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DeNA hopes for $25 million a month for its Nintendo-partnered games? That’s all?

DeNA chief executive Isao Moriyasu told Reuters today that it wants the titles it creates with Nintendo to bring in over 3 billion yen ($25 million) a month. He admits that DeNA has yet to talk to Nintendo about targets, but says that its best-selling game, Japanese-only release, Kaito Royale, has hit that mark, and that he expects its partner games to surpass that.

The announcement of a partnership between Nintendo and mobile gaming company DeNA to bring Nintendo characters and brands to mobile for the first time was a surprise when it hit earlier this month. Nintendo has downplayed the importance of mobile for years, but it turned that view around completely on March 17. This will let the company finally break free from the console roots that have had it lagging behind competitors Sony and Microsoft — Newzoo’s data shows that Nintendo’s year-over-year revenues are down 13 percent.

While Nintendo seems to want to keep quiet about this new future on mobile, its partner has been clear about its expectations, saying that it wants to be the No. 1 mobile gaming company in the world. DeNA is currently No. 8 on the list of top-grossing mobile companies in Japan, according to App Annie, and it doesn’t rank in the top ten internationally. But it believes that climb to the very top of the heap of mobile games, a market that Newzoo says will hit $40 billion by 2017.

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Digi-Capital managing director Tim Merel says that the $25 million-a-month goal is doable.

“Twenty-five million dollars monthly revenue, or $300 million annually, is achievable for leading mobile games, and Nintendo has a track record of some of the most-loved and highest-selling games in console,” Merel says. “The commercial success of the partnership will become clearer as games launch, so we hope their potential exceeds expectations.”

The Mario Bros. could do better than that

Peter Warman of market research firm Newzoo says that the number is lowballing it a bit, especially for as popular as Nintendo’s franchises are.

“Top global game franchises generate $1 billion-plus per year,” says Warman. “Examples being Candy Crush, Clash of Clans, Call of Duty, Grand Theft Auto. Mario is in the same league and has the potential to generate $500 million-plus on mobile alone. Taking that into account $25 million per month is lowballing it a little. At the same time, this would be a good first full-year performance.”

DeNA’s aimed number of $25 million also sounds a bit low, analyst and consultant Dr. Serkan Toto told GamesBeat. He says that Moriyasu is trying to “manage expectations in terms of theoretically possible revenue.”

“Twenty-five million dollars a month in sales for a Nintendo-made mobile game doesn’t sound like much, even though that translates to a handsome $300 million yearly sales,” Toto said. “You would need to sell around six million full-priced console titles for that, which is not that easy.

“I say this because in Japan alone we have not one but two mobile games that have been pulling in over $100 million per month for a long time now: GungHo Online’s Puzzle & Dragons and Mixi’s Monster Strike. And the vast majority of that revenue comes from Japan only.”

Piers Harding-Rolls, senior principal analyst, head of games at IHS, doesn’t see DeNA’s estimate as being off. And it’s still early — the companies have yet to disclose details of how they’ll share revenue from these games.

“I don’t see it as a lowball number,” says Harding-Rolls. “Of course, there are examples of games which generate significantly more than this, but also a large share that generate far less. I believe DeNA is bullish about games based on the Nintendo IP due to its global appeal and feels that they can outperform its current leading titles. However, this must be tempered with the idea that we have yet to see how open Nintendo is to the most popular forms of in-app purchase monetization. Indeed, I doubt the monetization strategy has even been fully fixed yet so quite a few questions still need to be answered before we can start estimating the true potential of this alliance.”

Not an instant fix

Nintendo’s move to phones and tablets should be huge — Toto says that “Nintendo can become a powerhouse on mobile as well.” But while this partnership sounds like the best situation for both struggling companies, things could still go wrong, says Warman.

“The fact that DeNA is shouting this out shows how desperate they are for success following two years of struggling and being surpassed by others, particularly GungHo,” Warman said.  “Both DeNA and Nintendo are having hard times. Why? Because they are having a hard time to adapt to or even acknowledge the new playing field that has completely new rules. And this is what worries me. If two companies that, each in its own way, have not been able to adapt to new business models and changed consumer expectations work together, there is a chance they will mess this huge multibillion dollar opportunity up.”

Warman finds it strange that Nintendo is willing to share responsibility for success with another company, saying that if they valued mobile gaming a truly strategic they would have kept most of the business in-house. But Nintendo is still new to this new business model of games as a service, one Warman calls “almost a new art form.”

“I am very happy that Nintendo has woken up to the real world and Mario is set free,” he says. “Still, I think the combination of Nintendo and DeNA is not particularly a match made in heaven. If I were Nintendo, I would have done it all myself — who needs a publisher with brands like Mario and Zelda — or gone for a Western partner.”

In this light, the match up of these two companies is perfect, he says. It will do well at first, with “enormous success in downloads and number of players,” says Warman. But medium to long-term term success will be the challenge for these two companies.

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