Nintendo and Universal Strike a Licensing Deal

 In News, Nintendo
Look out Mickey, here comes Mario.

Look out Mickey, here comes Mario.

MAY 11, 2015 • In a deal inked with Universal Parks & Resorts, Nintendo Co. Ltd. is licensing it video game characters, franchises and game worlds for use as attractions. No financial disclosures were made. The announcement said the companies will jointly develop major and immersive family-themed attractions. Creative teams from Nintendo and Universal will work together to develop concepts in the coming months but no timetable was made public. The news came on the same day Nintendo reported a full fiscal year profit of ¥41.8 billion ($349 million), its first 12-month profit in four years. To date, 52 million 3DS devices and 9.5 million Wii U consoles have been sold worldwide.

Impact: This licensing deal is more about exposure of Nintendo’s characters than it is about revenue per se. The gamemaker’s family-friendly characters have had a staying power that has only been topped by those controlled by the Walt Disney Co. (who of course now owns Pixar and Marvel properties).  This makes them perfect subjects for theme park use. The challenge Nintendo faces is that with weak sales for their new platforms an entire generation of children are at risk of not having the exposure to these characters that previous generations had. Getting these characters into mainstream media thus becomes crucial.  In the late 1980s and 1990s, Nintendo had multiple television shows and movies around its characters. It was this type of transmedia approach that drove massive revenues for franchises like Pokemon.

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During the last year Nintendo has changed course and accepted that it can do more outside its core video game business to raise brand awareness. While the full year profit is welcome news, too much of it was generated by the weak yen. Like its mobile efforts, licensing its IP in this manner is a mechanism to keep Nintendo IP in the public eye while it invests heavily in its next console, the NX.   Of course, the replacement for the lackluster Wii U cannot come fast enough. Also like licensing to mobile platforms income from this Universal partnership probably be minimal. As an example of how much such licenses can bring in, Six Flags Entertainment Corp. has a long-term license to use Warner Bros. cartoon and DC Comics characters. In 2011, Six Flags paid Warner Bros. $3.3 million in fees, plus 12% of in-park sales of merchandise adorned with those characters. For its part, Universal is gaining characters and storylines with worldwide appeal. Much will depend on the execution into theme attractions, but the upside to draw in more attendees is tangible. What’s more, the millions of dollars in marketing and promotion Universal will undoubtedly spend will surely work in Nintendo’s favor to reach its goal of keeping its IP fresh in the public mind.

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