Satoru Iwata States That Nintendo Should "Abandon Old Assumptions" About Its Businesses

Hiroshi Yamauchi "would tell me to carry an air of confidence"

As anticipated, this week's Q3 financial results Investor Briefing from Satoru Iwata attracted plenty of attention. The moment that Nintendo drastically revised its sales and projections down in January was also the point when plenty of speculation and ideas on the company's future were shared. Perhaps predictably, Satoru Iwata highlighted that Nintendo would look into exploiting smart phones but still keep its primary focus on its own hardware and software. An improved focus on the GamePad, DS games on the Wii U Virtual Console and the mysterious "QOL" platform were also announced, so Nintendo is shifting focus in various respects — just perhaps not in the way all investors would desire.

Speaking to The Nikkei, Satoru Iwata highlighted that periods of evolution and change are not an unknown for Nintendo, and highlighted that the company's careful management in the boom years of Wii and DS have placed it in a strong position.

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.

Some have been critical of the strategies outlined by Satoru Iwata, perhaps suggesting that they're not enough to bring Nintendo's fortunes back to previous levels. That's down to individual opinions, but the Nintendo President said the following when asked to specify, in brief terms, the primary strategy moving forward.

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 [mergers and acquisitions] as an option. For this reason, we'll step up share buybacks.

Are you pleased by Nintendo's policy of sticking to core parts of its business while seeking to evolve and improve in new areas? What do you think of these comments from Satoru Iwata? Let us know in the comments below.


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