Tencent Looks To Befriend Nintendo To Boost US Gaming Market Share

Tecent, one of the world's largest gaming companies and technology firms, has yet to permeate the US market in the way that it wants, which is one of the big reasons why it partnered with Nintendo earlier this year. A key part of that effort is to "learn the essence of making console games" from a company that knows a thing or two about releasing hit titles.

Nintendo is not just adept at making hit games, it has discovered the secret to creating booming franchises around iconic characters, like Super Mario, Zelda, and Donkey Kong, to name just a few. This is perhaps best exemplified in Super Smash Bros., a wildly popular brawler where many of Nintendo's characters appear in the same game.

"What we want is to expand from China, and one target is console game players in the US and Europe," a Tencent official who asked not to be identified told The Wall Street Journal. "We hope to create console games with Nintendo characters, and learn the essence of making console games from Nintendo engineers."

Tencent is not completely absent from the US and Europe, of course. It owns stakes in Epic Games and Activision Blizzard, and as such, reaps some of the rewards from each one's massive hits (Fortnite and the Call of Duty franchise, respectively). But it lacks a direct hit from its own team of developers.

It's not from lack of trying. Tencent attempted to win over US players with Honor of Kings (rebranded Arena of Valor in the US), the company's highest grossing mobile game that generated nearly $2 billion in 2018. But it did not see anywhere near the same success as it has in China.

The partnership with Nintendo has the potential to be hugely beneficial to both companies. For Nintendo, it gives the company more access to China's gamers. Tencent's promise was that it would help Nintendo sell its Switch console in China, where gamers are more apt to play on a smartphone or PC.

It's also a balancing act. Tencent already has a massive presence in China. And as one Tencent official noted to WSJ, "Nintendo games are not constructed to make people pay a lot of money."

Tencent's main goal seems to be to learn from Nintendo, which the company knows will take time. As it is doing that, however, Nintendo could potentially see more success in China where there is plenty of gaming dollars to go around.