will use Sega to “expand its platform outside of mobile gaming.”
Tech
Join me on Notes! [Tech]
Substack has launched a new feature called Notes, which does indeed look a lot like Twitter. I moved to Substack to take advantage of any potential network effects, so I will be using Notes, where you will get real-time posts from me. I’ll be sending an official email this week. Cheers!!!
Monday Motivation
“My staff and I are motivated not by trying to out-sell whatever happens to be in the market, but rather trying to develop something that is totally unique. I think it's important that we enjoy that process. To create a new standard, you have to be up for that challenge and really enjoy it. This is the way we work and have done so many times.” (Shigeru Miyamoto, creator - Super Mario Bros., The Legend of Zelda, Donkey Kong, Star Fox, Pikmin)
I’ve said a lot about Mario/Nintendo above, but this quote from Miyamoto-sensei captures it all.
GO FOR IT! REACH YOUR GOAL!