“Abandon Old Assumptions” Says Iwata

The Q3 financial results from Nintendo attracted plenty of attention this week, presented in the Investor Briefing by Satoru Iwata. If you recall, Nintendo reduced its sales projections for the year ahead in a drastic way just a few weeks ago, and speculation has since been rampant on the company’s future.

In an announcement that surprised no one, Iwata confirmed that Nintendo won’t develop their games for smartphones, but will be trying to find ways to engage smartphone users in other ways. They’ll improve their focus on bringing DS games to the Wii U Virtual Console, using the GamePad to its fullest advantage, and the strange, slightly confusing “QOL” platform.

Is this what investors want? That remains to be seen. Iwata spoke to The Nikkei and highlighted that Nintendo has seen its fair share of evolution over the decades, and that strong positioning in the past with its systems and games have given it a solid foundation from which to work on at the present time:

“Nintendo has undergone continuous changes over years, moving from Hanafuda playing cards to video games, and offering newer systems like the Wii. But we’ve been preoccupied with a fixed idea of what a game should be like. The game industry is at a turning point amid new developments like the rise of smartphones.

Mr. Yamauchi (former President Hiroshi Yamauchi) often said “Shitsui-taizen, Tokui-reizen,” meaning that we should act regally when things are bad, and be calm when things are going well.” Were he alive now, he would tell me to carry an air of confidence.

We built up cash reserves when earnings were strong. Because the entertainment industry ebbs and flows in wild swings, Mr. Yamauchi insisted it is vital to have deep pockets. Without savings, we could not have recovered from a single failure in game systems. Even now, we can afford many options because of our robust financial standing.”

Certainly there’s still plenty of criticism out there on what Nintendo is choosing to do—there are as many opinions as there were ideas in the boardroom, no doubt—but Iwata outlined briefly, when asked, what Nintendo’s strategy is moving forward into 2014 and beyond:
“We’ll change the way we sell products, by managing customer information via the Internet. We’ll offer discounts to steady, regular customers. We’ll cultivate emerging markets and launch new businesses in health and other areas. In an emerging country, you can expand the user base only after you offer a product line different from advanced economies in pricing.

We should abandon old assumptions about our businesses. We are considering M&As as an option. For this reason, we’ll step up share buybacks.”

Is this enough? This remains to be seen. Nintendo’s plethora of strategies, and professed change in focus to development in new areas, could see the company’s resurgence as it has in the past.

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Micah
Author: Micah View all posts by
Micah has been playing games since his first pong machine, and has been writing for as long as he could grip a pencil and not drool on the paper. So, for about a week.

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