Nintendo shares jumped as it announced the end of its holdout from smartphone games, with plans to develop new titles for mobile devices made by other companies. The Kyoto-based company will team up with DeNA, operator of the Mobage network, to create games and operate new membership services that include applications based on Nintendo’s character lineup of plumbers, gorillas and princesses. President Satoru Iwata’s strategy of selling software only for Nintendo devices has come under pressure as a consumer shift to mobile gaming eats into demand for the Wii U console and 3DS handheld player. Before today, the company’s stock had plunged about 80 percent since 2007, the year Apple’s iPhone made its debut, as DeNA also lost users to smartphones. “Finally Nintendo has turned a corner and embraced a huge strategic shift,” Atul Goyal, an analyst at Jefferies Group in Singapore, said in a report as he raised his recommendation on the stock to buy. “We have been waiting for Nintendo to make this move and this will offer large upside.” The two Japanese companies also agreed to a capital alliance in which they will buy 22 billion yen ($181 million) stakes in each other.
“Nintendo and DeNA are both desperate, so it makes sense for them to join forces,” said Mitsushige Akino, Tokyo-based executive officer of Ichiyoshi Asset Management. “There is a chance that they can bring new users to their smartphone platform.” The companies will develop original games optimised for smart devices rather than taking titles from the Wii U and 3DS, according to a statement. Nintendo also makes the Wii mini and portable 2DS. Separately, Iwata said Nintendo is working on a successor console code-named NX. He didn’t elaborate. “There is no reason to be pessimistic about the future of gaming consoles,” Iwata said in Tokyo yesterday. “We believe it’s possible to generate synergies by taking advantage of the respective strengths offered by the platforms.” Iwata has resisted turning to smartphones for years, saying the company’s games are designed for its own machines, where players can use a joystick and physical buttons to move through the virtual world. He has also argued that demand for software will push along hardware sales, and vice versa. The company’s dilemma is having to distinguish its offerings on smartphones while also using iconic characters to drive demand for in-house devices. Even if successful, Nintendo may struggle to generate significant earnings in a market dominated by free-to-play titles. “Nintendo is risking diluting its characters and accelerating defections from its own hardware platform,” said Amir Anvarzadeh, a manager of Japanese equity sales at BGC Partners in Singapore. “Shares will probably still rise in response, just because the market has waited for some kind of a smart device strategy for so long.”
First seen at: http://www.stuff.co.nz/the-press/technology/67436104/Nintendo-buckles-reveals-plan-to-develop-smartphone-games
