Twenty-two years ago, Nintendo (PINK:NTDOY) cemented its place as the global leader of the video game market. It didn’t do it by making games about a portly Italian plumber with an Olympic high jump ability and it didn’t do it by convincing people to buy a gray box that plugged into their television.
Nintendo’s key to victory was putting a little gray box in people’s hands. The Game Boy wasn’t the first portable video game machine in history, but it did have one thing that others didn’t; a trump card that helped make Nintendo what it is today: Alexey Pajitnov’s Tetris.
The industry has changed since then, and the Game Boy is a squeaking abacus compared to Apple‘s (NASDAQ:AAPL) iPhone and other common pocket devices running Google‘s (NASDAQ:GOOG) Android operating system. One thing hasn’t changed, though: People still like Tetris.
The puzzle game of making perfect rows out of seven differently shaped blocks that fall at increasing speeds from the top of the screen remains as popular now as it was in 1989. It has sold hundreds of millions of copies (132 million paid copies on mobile phones alone) across a wide variety of platforms and through a swath of publishing partners working with the game’s management company, Blue Planet Software. Electronic Arts (NASDAQ:ERTS) released a brand-new version of Tetris on Android devices that is totally free on Tuesday.
Chances are good EA will make more money through its free version of Tetris than it has with single-purchase copies in the past. It uses the same advertising-supported model as other free mobile EA games like Scrabble, with ad support running in the game with partners like AOL (NYSE:AOL).
EA understands all too well that how video games are monetized now is very different from the way they were in 1989, and its aggressive digital strategy has been successful. Nintendo made its money on Tetris by selling a $30 cartridge containing the game at stores and by packing it in with the Game Boy. Now, for a game to be a massive financial success, it has to be more than good. It has to connect players to Facebook and Twitter accounts; let them rack up high scores seen by a broad swath of friends through gaming networks like Microsoft‘s (NASDAQ:MSFT) Xbox Live; and charge for every last bit of content, whether it’s a new level for the game or a fancy shirt for your custom character. It also must sometimes forgo an initial fee at all.
Some businesses are clinging to the old ways. Nintendo is releasing Tetris: Axis for the Nintendo 3DS on Oct. 2. It’s a retail version of the game purchased at stores like GameStop (NYSE:GME) for $34.99. It’s precisely these sorts of choices that have hurt the company so badly this year. Why would anyone pay $34.99 for a game that isn’t dramatically different from something they can get for free on their phone?
The lesson for investors: Follow who’s doing something new with Tetris to get a better sense of where the industry is headed.