Nintendo finally enters smartphone game sector, with DeNA as partner

by

Staff Writer

In a major policy shift, Nintendo Co. said it has partnered with mobile video game operator DeNA Co. to enter the smartphone game market.

During a joint news conference in Tokyo on Tuesday, the two firms said they will develop smartphone games using Nintendo’s popular franchises, such as Super Mario Bros. and Pokemon to target the global market.

They will also create a membership-based service that will serve as a “bridge” between a variety of devices, including computers, smartphones and Nintendo’s 3DS portable game console.

The move is a big shift for Nintendo, which has stayed away from the smartphone market.

“Many of you might be wondering why we are changing our policy, as we have long been cautious about doing business for smart devices,” Nintendo President Satoru Iwata said at the hastily arranged news conference.

He said he had been concerned that the short life cycle of content in the smartphone game market could diminish the value of Nintendo’s venerable character lineup.

“We have been exploring ways in which we can maintain and boost the value of our intellectual property through the (smartphone) sector. I think we have finally found our answer,” Iwata said.

He said DeNA has the know-how to create Internet-based services and systems, and it also knows how to operate smartphone games, which require frequent updates to keep users engaged.

Tokyo-based DeNA runs the Mobage mobile phone game platform and other Internet services, including news and manga apps.

The rapid growth in smartphone games over the past several years is widely thought to have undermined the market for stationary and handheld gaming consoles like the Sony PlayStation and Nintendo series, such as the Wii and 3DS.

While Nintendo is expected to post a profit this business year, the firm saw operating losses for the past three consecutive years.

Iwata denied the company was forced into entering the smartphone market.

“Media outlets often say that we were cornered, but I don’t feel that way at all,” he said. “However, any firm will fall into decline if it fails to adjust to change.”

By partnering with each other, Iwata said the two firms will be able to provide attractive smartphone games that will eventually increase the number of players worldwide, which means they will be nurturing new potential users for Nintendo’s gaming consoles.

Iwata stressed that Nintendo has not lost its passion for gaming consoles, and the company is developing a new system code-named NX.

The new membership-based system will form a bridge between Nintendo’s gaming consoles and smart devices, he said.

Iwata did not disclose exactly when the two firms will release their first smartphone game, but at least one will be released this year.

DeNA CEO Isao Moriyasu said the partnership is the best option to grow its smartphone game business moving forward.

“The competition in the smartphone market is becoming more fierce . . . to be chosen by users from among a massive number of available titles, games need to have something that clearly differentiates them from the crowd,” he said.

Moriyasu said intellectual properties, such as characters, are the most visual factor to do this, and Nintendo has plenty that are loved by game users around the world.

The partnership involves a capital tie-up.

Nintendo will acquire 10 percent of DeNA’s treasury shares, which are worth ¥22 billion, while DeNA will acquire 1.24 percent of Nintendo’s treasury shares, also worth ¥22 billion. After the acquisition of DeNA shares, Nintendo will become the second-biggest shareholder in the company.