Latest / The CEO Diary with Fexingo: Leadership Lessons, Executive Decisions, and Corner Office Stories / How Nintendo Turned Mario Into a $60 Billion Franchise
Transcript
- Lucas: So Nintendo reported earnings last month, and buried in the numbers is a number that still stops me: the Mario franchise has generated more than 60 billion dollars in lifetime revenue. That is bigger than Star Wars. Bigger than Harry Potter. It's one of the most valuable entertainment properties on earth, and it comes from a company that, for decades, refused to put its characters on a smartphone. Luna: That 60 billion — is that just games, or does that include the movie and the theme parks? Lucas: It includes everything — game software and hardware, licensing merchandise, the Universal Studios theme park lands, the Super Mario Bros. Movie gross. Nintendo breaks it out annually in their corporate briefing. And what's fascinating is how much of that value was created before modern digital distribution existed. Mario debuted in 1981. The core design decisions that made the franchise durable were made forty years ago. Luna: By Shigeru Miyamoto, right? The guy who also made Zelda and Donkey Kong. Lucas: Exactly. Miyamoto didn't just design games — he designed a philosophy. He famously said that a game should be fun to play even if you take away the graphics. That was radical at a time when arcade games were all about spectacle. He focused on 'feel' — the jump arc, the enemy pattern, the feedback when you grab a coin. That tactile quality is why Mario still works on a thirty-year-old Game Boy. Luna: And that philosophy extended to how Nintendo protected the brand. They were famously reluctant to license Mario out. For years you couldn't get Mario on a cereal box unless it met their quality standards. Lucas: Right. Nintendo of America's licensing department was legendary for rejecting partners. They turned down millions in easy revenue because they worried a bad product would damage the character's equity. Compare that to how aggressively other media companies licensed in the 80s and 90s. Nintendo chose scarcity. Luna: Scarcity is interesting because they went the opposite direction with hardware. They sold hundreds of millions of consoles and handhelds, which created an enormous installed base for Mario games. Lucas: That's the key insight. Nintendo treated the console as a distribution platform for their IP, not just a piece of electronics. The Wii, the DS, the Switch — each one was designed to be cheap enough to reach a broad audience, and then Mario was the anchor title that drove adoption. Miyamoto and the late Satoru Iwata understood that a new Mario game sold hardware. That's still true. Super Mario Odyssey sold more than 28 million copies, and it's widely credited with keeping the Switch's momentum going in year two. Luna: If today was useful in any way, you know these episodes stay ad-free because of listener support. If The CEO Diary has helped you think differently about a business problem, you can buy us a coffee at buy me a coffee dot com slash fexingo. It genuinely keeps this going. Lucas: And we mean that — every contribution matters. Now, speaking of momentum, let's talk about the Super Mario Bros. Movie. That film grossed 1.36 billion dollars globally. For decades, Hollywood had tried and failed to make a good video game movie. Nintendo waited until they found a partner — Illumination — who understood that the movie had to feel like playing a Mario game. Luna: Nintendo didn't just license the IP and walk away. Miyamoto was a producer. He reportedly insisted that Mario's voice actor, Charles Martinet, not be replaced by a Hollywood star. That's a pretty unusual level of control. Lucas: It's the same discipline they showed with mobile. When Nintendo finally released 'Super Mario Run' in 2016, it was a paid app with no ads and no gacha mechanics. Wall Street hated it because it didn't maximize revenue per user. But Nintendo was protecting the brand. They didn't want Mario associated with the kind of monetization that defines most free-to-play games. The result was that the game had a very high conversion rate among the people who downloaded it, but a smaller audience. Miyamoto called it a 'brand extension,' not a slot machine. Luna: And yet the company's overall value has only gone up. Nintendo's market cap is around 60 billion dollars today, which is basically the same as the Mario franchise's lifetime revenue. The IP and the company are almost interchangeable. Lucas: That's a rare thing. Disney is worth a lot more than Marvel or Star Wars individually because it owns multiple IP silos. Nintendo is basically a single ip company if you think about it. Mario alone accounts for more than half of their software sales. Zelda is second, but it's a distant second. So the existential risk is real — but so is the moat. The moat is that no other company has a character with that kind of cross-generational recognition that is also completely controlled from creation to distribution. Luna: What about the theme parks? Nintendo opened Super Nintendo World at Universal Studios Hollywood in 2023, and Osaka before that. Are those a meaningful revenue stream or more of a marketing expense? Lucas: They're both. The parks are expensive to build and operate, but they serve as a permanent advertisement for the characters. Universal pays Nintendo a licensing fee, and Nintendo also profits from merchandise sold inside the land. More importantly, the parks create an emotional connection that extends the brand's life. A kid who plays Mario on Switch and then walks through a real-life warp pipe in Osaka is going to remember that for decades. That kind of immersive marketing is hard to quantify, but it explains why Nintendo's brand equity hasn't eroded even as younger audiences spend more time on Roblox and Fortnite. Luna: Fortnite is an interesting contrast. Epic Games has built a massive platform, but they don't own a single character that's been around for 40 years. Mario is older than most of Nintendo's customers. Lucas: And that longevity is partly because Nintendo never let Mario become a joke. They never did the 'edgy' reboot. They never put a gun in his hand. Mario is fundamentally optimistic and simple — a plumber who saves a princess by jumping on turtles. That core is so stable that you can iterate endlessly on the game mechanics around it. The latest entry, 'Super Mario Bros. Wonder', introduced a flower that turns Mario into an elephant — silly and creative, but it didn't change who Mario is. Luna: Speaking of iteration, Nintendo is rumored to be releasing a new console, sometimes called the Switch 2, later this year. How does the Mario strategy change with a new hardware generation? Lucas: If history is any guide, they'll launch a new 3D Mario title alongside it. That's what they did with the Switch — 'Super Mario Odyssey' launched in the first year. A new Mario game is the single strongest reason for a casual gamer to buy a new console. So the IP strategy and the hardware strategy are completely aligned. The risk is that if the next Mario game doesn't land, the whole console launch could suffer. But Nintendo has a pretty good track record. The last truly divisive 3D Mario was 'Super Mario Sunshine', and that was 2002. Luna: Do you think Nintendo would ever sell Mario to another company? Like, if the hardware business ever failed? Lucas: I think it's nearly inconceivable. Nintendo's entire corporate identity is built on its characters. The late president Satoru Iwata famously took a 50 percent pay cut after the Wii U failed, rather than lay off employees. The culture is one of stewardship, not shareholder maximization. They see themselves as the caretakers of Mario for future generations. That sounds lofty, but it's reflected in their decisions — they'd rather shrink than sell. Luna: That's a lesson for any business with a valuable brand. The most valuable asset you have might be the one you refuse to monetize fully. Lucas: Exactly. The 60 billion dollars didn't come from squeezing every dollar out of the franchise. It came from protecting the thing that made people love it in the first place. And that's a hard lesson for any CEO to follow, because it requires saying no to easy money.