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Nintendo moving to mobile with DeNA, announces new hardware

Iwata says new "NX" hardware is proof of commitment to dedicated devices

Nintendo has formed a comprehensive new alliance with DeNA that will make every one of the company's famous IPs available for mobile development.

The bedrock of the deal is a dual stock purchase, with each company buying 22 billion ($181 million) of the other's treasury shares. That's equivalent to 10 per cent of DeNA's stock, and 1.24 per cent of Nintendo. The payments will complete on April 2, 2015.

What this will ultimately mean for the consumer is Nintendo IP on mobile, "extending Nintendo's reach into the vast market of smart device users worldwide." There will be no ports of existing Nintendo games, according to information released today, but, "all Nintendo IP will be eligible for development and exploration by the alliance." That includes the "iconic characters" that the company has guarded for so long.

No details on the business model that these games and apps will be released under were offered, though Nintendo may well be reluctant to adopt free-to-play at first. The information provided to the press emphasised the "premium" experiences Nintendo currently offers on platforms like Wii U and 3DS. Admittedly, that could be interpreted in either direction.

However, Nintendo and DeNA are planning an online membership service that will span Nintendo consoles, PC and smart devices. That will launch in the autumn this year.

This marks a significant change in strategy for Nintendo, which has been the subject of reports about plans to take its famous IPs to mobile for at least a year. Indeed, the company has denied the suggestion on several occasions, even as it indicated that it did have plans to make mobile a part of its core strategy in other ways.

Analysts have been offering their reflections on the deal, with the response from most being largely positive.

"Nintendo's decision to partner with DeNA is a recognition of the importance of the games app audience to the future of its business," said IHS head of gaming Piers Harding-Rolls. "Not only is there significant revenue to be made directly from smartphone and tablet consumers for Nintendo, app ecosystems are also very important in reaching new customers to make them aware of the Nintendo brand and to drive a new and broader audience to its dedicated console business. Last year IHS data shows that games apps were worth $26 billion in consumer spending globally, with handheld console games worth only 13 per cent of that total at $3.3 billion.

"The Nintendo-DeNA alliance is a good fit and offers up a number of important synergies for two companies that are no longer leaders in their respective segments.

"DeNA remains one of the leading mobile games company's in Japan and, we believe, shares cultural similarities with Nintendo, especially across its most popular big-brand content. The alliance gives Nintendo access to a large audience in its home market, which remains very important to its overall financial performance. Japanese consumers spend significantly more per capita on mobile games than in any other country and it remains the biggest market for both smartphone and handheld gaming. While the partnership gives Nintendo immediate potential to grow its domestic revenues through this audience, gaining access to DeNA's mobile expertise is important too to realise this potential.

"This alliance makes commercial sense on many levels - the main challenge will be knitting together the cultures of both companies and aligning the speed of development and iteration that is needed in the mobile space with Nintendo's more patient and systematic approach to games content production. How the new games are monetised may also provide a challenge considering the general differences in models used in retail for Nintendo and through in-app purchases for DeNA."

In a livestreamed press conference regarding the DeNA deal, Nintendo's Satoru Iwata reassured those in attendance that the company was still committed to "dedicated video game systems" as its core business. To do that, he confirmed that the company was working on a new console, codenamed "NX".

"As proof that Nintendo maintains strong enthusiasm for the dedicated game system business let me confirm that Nintendo is currently developing a dedicated game platform with a brand new concept under the development codename NX," he said.

"It is too early to elaborate on the details of this project but we hope to share more information with you next year."

For the full, translated conference, see the video below.

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Latest comments (20)

Daniel Hughes PhD Researcher, Bangor University2 years ago
While it's true that as late as January 2014 Nintendo were denying a move onto smart devices, in the last 12 months that has changed. GI ran a very insightful article this time last year (possibly last April) dissecting Iwata's major announcements at the time, and if anything, this trajectory should have been expected. The scale of the deal, and the sudden announcement, are still surprising, of course.

Nintendo did confirm 12 months ago, though, that they were looking into developing new products and using their own IP on smart devices. They announced that their new hardware wouldn't be individual platforms tied to seperate boxes, but would orientate around the idea that a network is now the platform, and not the box you access that network with. NX is most likely "Nintendo Cross"; a chipset that can be launched in two configurations, with shared development tools, shared architecture, a shared operating system, and access to a network that will be established across PC, smart-devices and perhaps Wii U & 3DS.

Before Christmas (I forget the exact timing) Nintendo confirmed a large stock buy-back, which would make it easier for acquisitions and mergers to take place, which foreshadows the DeNA deal. While I'd love to claim I saw it all coming, I certainly didn't see it coming right now and on such a scale. For a conservative business, it's a fairly bold move, but I think it makes a lot of sense.
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Farhang Namdar Lead Game Designer Larian Studios 2 years ago
I think we'll see less innovation on actual Nintendo platforms if this is a success. On the other hand having a Steam like Nintendo that you can launch from anywhere would be nice, not sure if we need it, but it would be nice. Clearly they look like they are evolving/moving into a platform independent space. It's time for Nintendo to finally act like a Pokemon and evolve!
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Marty Howe Director, Figurehead Studios2 years ago
i hope they make the games good, and don't mess it up, presumably Nintendo would have a tough approval process.
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Show all comments (20)
Istvan Fabian Principal Engineer, Sony Computer Entertainment Europe2 years ago
1, Apple using x86 CPUs, check
2, Nintendo considering multi-platform, check
3, Apocalypse? :)
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Nick McCrea Gentleman, Pocket Starship2 years ago
@Istvan, no number 3 is Half Life 3, obviously.

Then apocalypse.
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Nicholas Lovell Founder, Gamesbrief2 years ago
Cats and dogs, living together... :-)
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.2 years ago
I thought it odd that God sent Satan a coat last year for Christmas.
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Istvan Fabian Principal Engineer, Sony Computer Entertainment Europe2 years ago
Careful what you wish for :)
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James Berg Games User Researcher, EA Canada2 years ago
This is awesome news, and.. wow. Had to read it twice to make really, really sure we weren't all being trolled. Very exciting news!

I'm hoping they don't go F2P with Nintendo games, despite being DeNA. Nintendo games could do some great things for perception of value in the mobile space if they hold on to premium pricing - they'll surely be worth it. Really excited to see Link and Samus on my iPad :)
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Greg Wilcox Creator, Destroy All Fanboys! 2 years ago
I'm hoping they don't go F2P with Nintendo games, despite being DeNA.

(sings)" When the tiger changes stripes, there's no charge to use warp pipes..."

I dunno about that, James. I'm gathering it'll be a mash-up of Nintendo's current premium pricing (because they can get away with that) and perhaps the option to F2P it, DeNA style with some titles. Or it'll just be DeNA doing what they do best and Nintendo crossing its fingers that it's made the correct decision.

Both companies will make some nice bank provided they can assure longtime fans and collectors that nothing will be diluted and anything deemed "canon" isn't kicked to the curb just to rake in some easy money. Then again, it's the age where everyone seems desperate for that next big hit, so it'll also be the two-step minefield portion of the program while this gets sorted into different columns...

I don't smoke, but I think I owe myself a cigar because Nintendo is also getting Puzzle & Dragons Z/P&D Super Mario Bros. Edition on the 3DS from GungHo as a standalone dual game purchase and I predicted that would be a no-brainer at some point (why it didn't happen sooner, I have not a clue). I'm wondering why the heck they didn't stick to that deal with DeNA and have them just to standalone versions of their card battle/creature collecting/raising games on the 3DS and Wii U instead of going mobile. But the answer is "money!", so I guess that's the answer.

As it is, those Nintendo super-fans that hate the idea will (and are, as the sites I poked at briefly show) be livid and inconsolable for a few months until they see proof that nothing is being watered down and their wallets are still there. What's great for business these days certainly has no qualms about shaking some people out of their trees. Now all Nintendo needs to do is step into VR (again) and we'll see the earth crack into eight pieces... :D
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Adam Campbell Producer, Hopster2 years ago
The fact that they're introducing new dedicated hardware to support this new strategy is reassuring to me, as I absolutely believe Nintendo are better off as a manufacturer of gaming hardware with compelling software on top.

Outside Nintendo's own games, I'm interested to see what the implications will be for third party development studios, if we're looking at more than just one physical platform (i.e. handheld, plug-in console or both in one) and the impact this will have on games design.
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James Berg Games User Researcher, EA Canada2 years ago
Hah, Nintendo VR on the Galaxy Note maybe? ;p
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Istvan Fabian Principal Engineer, Sony Computer Entertainment Europe2 years ago
You mean Galaxy Boy? :)
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Jeff Kleist Writer, Marketing, Licensing 2 years ago
@Istvan

Apple using x86 CPUs is actually a fascinating story. They were originally supposed to use the CELL processor, but when IBM used a loophole in the contract to apply the CELL mother core to the chip they were designing for Xbox360 (which saved them tens of millions in R&d), Apple, and more likely Steve Jobs threw a temper tantrum and they went to IBM's chief rival Intel, with the added bonus of it being a smart business decision

NIntendo is hoping to just move their current 3DS sales over to mobile. But they're not going to get $30+ a game on tablets outside of s hardcore dedicated audience.
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What will be interesting is how close Nintendo actually work with DENA. If its mostly a licensing deal then I suspect the super fans will still consider that Nintendo isn't actually making games for smartphones.

Maybe this announcement is a sign from Nintendo that it doesn't see mobile as a direct competitor to its hardware businesses given the types of genres, business model and control schemes that are popular on mobile.

However as with most things what is technically true will matter less than what is perceived true and I can't help thinking this is a huge risk. It will be interesting to see what the market does once the bump of the announcement slows. After getting what they want will they take the money and run?
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Caleb Hale Journalist 2 years ago
Nintendo needs to introduce its brand to a new generation, and the medium for doing so is no longer a dedicated gaming handheld. I think this is less about putting games on phones and more about using the ubiquity of these screens to do some serious marketing for Nintendo's future dedicated gaming platforms.
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Greg Wilcox Creator, Destroy All Fanboys! 2 years ago
@Jeff: Right.

They're going to now get people to spend MORE than $30 on a game with their characters in it thanks to micro-transactions (that will HOPEFULLY be character and content based and NOT time based). That and imagine if Ammibo use gets moved to mobile devices and can be whipped back to whatever actual Nintendo platform they want you to use that data on?

*Cha-ching!*

Get it now?*

*(well, I hope to hell they're thinking like me... even if only a tiny bit)...
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Istvan Fabian Principal Engineer, Sony Computer Entertainment Europe2 years ago
@Jeff
I've been working on PS3 since 2005; had the very first devkits from all series with the lowest serial numbers... just saying, that CELL is not exactly news to me ;)
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Jeff Kleist Writer, Marketing, Licensing 2 years ago
@istavan

Well, I still think the drama behind it is fascinating on how Apple ended up on Intel :)
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Tom Keresztes Programmer 2 years ago
@jeff:

Apple went with Intel for power and performance reasons : the cell is no match for the core2, especially not the quad core ones, but the the Power was using too much power for a laptop. They very likely evaluated both. Look back into 2007 for comparision with athlon64 and c2d to get a reason why they choose Intel. It was simply faster.
The 2.5ghz Dualcore powermac g5 had watercooling. so much about suitability for a laptop.
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