TOKYO: Nintendo came into a partnership with DeNA Co, a Japanese game provider, under which the companies will exchange ownership stakes and will set up a new mobile game platform.
Until now, Nintendo had clung to its traditional, console-based business model, refusing to license its characters for mobile use out of concern that it might undermine the value of its rich catalog of games. That strategy has come at a steep cost, analysts say, because games played on smartphones, tablets and other portable gadgets are providing much of the industry’s growth.
“The company seems to have totally changed its mind-set, after having resisted against mobile game development, publicly complained about the low quality of content in mobile and played down its role in the game world overall,” said Serkan Toto, a Tokyo-based game consultant. “This is about the most drastic, bold shift in strategy Nintendo could have undertaken.”
The alliance between Nintendo and DeNA includes a cross-shareholding. Nintendo, which is based in Kyoto, said it was buying a 10% stake in DeNA, for ¥22 billion ($182 million). Tokyo-based DeNA is acquiring a 1.24% stake in Nintendo for the same amount.
The companies said they would introduce a new game distribution portal this autumn, which will be the only way for owners of smartphones and other mobile devices to gain access to Nintendo games. The portal will also be accessible via Nintendo’s game consoles.
Nintendo President Satoru Iwata said at a news conference Tuesday that the company hoped to reach hundreds of millions of new users via the service, which will be made available globally. He said Nintendo would take the lead on developing new games for it, while DeNA will operate the technical side. Revenue will generally be split 50-50, he said.
“By tapping into the smartphone we can increase the number of Nintendo fans,” Mr. Iwata said. “No company in any industry can survive if they fail to adjust to changing market environments.”
Previously, Mr. Iwata repeatedly and adamantly ruled out a shift to mobile. In an interview with The Wall Street Journal in 2013, he said: “If we think 20 years down the line, we may look back at the decision not to supply Nintendo games to smartphones and think that is the reason why the company is still here.”
But in the meantime the smartphone gaming trend gathered steam. Newzoo, a market research firm, estimates that mobile games generated $25 billion in revenue in 2014, up 42% from a year earlier. This year mobile games will replace consoles as the largest game segment, the firm said.
Nintendo has recorded three straight years of operating losses, through the 12 months ending March 31, 2014.
