Mario is jumping to a new platform, namely mobile devices not made by Nintendo Co.
The announcement on Tuesday triggered a 27% pop in the Japanese game giant's U.S. stock, which gained $3.93 to close at $18.22 in over-the-counter trading.
Nintendo had long resisted making its marquee game franchises available on any hardware other than those made by the company itself, maintaining that all of its games are optimized for its own hardware configurations. Major changes in the market may have forced Nintendo's hand.
Sales of its Wii U game console lagged far behind those of its console rivals, Microsoft Corp.'s Xbox One and Sony Corp.'s PlayStation 4. Nintendo shipped just 9.3 million Wii U consoles worldwide, compared to 11.6 million Xbox One's and 19.6 million PlayStation 4's, according to estimates by VGChartz. This puts Nintendo, which once reigned supreme with is Wii console, dead last in the current generation of consoles.
The most dramatic change in the market, however, is the explosion of smartphones and tablets -- eating into the so-called casual game market where Nintendo has historically dominated with its emphasis on visually friendly characters and intuitive game controls. As mobile devices proliferated, gamers have all but abandoned handheld game consoles, including Nintendo's 3DS.
"Nintendo has recognized for a while that it has to evolve its IP," said P.J. McNealy, Analyst with Digital World Research. "It's a significant move for Nintendo, and I suspect it won't be the last expansion of its IP beyond Nintendo hardware."
Nintendo, in a news conference Tuesday, said it will not be porting any existing titles, but rather create new games designed for smartphones and tablets. It announced a partnership with Japanese Internet company DeNA Co. to develop and publish new titles. As part of the agreement, Nintendo agreed to acquire 10% of DeNA (pronounced dee'-en-ay) for 22 billion Yen (approximately $181.3 million), while DeNA would acquire 1.24% of Nintendo's stock, also for 22 billion Yen. The companies did not disclose when gamers will be able to actually play Mario games on their phones or tablets.
Will the agreement help pull the creator of Mario and his pals back into the game?
Perhaps not right away, said Michael Pachter, Analyst with Wedbush Securities. "Nintendo is making a smart move," Pachter said, "but with all original content and a subscription service, it may take years to generate meaningful profit."