Nintendo Bets on Dragons in First Built-From-Scratch Mobile Game

(Bloomberg) -- Nintendo Co.’s two-year old experiment in mobile gaming is heading for uncharted territory with Dragalia Lost, its first smartphone title featuring original characters rather than its established stars.

Nintendo Bets on Dragons in First Built-From-Scratch Mobile Game

Co-developed with new partner CyberAgent Inc., the free-to-play game is debuting Thursday on Apple and Android devices in the U.S., Japan and Asia. Instead of relying on an all-star lineup of characters like Super Mario and Donkey Kong to generate buzz, Nintendo is betting on a completely unknown cast of heroes and a new fantasy world full of dragons. 

That’s a big gamble -- and the early signs are worrisome. Fewer than a million players have pre-registered to download Dragalia Lost. Nintendo’s Super Mario Run for mobile devices notched up more than 20 million registrations prior to release in late 2016. Dragalia Lost will go live Thursday afternoon Japan time.

“Investors think it will be hard for original intellectual property to create a hit,” said Hideki Yasuda, senior analyst at Ace Research Institute.

For years, Nintendo shunned games that would run on smartphones instead of its own consoles, but the mobile sector has become increasingly important to its financial results. With Nintendo’s hybrid Switch console effectively combining two individual lines of business — handheld consoles like 3DS and home machines like the Wii — into one, Nintendo’s ability to make up any revenue shortfall largely depends on growing earnings from smartphone games like Dragalia Lost.

Last month’s 13-minute reveal video of Dragalia Lost generated a mostly muted reaction online. The presentation showed off vibrant graphics and a colorful cast of warriors and dragons who will join the player to defend a fictional kingdom against an evil force. But the video also detailed the game’s emphasis on buying loot boxes, repetitive gameplay called grinding, and rewards for constantly opening the app.

“Nintendo has seen their brand image as safety and security,” says Yasuda. “However, they aim to increase revenue this time.”

In choosing its new partner, Nintendo is clearly pushing for more profit. CyberAgent is known for financially successful titles like GranBlue Fantasy that rely on aggressive monetization of users. In early 2016, the company’s tactics came under fire after a player live-streamed himself spending about $6,000 over one evening to acquire a rare character.

Nintendo chose CyberAgent despite the controversy, with new President Shuntaro Furukawa saying he expects smartphones to generate 100 billion yen ($890 million) in annual revenue in the “near future.” 

“Smartphones are very important and I want to make it one of our profit pillars in the future,” Furukawa told the Kyodo news service in June. 

The deal with CyberAgent came after two subpar years with original mobile partner DeNA Co. The first smartphone title Super Mario Run failed to hit financial targets, despite early registrations, according to Nintendo executives. The second and third games had mixed results.

Nintendo’s shares are little changed this year.

©2018 Bloomberg L.P.