NEW YORK (TheStreet) –– Nintendo's monumental deal to bring Mario, Luigi and the rest of its characters to smart devices isn't just about staying relevant -- it's about money, pure and simple. "A successful game is about $300 million to $500 million in revenue," said Seth Fischer, a hedge-fund manager at Oasis Capital Management. "Whether it's two games, three games or four is anyone's guess, but the ballpark of successful games is around 65% to 70% margins and since this is a revenue share deal (with mobile-gaming company DeNA), Nintendo's net might be 40%. I think this is great." Fischer would not disclose what percentage of the funds' portfolio is allocated toward Nintendo, but said it was fair to characterize it as "sizable." This week, Nintendo unveiled a collaboration with Japanese mobile-gaming company DeNA (pronounced DNA) to bring all of its intellectual property, including Mario, Luigi, Princess Peach, Bowser and more, to smart devices. The two companies also announced a service that will let users play games on mobile devices, PCs and Nintendo's consoles, including the 3DS and the Wii U.In addition, the companies are investing $181 million (22 billion yen) in each other. "The alliance is intended to complement Nintendo's dedicated video game systems business and extend Nintendo's reach into the vast market of smart device users worldwide," the companies said in a statement. For years, Nintendo publicly balked at the move to mobile games because of concerns that it would hurt existing console and disc revenue, not help it. Traditional console games can sell for $40 and up, while the cost of the Wii U (bundled with Super Mario 3D World) costs $293 on Amazon . By comparison, most mobile games on Apple's App Store or Google's Google Play usually cost a few dollars. Some are free to play; users pay for upgrades in the game, a model known as "freemium." It's clear, however, that Nintendo had to do something to gain access to the mobile-games market, which is growing in popularity and revenue. Must Read: Warren Buffett Loves These 4 Tech Stocks According to a mid-2014 analysis by NewZoo, a games market-research company, the mobile-games market (games on smartphones and tablets) will reach $35.4 billion by 2017, up from $17.6 billion in 2013, ultimately accounting for a third of the global games market. In 2014, Nintendo generated around $3 billion in revenue from its largest properties. Though no official announcements have been made by Nintendo or DeNA about which games they will create, exact timing or prices of the games, it seems as if the opportunity for Nintendo to boost revenue significantly is there. Jefferies analyst Atul Goyal estimates that Nintendo could see an additional $2.4 billion in revenue from smartphone games and the potential for more than $10 billion in Ebitda (earnings before interest, taxes, depreciation and amortization). "If Nintendo executes well, there is potential for >$10b in inc. EBITDA for it to reclaim its 2007 highs of ¥73k," Goyal wrote in a note, upgrading Nintendo to buy with a price target of 30,000 Yen. Nintendo President Satoru Iwata said during a press conference that Nintendo was targeting a user base of around a few hundred million users, a level that Goyal believes is "highly achievable." By comparison, King Digital , maker of the popular Candy Crush franchise, ended the fourth quarter with 533 million monthly active users. San Francisco-based mobile-gaming company Zynga ended the fourth quarter with 108 million monthly active users. There are around 2.5 billion smartphone users around the world, compared with about 150 million Nintendo DS users and just 100 million Wii users, including the Nintendo Wii U. The vast difference in market size makes this an attractive opportunity for Nintendo. "I think there was a generation of people who missed Nintendo intellectual property (IP), a younger generation that missed out on it," Fischer said. "I think this expands the universe of Nintendo customers, gamers and people who participate in Nintendo IP." Must Read: 7 Nintendo Games We Desperately Want to See On Smartphones
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