After years of resisting, Nintendo Co. Ltd (NTDOY) Tuesday finally gave into the inevitable and said it would start putting its games on smartphones and other mobile devices.
The maker of Super Mario, whose shares have fallen by over 80% from their 2007 peak as the rise of mobile gaming has gnawed away at its console-based business, said it’s teaming up with DeNA, an online gaming firm, to develop smartphone games that will feature Super Mario, Donkey Kong and other familiar characters from its catalog.
Nintendo will take a 10% stake in DeNA in exchange for a 1.2% stake in itself, in a share swap valued at 22 billion yen $181 million).
They will also launch later this year an online membership service accessible on mobile devices and Nintendo’s existing 3DS portable system and its Wii U console, Reuters reported.
Nintendo President Satoru Iwata told reporters that the alliance “will allow us to build a bridge between smart devices and gaming consoles.”
Iwata had consistently refused to acknowledge a trend that has been undeniable for most industry observers in recent years. While online gaming through smartphones and other mobile devices has exploded, demand for console-based games has withered. Nintendo recorded three straight years of operating losses before its last fiscal year and delivered another profit warning in January after a near 40% year-on-year drop in sales of its 3DS console.
It still expects to make money in the year through March, helped by the fact that the yen has depreciated sharply against the dollar, increasing its profit margins in the U.S..
Iwata told a press conference that the company doesn’t intend to abandon the console model completely. He said it will continue to work on a new console, called the NX.
DeNA, which grew from a startup launched in 1999 to a major online gaming company, has also lost its momentum in the past two years as users moved on to more popular gaming apps. DeNA mainly develops games played on browsers.
As a result of the capital alliance, Nintendo will become the second largest shareholder of DeNA after its founder, Tomoko Namba, who has a 13.1%, Reuters reported.