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Topic: Should Nintendo Just Tell Investors to "Shove it" and go private?

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Kogorn733

The company Interbrand, which values and rates (you guessed it) brands around the world, recently dropped Nintendo's brand value by 1/3. http://www.gonintendo.com/s/239159-interbrand-drops-nintendo-...

This got me to thinking. Generally, people who invest in video game companies are not gamers themselves, and are limited in knowledge to the crap Michael Pachter spews out of his mouth. Crap that suggests that "free to play" is a good business model, when in fact it dilutes video games as an art form, scams consumers, and hurts the industry in the long run for only short term gain. Crap that suggests that only shooters sell. Crap that suggests video games should be realistic instead of exploring creativity.

Nintendo being a public company and having to put up with this mindless crap, in my opinion, is only going to hurt it in the long run. What if Nintendo just went private and did its own thing? Private companies (such as Koch Industries), can still make a lot of money and become really valuable. Why doesn't Nintendo do the same? What advantages does Nintendo gain from being a public company in a world where investors know little about gaming?

Discuss

Kogorn733

RedDevilAde

A company can't choose to be private, the owners decide that by delisting it, not practical to do unless the company is bought out. Someone still has to own it (e.g. a private equity company or a mega rich individual who would need to buy all of the shares or via a management buyout), the company can't buy itself, where would it get the funds from? Its war chest is the legal property of the shareholders, that couldn't be used, so investors can't be told to shove it, they own the company.

Edited on by RedDevilAde

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Peach64

Those investors will have a very good idea of what makes money in the gaming industry. I'm pretty sure they'd have a much better idea than most people here, going off the reaction to Capcom's recent words about games needing to make so much money before a sequel is green lit. Investors, no matter what industry, put money in, so they can make more money. It's not a charity where people are giving money to companies to make something nice for people.

Peach64

iKhan

Every company has to deal with that. The trick is managing the idiocy of the investor while still keeping company value up.

We've seen time and time again that just replicating what is popular is a recipe for disaster.

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LzWinky

Investors are interested in making money. When a company like Nintendo flounders, that looks bad to them regardless of your biases as a "gamer".

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Ralek85

I'm confused, why do you equate "in the long run" with "good business", or conversely "only short term gain" with "crap" when you talk about investors? I'm no financial expert, but wouldn't this be a matter of perspective or purpose? Investments to achieve "only short term gain" are neither illegal nor illegitimate ... there just one kind of investment.
I agree with basically all the stuff you argue from a consumer perspective, not necessarily though from a business perspective, especially not a short-term investment perspective. That aside @RedDevilAde already asked the pertinent questions, who is going to buy, own and run it anyways then?
Last but not least, I'm afraid that Nintendo is in dire need of being questioned in the way they run their business, especially these days (and let's not forget they DO run a business). One might argue as to the qualification of their shareholders to do so, but at least they have to give account for their business decisions rather publicly, and they can be held responsible as well.
Gamers might be horrified at proposals to do a ... dunno ... Free-to-Play Mario on Smartphones, and while I certainly can empathize with that as a fellow gamer, it doesn't mean it has to be a terrible business idea per se.
Nintendo needs to adapt to the changing market, just as any other company has to, or they will die. They can and probably should go about it in a fashion that plays to their strengths as much as possible, but nevertheless adapt they have to.

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Kaze_Memaryu

I don't think they could do that so easily. The investors might not seem to influence Nintendo heavily, but to a certain extend. That means they control a noteworthy amount of money, and Nintendo has no intention to lose it. Otherwise, they probably would've bought up all shares during the Wii era.

BinaryFragger wrote:

Nintendo and their investors share the same goal: making money.

People who worship Nintendo (or any other company, for that matter) tend to forget that companies exist to MAKE MONEY. Look at the comments at the Capcom article on the front page, with people saying ridiculous things like companies should not make "games for profit."

There's a huge difference though: investors only care about money, and nothing's too low as long as they get their pockets full. Nintendo aims to profit from customer satisfaction: a happy customer is a paying customer after all.
You take the easy way by saying EVERY company just wants money and doesn't care how, but that's where your view falls flat on its face. Some companies are only interested in profit, but enough others genuinely care about their customers - that obviously includes Nintendo, even if not everyone is happy with their decisions as of late. But these whiners always existed.

<insert title of hyped game here>

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Klimbatize

Kogorn733 wrote:

What advantages does Nintendo gain from being a public company...?

Money from the investors.

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unrandomsam

There is different types of investors. Obviously they all want to make money but they don't all only care about the short term.

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LzWinky

If I'm not mistaken, the Yamamuchi (spelling?) family still owns a big chunk of Nintendo...or sold it. Either way investors don't have full control over Nintendo

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Octane

Peach64 wrote:

Those investors will have a very good idea of what makes money in the gaming industry. I'm pretty sure they'd have a much better idea than most people here,

Whilst I agree with the latter part, you really need to read the Annual General Meeting of Shareholders one day, they sometimes are hilarious as well.

Octane

CaviarMeths

Investors are a very important part of big business. A publicly owned and traded company not only gives the company more funds and resources to make acquisitions and start projects, but it allows the public to have a say in the direction of the company. And yes, this is a good thing. Believe it or not, most of the people who invest in Nintendo believe in Nintendo and want good things for Nintendo. They want real, sustained, long-term growth on their investment, and they realize that Nintendo, apart from the last 2 years, is actually pretty good at making money. Nintendo making these investors happy usually also means making us, the consumers, happy.

The reason for the recent dissent is because of those last 2 years where Nintendo has lost money. This hasn't happened in decades and investors want answers. As a non-share holder, but a consumer, I want answers too. I want Nintendo to make healthy business decisions because I love the product. The Wii U had an awful launch, an awful first year, and a poor second year. Something needs to change in order to go back to that real, sustained, long-term growth. I don't believe the answer is dropping hardware or going mobile, and the majority of shareholders don't either.

Of course some investors really do just want a quick buck and want Nintendo to shove all its IP on other platforms and mobile, but obviously, with Iwata's relatively good approval rating and the overall direction of Nintendo since he took over as CEO, they are in the minority and aren't making big decisions for the company.

Edited on by CaviarMeths

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Inkling

@Pigeon How about a Tablet/Smartphone hybrid (phablet)? Those are getting popular!

Edited on by Inkling

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crimsoncavalier

What Nintendo needs to do is make better business decisions. The decisions of the last few years have been short-sighted and close-minded. It's as if Nintendo has stuck their fingers in their ears and are going "Lalalalala can't hear you!!" to all the obvious trends in gaming. It has nothing to do with bad decisions from investors, or "experts" weighing in on TV or radio or internet.

Nintendo exists to make money, as everyone has already said, and the best way for them to continue to do so is to make products that consumers want. Having investors gives them more money to play with, so to speak, but it also makes them subject to review from stockholders, who also want Nintendo to make money. Nintendo is by no means dead or headed to bankruptcy, but they are definitely completely heading in the right direction. Steps have been made to address some issues, but they are still lacking in many aspects.

The Western market is where gaming is now. It used to be Japan, but that is no longer the case. Nintendo has to start catering to the Western audiences, even if they go kicking and screaming. I want Nintendo to recover, because I love the product, but they need to get their act together.

crimsoncavalier

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CaviarMeths

Pidgeon wrote:

Personally, I think the Wii U should be Nintendo's last home console.

Stopped reading here.

Pidgeon wrote:

Please hear me out.

Oh. Ugh, fine.

Pidgeon wrote:

I think the way forward for Nintendo, if they do decide to stay in the hardware business, is a hybrid console. One that can be played on the go AND on the television. Basically, the Wii U tablet, without the main console unit, and smaller to it is at least as comfortable as the average tablet to carry around.

It's been called the Nintendo Fusion and it's not really a new idea. No official word yet, but it's interesting. It's worrying how often you use the word 'tablet' though.

Pidgeon wrote:

Two reasons for this. First, and foremost, none of the three 1st party developers can sustaindeveloping a healthy number of 1st and 2nd party games for both a handheld and a home console. Nintendo had to make a choice which of their two consoles to focus the majority of their resources into, and they chose the 3DS. Sony also had to make a choice, and chose the PS4, leaving the PS Vita in the hands of indie devs and ports. Having a single machine dedicated to both markets, where they can release every 1st party title onto would resolve their problems by lowering costs and ensuring they will have 3rd party support all the way.

Fair reasoning, but I think we've seen evidence that Nintendo is fully prepared to throw its weight behind the Wii U. There is reportedly a major 1st party release on it every month in 2015. That's more support for the Wii U from Nintendo than the PS4 is getting from Sony. Sony was happy to just cut its losses with the Vita and let Japanese 3rd parties carry it, but Nintendo doesn't seem willing to do the same with the Wii U. At the least, we can expect heavy support for Wii U throughout 2015.

Merging everything into one platform is also riskier. By having two pillars, Nintendo has always been able to fall back on something. The poor performance of the Gamecube was carried by strong Gameboy Advance sales, and we're seeing that again with the Wii U and 3DS. What if the Nintendo Fusion fails? Nintendo would have nothing else to carry it, unless Quality of Life turns out to be Sony Financial.

In related news, Nintendo has spoken about wanting to have one unified OS for all of their hardware, similar to iOS and Android.

Pidgeon wrote:

Secondly,by the time this hybrid console would have been released, Nintendo would hopefully have the skills and experience to make this product even more like a typical tablet or mobile phone device, and can sell it as such. The 3DS has an image of being a toy whereas, even in Japan, it's obvious more savvy kids are choosing to stick to tablets and mobile phones because their parents are using them. Heck, in a food court today, I saw a group of 12 year-old crowding around playing games on a tablet. A lot of my 3 - 10 year-old students play games on their parent's mobile phones. Make this Hybrid console more like a savvy technological kit, and you've got a winner.

Oh. That's why you kept saying the word tablet.

I get the feeling that this paragraph is your main point, and you sort of just crafted the stuff about Nintendo Fusion around it. What you really want is Nintendo to make a tablet that can be taken on the go or be streamed to a TV.

I guess we disagree afterall. I don't think any future for Nintendo without buttons can be considered "logical" on any level. At the very least, dropping your other platforms and going head-to-head with Samsung in the mobile market is just straight up corporate suicide.

Pidgeon wrote:

But, honestly, I think Nintendo will announce their 3DS successor as early as next year. They're decision to release the New 3DS to squeeze a little more sales from that console is proof that they can't hope to keep that platform going for too much longer. But time will tell.

Do you really consider it a good idea for Nintendo to steal Sega's business strategy from 1993-1995?

Edited on by CaviarMeths

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Sleepingmudkip

I'm not in favor of a hybrid console, and i think nintendo should have one more portable in 2-3 years to test the waters again before even thinking about a hybrid console, and in all honestly i think its awkward to hold the wii u gamepad on a bus or a plane.

Edit:And it would be a bad idea for nintendo to drastically just switch to private

Edited on by Sleepingmudkip

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skywake

I agree with the "no, investors are right" things people are saying here to an extent. However if you were a person with money and you were wanting to invest in a company? Nintendo is not where you'd look. It's not that sort of industry. I mean sure, Nintendo are not going to go anywhere soon and I wouldn't be putting my money down on them folding next year. However they're not somewhere I'd park my money if I was looking at a long term sustainable return. Nintendo's investors will therefore be more likely be after a quick buck. So they won't be interested in the long term vision as much as other types of investors might.

I mean look at their share price over the last twenty years or so. It went upto 22, then it crashed to just under 10 in the GC era, then almost 80 at the peak of Wii down to 12 now. That ain't a stable ride and it doesn't follow what the rest of the market is doing. It's just a formula of "if the current thing is a hit?" and there's no way to know in advance if the next thing will be a hit. You just see it in the shops selling and know that that thing there now is a hit. And lets not forget that fairly senior people in tech companies are even trying to guess whether "the console" as we know it will still be a thing in five to ten years. Tech can move quickly and there are many players. For Nintendo to be at the top of their game they need to make the right moves as everyone else makes the wrong ones. So it's a gamble, it's not a sure thing.

Compare that to someone like BHP who in the same sort of period has gone between 27 and 46 and we all know instinctively exactly when that low point was. And guessing where they'll be in five years is a much simpler. You simply ask "do people still need iron? yes? Do we still get it from rocks? yes? Then BHP will be making money".

Edited on by skywake

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kereke12

crimsoncavalier wrote:

What Nintendo needs to do is make better business decisions. The decisions of the last few years have been short-sighted and close-minded. It's as if Nintendo has stuck their fingers in their ears and are going "Lalalalala can't hear you!!" to all the obvious trends in gaming. It has nothing to do with bad decisions from investors, or "experts" weighing in on TV or radio or internet.

Nintendo exists to make money, as everyone has already said, and the best way for them to continue to do so is to make products that consumers want. Having investors gives them more money to play with, so to speak, but it also makes them subject to review from stockholders, who also want Nintendo to make money. Nintendo is by no means dead or headed to bankruptcy, but they are definitely completely heading in the right direction. Steps have been made to address some issues, but they are still lacking in many aspects.

The Western market is where gaming is now. It used to be Japan, but that is no longer the case. Nintendo has to start catering to the Western audiences, even if they go kicking and screaming. I want Nintendo to recover, because I love the product, but they need to get their act together.

LONG LIVE NINTENDO

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Octane

crimsoncavalier wrote:

What Nintendo needs to do is make better business decisions. The decisions of the last few years have been short-sighted and close-minded. It's as if Nintendo has stuck their fingers in their ears and are going "Lalalalala can't hear you!!" to all the obvious trends in gaming.

When they started developing the Wii U, they did a pretty good job at predicting the rise in touch screens, tablets in general and gaming on tablets. Tablets only happened to kick off a little sooner than they predicted.

Edited on by Octane

Octane

SkywardLink98

I don't know much about the stock market, but don't the investors own a share in the company? And if they do, they can't be told to "shove it". The owners/investors would have to choose to go private.

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I love Nintendo, that's why I criticize them so harshly.

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