The company, called ND Cube, will use Dentsu's knowledge of media to build markets for games that will be based on the know-how of Nintendo.
ND Cube has initial capital of $2.7 million with Nintendo holding a 78% stake and Dentsu holding a 13.3% share. The remainder will be held by software development staff. The two companies are looking to launch an IPO for the new company in 2002.
ND Cube will develop software for the next generation of Nintendo's video game consoles as well as for the company's Gameboy portable player. It is looking for an annual sales target of 500,000 game units in the fiscal year ending March 31, 2001.
For Dentsu, the joint venture helps it tap the possibility of using video game consoles for advertising.
For Nintendo, the venture marks the second time in the past few months it has joined hands to form a new software company. Last September, it joined video game maker Konami Co. in a 50-50 joint venture to make games for its mobile video game consoles.
Earlier this week, Nintendo said that it will buy a 3% stake in national convenience store chain Lawson, which it hopes to use as a distribution network for selling video games.
Copyright March 2000, Crain Communications Inc.