Meet the Japanese gaming giant that's going to save Nintendo
Nintendo's stock shot up 28% following the news, and it marks the beginning of a new era for Nintendo - gamers have been begging for Nintendo games for their iPhone or Android phones for ages. But why is Nintendo asking DeNA to create the mobile games rather than taking on the challenge itself?
It turns out that Nintendo has realized that neglecting the mobile apps space for eight years means it has some catching up to do. Enter DeNA, a multi-billion dollar Japanese gaming company that's published over 1,000 games, almost all of which are free-to-play.
From Nintendo's standpoint, DeNA might not be the most well-known games publisher in the business, but it's Nintendo's best shot at a successful late entry into the mobile space, and DeNA has a track record of creating polished games under existing intellectual properties including Marvel, Star Wars, and Hasbro.
DeNADeNA has a history of translating franchises to mobile games.
"DeNA's expertise lies in, for example, the infrastructure technology that can handle a massive amount of traffic," DeNA CEO Isao Moriyasu said Tuesday at Nintendo's press conference. "We are also able to manage live operation by analyzing user activities and quickly reflecting the insight to improve our service."
DeNA's big claim to fame is its "Mobage" gaming platform, an existing software infrastructure that allows DeNA to quickly crank out games. Thanks to Mobage - which was recently re-branded to "DeNA" for greater exposure - DeNA is used to "massive amounts of traffic," which is exactly what Nintendo needs if it's planning to launch a game like "Super Mario Bros." or "Super Smash Bros." on iPhone.
And while Many of DeNA's casual puzzle games such as "Cupcake Carnival" and "777 Slots" have yet to break into the top 1,500 apps on the App Store, DeNA's portfolio also includes established franchises like "Marvel Mighty Heroes," "Star Wars: Galactic Defense," "Transformers: Battle Tactics," and Peter Molyneux's "Godus."
It's likely these more popular games that drew Nintendo to DeNA, as they prove DeNA can handle creating a polished game under an existing intellectual properties such as Star Wars and Marvel. Nintendo has a history of being extremely protective of its characters and games, and it likely looks at DeNA as a safe way to quickly bring Nintendo games to mobile.
Nintendo is also going to avoid porting existing Nintendo games over to smartphones, and has promised to build new games "from the ground up" for mobile. Once again, DeNA's experience in the space will provide Nintendo with multiple options for how to build a game designed specifically for mobile.
DeNA also has a large incentive to create games that meet Nintendo's high standards: both companies have invested $181 million (22 billion yen) into each other, according to Reuters, which means that Nintendo now owns about 10 percent of DeNA and DeNA owns 1.24 percent of Nintendo.
There's no doubt that Nintendo is the one calling the shots in this partnership, either. While DeNA has been successful at landing partnerships with other big players such as Marvel, Star Wars, and Hasbro in the past, DeNA is certainly looking for another major hit. DeNA's revenue dropped 17% year-over-year to $287 million last quarter, according to Tech Crunch, so it's in DeNA's best interest to stay in Nintendo's good graces.
Nintendo needs DeNA, DeNA needs Nintendo, but most importantly, the world needs to be able to play Pokemon on their iPhones.