Nintendo (NASDAQOTH:NTDOY) has shared very little information as to how its characters will be integrated into Comcast's Universal Studios theme parks in Tokyo, Hollywood, and Orlando. Some ride ideas have been teased -- get ready to drive in a Mario Kart race -- but plans remain vague. Recently, Universal Studios confirmed that it plans to launch a fourth theme park in Florida. Could Nintendo's characters become a major part of that attraction?
And as esports' popularity grows, Nintendo is late to the game. Competing game publishers have already been hosting massive tournaments for millions of viewers, but the maker of Super Smash Bros. is finally dipping its toe into this high-growth part of the industry.
A full transcript follows the video.
This video was recorded on Oct. 16, 2018.
Vincent Shen: I've heard a bit about a potential new Super Mario movie in the works.
Dan Kline: I don't think it can top the old one. [laughs]
Shen: It's potentially currently going through the production phase. But they've also gone through more licensing stuff in terms of theme parks, which you brought to my attention. Can you talk a little bit about that?
Kline: Right now, at the Universal Studios location in Japan, they're actually already under construction on what's called Nintendo Land. It's a handful of rides. They've been very secretive. We know there'll be a Mario Kart ride. Think of it like the Star Wars expansion at Disney, a very immersive land, a big deal. In Orlando, they've said, "We are going to build out Nintendo properties." But they've been very cagey about where. The rumors had always been at the original Universal Studios. There's a kids' area that's a little bit lifeless, it would make sense. But then, about a month ago, it became public that Universal Studios is building a fourth gate, another theme park, and they've amassed a big chunk of land to do that. So, it's very logical to think that Nintendo is going to be the cornerstone, the Harry Potter, of this new theme park. And maybe there'll be something tying it to one of the other theme parks, like the train ties the two Harry Potter Worlds together to help sell multi-day tickets. This is a risk for Universal and a huge win for Nintendo, because they're getting the licensing fee whether it's an instant success or not.
Shen: All the new people going to this park and enjoying those rides, potentially bringing them into this world for Nintendo.
Kline: In theory, you're going to get people who go on the ride not knowing what Mario Kart is, or never having played Pokémon, and they're going to enjoy the ride experience and then go out and experience the video games.
Shen: Yeah. The last topic, we only have a couple of more minutes, I do want to talk about e-sports since that's one of the more popular trends at the moment in the entire video game sector, and where Nintendo is with this trend. If you're a listener and you guessed that Nintendo is a little bit late to the game again, you'd be right. In e-sports, Nintendo has typically taken a more hands-off approach, allowing independent tournament organizers to basically set up their own events and prizes with very limited input from the company. Maybe Nintendo will offer some marketing support, some hardware support, providing consoles, for example, to the tournament or the event. But their efforts have ultimately been nothing like what Activision and EA have in the works, in terms of these multimillion dollar franchises, major tournaments, thousands of spectators, and these really big cash prizes.
But Nintendo's experimenting more with formal e-sports as of this summer. They had the Splatoon 2 world championship and also the Super Smash Brothers Invitational tournament to showcase those titles, especially the upcoming Super Smash Bros Ultimate, which is coming in December for the Switch. Very, very highly anticipated title for that console. It should be a huge seller in the holiday season. I think Super Smash Bros alone could be a big tailwind for increased software sales or game sales, and also console sales for anyone who's been holding out for this, one of the most popular multiplayer titles of all time.
Kline: They've really built the case for buying the Switch by -- at first, it's like, "Well, OK, Mario Kart, I kind of want that." Then they add one title every quarter. Then, eventually, you're like, "Boy, I have to get this. There's like 10 things."
But in terms of e-sports, they have to engineer some of their games a little differently. If you look at older versions of Super Smash Brothers, they're not purely competitive games. There's a level of goofiness to it that takes away from the e-sports. I haven't played the new title, but I would assume it's going to at least have the option of a purer who-is-better competition, as opposed to, we were playing and then I stepped on something that made me super powerful and I kill you and it had nothing to do with who's better. I would assume they're going to have to either have loose, more fun tournaments that aren't as competitive; or, they're going to have to put out games that work to that world.
Shen: Yeah. We're running out of time. Final thoughts from me, Matt, this is definitely a case where I can see where you're coming from, in that Nintendo does not get enough love compared to some of the other U.S.-based video game companies. But I think the turnaround, thanks to the success of the Switch, is undeniable. And I do really like some of the other investments and focuses that management is taking, in terms of what they can do with all that valuable IP that they have. Any final thoughts from you, Dan?
Kline: If you look at the life cycle of consoles, the success of the Switch gives them 10 years to plan for what happens next. I think what happened is, they'd had a steady stream of always having a successful console. That got them a little bit complacent. They didn't have to license, they didn't have to partner, they didn't have to do theme park deals. Now, if the Switch is the last successful Nintendo console, I think they'll be ready for the world that could represent that, where they're licensing, they have partnerships, they've worked with Apple, they've worked with other people. This sort of resets the company, and gives them time to become a growth story, when they were definitely a shrinking story that owned some really good IPs. This makes me very excited about the future of Nintendo.
Shen: And it certainly helps to be able to make some of those investments, go through some of these experiments when you're on a swing and you're doubling revenue in the past fiscal year.