Nintendo to Develop Mobile Games in Tie-Up With DeNA

Japan video game maker Nintendo and online gaming firm DeNA are teaming up to develop smartphone games featuring the likes of Super Mario, in a bid to retain users increasingly shunning their console and browser-based games.

The two companies said on Tuesday that they would buy 22 billion yen ($181.4 million) worth of shares in each other as part of a capital and product tie-up. As a result, Nintendo will acquire a 10 percent stake in DeNA, while DeNA will acquire a 1.2 percent stake in Nintendo.

The companies will jointly develop and operate gaming apps, including those with Nintendo’s iconic game characters, for smartphones. 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.

“This will allow us to build a bridge between smart devices and gaming consoles,” Nintendo President Satoru Iwata told reporters. “It doesn’t mean smart devices will eat away at gaming consoles; it will create an entirely new type of demand.”

Analysts have long called on Nintendo to shift its focus to mobile devices after losing customers to both smartphone gaming app makers and console rivals like PlayStation maker Sony and Xbox maker Microsoft.

Nintendo had long resisted such pressure, pinning hopes on making hits out of games such as Mario Kart 8, but earlier this year, it halved its operating earnings target for the fiscal year through March to 20 billion yen ($169 million), citing weak sales of its 3DS handheld device in the year-end holiday season.

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 percent stake.

(Reporting by Ritsuko Ando, Teppei Kasai and Taiga Uranaka; Editing by Miral Fahmy)

This article originally appeared on Recode.net.