TOKYO (BLOOMBERG) - Nintendo has struck a long-term deal to develop augmented reality smartphone apps with Niantic, the Google spin-off whose smash hit Pokémon Go introduced AR to a mainstream gaming audience.
The pair announced a long-term agreement in Tokyo Tuesday to turn Nintendo content into AR apps, which work by superimposing digital images onto the physical world. They will start by releasing a Pikmin app in 2021, based on the puzzle-solving series created by Nintendo's creative fellow Shigeru Miyamoto in 2001.
San Francisco-based Niantic becomes Nintendo's fourth smartphone app development partner, potentially giving the Kyoto-based company's mobile efforts a much-needed push. Since 2016, Nintendo has developed fewer than 10 smartphone games with outside partners DeNA, Cygames and Line. Nintendo's shares rose more than 2 per cent in early trading in Tokyo.
"The deal could help address complaints among investors that Nintendo hasn't been able to earn much from smartphone apps," said Hideki Yasuda, an analyst at Ace Research Institute. "Among all Nintendo-related smartphone apps out there, Pokemon Go has been the most successful game, but Nintendo's revenue share was only a fraction of it as the game was between Niantic and Pokemon Co. By directly dealing with Niantic, Nintendo is likely to see a boost in revenue from smartphone apps."
Niantic, spun out of Alphabet's Google in 2015, has been a global pioneer in developing smartphone apps with AR technology. Its most successful creation is Pokémon Go, which Niantic worked on with Nintendo affiliate Pokémon Co and took the world by storm in 2016.
The Pikmin app will be the first of a series of collaborations between the two companies, and will be developed by Niantic's Tokyo team. Pokémon Go director Tatsuo Nomura will lead development of the app.
The partnership announced Tuesday doesn't include additional financial support for Niantic from the Japanese video game powerhouse, which joined Google and Pokémon Co in a US$30 million funding round for the studio in 2015.