Nintendo & DeNA

Nintendo has lifted the curtain, today, on a major corporate deal that dramatically adjusts its approach to smart devices, and also its future direction as a business. With Nintendo signing a major deal with DeNA to brings major IPs to smart devices, in addition to the partnership being linked to a future loyalty program that'll affect us all, the company has taken bold steps in moving beyond its current, traditional structure towards a fresh future. What it hasn't done, yet, is laid the groundwork to move away from its own hardware and game development focus - we would argue this is about evolution, not retreat.

Let's qualify that statement before assessing the detail. We have, in the past, made arguments that it's a mistake for Nintendo to simply direct its IP onto smart devices. Upon hearing the news today, however, there's a feeling of optimism - for this writer at least - at what has been announced. Previous fears over moving to smart devices were driven partly by fear of change, absolutely, but also a sense that Nintendo is ill-equipped to make the most of the smart device market while keeping its home console business healthy. The partnership with DeNA is notable, though, as both companies have invested heavily in each other, both in terms of policy and in financial outlays. We've seen hundreds of millions of dollars change hands, with Nintendo becoming the second biggest shareholder in DeNA - this commitment, and the words of Satoru Iwata, certainly matter.

Let's consider the strengths of DeNA, in particular, and what it could bring Nintendo gamers. Beyond its smart device expertise in terms of games, it specialises in e-commerce and online infrastructure for significantly-sized businesses. For example, there'll be a 'Membership Service' to replace Club Nintendo later this year, and the scene seems to be set for services across Wii U, 3DS and smart device apps / games across one login. That's the logical step, especially considering the fact that we already have the Nintendo Network ID.

The possibilities on that score excite us, but the main focus is undoubtedly on one thing - the planned arrival of core Nintendo IP in smart device games. This naturally prompts fears, which are reasonable, and our stance before on the topic (mostly against it) is now completely irrelevant - it's happening, and we need to adjust to the idea and consider what it means.

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What it doesn't mean, in our view at this stage, is the beginning of the end. This isn't a 'Sega' moment, in which Nintendo is taking moves towards solely making games and stepping out of hardware. There are many obvious reasons to dismiss these fears - Satoru Iwata made a point to loosely announce the Codename NX hardware as something to be revealed in 2016; we'll be considering that in detail elsewhere. In addition we have Nintendo's current financial and market position, in which it has substantial cash assets and the world's leading dedicated portable gaming device with the 3DS. As highlighted above, the DeNA partnership is also vital in this, as this is a large corporation with major resources and expertise in mobile, meaning Nintendo isn't directly tackling these challenges alone and diverting excess resources away from its core business of making games and systems.

These key facts should give early reassurance, and certainly make any early hysterics and negativity unreasonable. As we've said, there's an inevitability that Nintendo would move to smart devices in various ways, and our previous 'no thanks' stance is now out-of-date - there's cause for cautious optimism, at least.

As we'll explain further when we discuss the potential of the Nintendo NX, there's certainly scope for exciting connectivity and features in the future. The principle of a new Membership programme tying together services across phones, PC, 3DS and Wii U is enticing for all of the creativity and interconnectivity it can bring; with Nintendo's relatively poor record in areas of online infrastructure, DeNA is particularly welcome. There's reason to be hopeful about a future in which we can access content, buy games, share Miiverse thoughts and progress with others, all on whatever device we happen to be using at the time and with quick 'in the cloud' synchronisation across our gadgets. We have aspects of that now, but it can all be improved.

Key areas to note - meanwhile - in terms of the smart device games that are coming, are that Nintendo has ruled out direct ports of Wii U and 3DS games, in particular; the key philosophy is that dedicated consoles will still host the experiences many of us treasure the most. Older games are a little more vague in this picture, though the focus will apparently be on catering to the control options available - we'd bet some Yen on an early iteration of Pokémon Shuffle, for example, a title that doesn't feel like a tight fit for the 3DS eShop, in any case. Beyond that the usual genres of runners, card games and tile-matching variations seem likely candidates, albeit utilising major Nintendo brands.

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The concern naturally focuses on the games we'll actually see on smart devices, and how these affect the Nintendo brand and appeal of its own hardware. That's the tightrope act for Nintendo, particularly, as balancing quality with the desire to make sizeable profits will be a challenge. There will be games that make dedicated Nintendo fans shudder or, in worse cases, angry - we need only look at the alienation that companies such as Sega and Square Enix have fostered in this area as a warning sign. Nintendo's taking a step that could not be avoided, but avoiding a slip-up or two in the process will be near impossible.

Of all the ways Nintendo could pursue smart device gaming, though, today's announcement does at least provide some degree of confidence. The role DeNA can play in the Club Nintendo replacement suggests a more technologically sound, and integrated, service than Nintendo would produce on its own. We also feel that Nintendo would struggle in a bad way in tackling smart devices alone, but in both companies investing heavily there's a shared desire to make the move work. More gaming hardware is coming, too, and Satoru Iwata was at pains to frame this deal as a solution for expansion, not an omen for shrinking away from consoles and dedicated gaming experiences.


The example was given by Iwata-san that Nintendo once aggressively targeted the television, when it was increasing in popularity, to expand its business into home gaming with the Famicom. While it's now targeting smart devices in a similar way, we should show some faith in the Nintendo President's word - the big N is still a video game company, and isn't abandoning its core values yet.

Nintendo has decided to deploy its video game business on smart devices but it is not because we have lost passion or vision for the business of dedicated video game systems. On the contrary, now that we have decided how we will make use of smart devices, we have come to hold an even stronger passion and vision for the dedicated video game system business than ever before. Nintendo has made this decision because we have concluded that the approach of making use of smart devices is a rational way for us to encourage even more people around the world to recognize the great value of the wonderful game software available on our dedicated game systems.