The Chinese giant wants to "create console games with Nintendo characters" and thus "learn the nature of console games from Nintendo engineers." This does not necessarily mean that it will continue, as Nintendo is known for protecting its culture and IP in order to preserve the experience of gamers.
On the one hand, the partnership is plausible since Tencent and Nintendo already have a corporate relationship that started earlier this year. The pair teamed up with the intention of selling the Switch in China, where consoles (and games in general) are tightly regulated. But despite promises of launching the console in stores, there was little actual movement, most notably to regulatory hurdles.
And Nintendo has taken preliminary steps to allow others to play with their toys, especially when China is involved. Some Wii and GameCube games have been published in China for the NVIDIA Shield, including New Super Mario Bros. (Wii) and Legend of Zelda: Twilight Princess . Similarly, Nintendo has made mobile games, including Super Mario Run with developer DeNa. Not to mention that it allowed Ubisoft to make Mario + Rabbids
Tencent's powerful position in the gaming industry is also overwhelming, as it is now the largest gaming company in the world by revenue. This mainly comes down to investments in publishers and developers with a large presence in the US, including Riot Games, Epic Games, Activision Blizzard, PUBG Corp., Ubisoft, Supercell and Miniclip, among others.
But there may be many reasons why Tencent's hopes will be crushed, especially since Nintendo is unlikely to allow a potential competitor to learn its secret sauce. And Tencent's own games target a Chinese audience that uses computers or phones, not consoles, mostly.
These titles are also often an excuse to shock consumers for their money. In the end, WSJ quoted another official saying that Tencent would not attach Nintendo games to China, since "Nintendo games are not designed to make people pay a lot of money."