News Article

Satoru Iwata Believes Nintendo Can Establish a "New Core Business" to Join Video Games

Posted by Thomas Whitehead

To "consider establishing other pillars that leverage its strengths"

When Satoru Iwata announced that Nintendo would be revealing a Quality of Life (QOL) platform in the coming year, some Nintendo fans expressed concern that the company would be diverting resources and attention away from its core gaming systems. While that'll be an ongoing topic, the company President has outlined to investors the reasoning behind the company's moves into other business and platform areas.

Although Iwata-san acknowledged that some "tend to believe that Nintendo is a video game company and even think that Nintendo should not or must not do anything other than making video games", he emphasized that the company has only been in that market for around a quarter of its history, and that it needs to utilise its strengths and experience to boost its financial well-being.

Regarding the profitability of any video game business, there is no basic demand for games, so it greatly depends on changes in the business environment. Just as it was difficult to forecast the performance of Nintendo DS or Wii before their respective launches, which both proved to greatly exceed our expectations, at other times, our products do not meet our expectations, as is the case with Wii U. This is inevitable in the entertainment business. Currently, Nintendo has both the home console and handheld platforms, and we would see great results if both of these platforms performed very well; however, our business would become mediocre if one of them faltered, and if both of them were to falter, it would very negatively affect our business. We have decided to establish new business platforms not for being pessimistic about the future of the video game business, but to prepare for a challenging situation. Without other pillars, the faltering of the video gaming business would directly have a negative influence on our financial results and the market would respond with harsh criticism. Considering the situation, I would say that Nintendo should consider establishing other pillars that leverage its strengths. As I said earlier today, people, including ourselves, have considered Nintendo to be a video game company for the last 30 years. However, I believe that the intrinsic nature of entertainment is much broader than how we see it today. We believe that we may be able to establish some sort of new core business if we consider our role as an entertainment company in a broader sense. Again, we are not pessimistic about the future of the video game business, nor have we given up on earning profit from the existing video game business. Rather, it is an expression of our determination to become a more stable company, constantly achieving better financial results regardless of the fluctuations in our video game business.

With efforts diversifying, it was also explained that in addition to unifying hardware and software teams in the building pictured above — a process to be completed shortly after E3 — the company has established a “Business Development Department”. Due to the fact Nintendo "must create a new business structure and execute a variety of new endeavors", it has "gathered experts from a variety of different fields for this department" in order to drive forward its varied plans, products and strategies.

Are you concerned about Nintendo exploring alternate areas of business as well as video games, or are you content that it's the best approach to secure the company's ongoing future? Share your thoughts in the comments below.

[via nintendo.co.jp]

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User Comments (77)

C-Olimar

#1

C-Olimar said:

It makes sense, considering the money they made during the Wii/DS generation. They should have considered investing in new areas sooner.

FullbringIchigo

#2

FullbringIchigo said:

well as they started as a playing card company, branching out into other things doesn't seem that far faethed

Mk_II

#3

Mk_II said:

As far as i know, Sony and Microsoft also manage to do some other stuff so i don't see a problem.

VictorySong

#4

VictorySong said:

Sounds like a solid business decision. Both Microsoft and Sony have other sources of income besides their video game branches to support them in hard times. Well Sony not so much but definitely Microsoft.

@Mk_II beat me to it.

Vrael

#5

Vrael said:

I approve Mr Iwata. As long as you keep focus on fixing the wii u I am curious to see what you will do.

RoomB31

#6

RoomB31 said:

This is smart, but also late, unless they have been working on this for some time. We'll have to wait and see what Nintendo brings forward. Only exciting things can happen!

MoonKnight7

#7

MoonKnight7 said:

I find this to be a smart move. If it makes the company more stable, then all the other departments will be more stable. Hopefully with this, they won't have to worry about the boom and bust cycle.

Dezsi

#8

Dezsi said:

As long as they keep making consoles and games for it, I'm all good.

unrandomsam

#11

unrandomsam said:

@T7L3R Sony totally does - TV / Hi-Fi / Mobile / Film / Music / Computer hardware (Not just the laptop but they sold) / Software - problem for them is so many of them are tanking at the same time.

MoonKnight7

#12

MoonKnight7 said:

@RoomB31

This is just my opinion, but I think they've been working on QoL longer than they are leading us to believe. Especially since they are supposedly showing something this fiscal year.

originaljohn

#13

originaljohn said:

I'd be happy to see Nintendo buy stuff like Studio Ghibli, it would help establish their brand outside videogames. Also help getting exclusive rights if any future games developments where to come along...

Ninhau

#14

Ninhau said:

they definitely should not put all their eggs in the videogame basket. they have to expand into other areas... like sony & ms do. more than a videogame company, theyre a entertainment company, and QOL fits into that

unrandomsam

#15

unrandomsam said:

@MoonKnight7 Yeah but if whatever this new thing is tanks as well then its going to hasten the collapse. There is nothing about this that seems like its going to be something that cannot fail.

GalacticMario28

#16

GalacticMario28 said:

It sounds like Nintendo is really trying to do some interesting things with its business. As long as I get to keep playing Nintendo video games, I'm fine with Nintendo branching into other areas too.

gatorboi352

#17

gatorboi352 said:

@MoonKnight7

Of course they have. QoL is simply an extension of their blue ocean strategy (Wii Fit, Wii Sports, etc..). The difference going forward now is that they are removing it entirely from their video games business. 100 million people didn't buy Wii because it was a video game console. They bought Wii because it was "fun" and Wii Sports kicked butt.

Nintendo has finally realized they don't have to shoehorn every new venture into some form of video game console/device. They are not bound by video games. Both aspects of their business will only be better because of this. The next consoles can be more in line with today's industry and trends, while they simultaneously go after the blue ocean/casuals with non video gaming oriented devices. Think: Wii Fit U meter, minus the game it syncs with.

originaljohn

#19

originaljohn said:

The reason why sony and microsoft can afford to launch more advanced hardware than NIntendo is because their other business areas take the financial hit during R&D. This move helps Nintendo potentially level that playing field.

unrandomsam

#21

unrandomsam said:

@Ninhau They should go into Japanese gambling that is a better fit. Sure thing if you have memorable IP. Sammy can offset any blips that affect Sega. (Everybody else is in it - Konami / Capcom / SNK etc - and nobody who starts seems to end up stopping so it seems like a sure thing).

mostro328

#22

mostro328 said:

I'm very interested in the.QOL project i don't mind a new console by 2017 2018...as long as i get some more top notch games for wiiu

Nintendo_Ninja

#24

Nintendo_Ninja said:

Yes. Do it! But what could they do? Smartphones (bad idea, industry is controlled by Apple), Computers (some sort of new hybrid PC), Virtual Reality (like oculus rift, but with both hardware pieces), or something to revolutionize technology!? The possibilities are endless.

originaljohn

#25

originaljohn said:

I think QOL already exists for Nintendo hardware users (Miiverse). It will be a cloud based platform from which people can access from many different devices i.e. mobiles, tablets, consoles and pc's. What will it actually provide is the mystery but I think it has to have something to do with the casual end of the video games business. It must be free or very cheap, generate a lot of traffic that gives people instant exposure to NIntendo products and services.

Hy8ogen

#27

Hy8ogen said:

Nintendo, team with with Bandai Namco and come out with Gundam NFC figures.

MuchoMochi

#28

MuchoMochi said:

I'm more than okay with this if it leads to Nintendo becoming a large household entertainment name again like they were in to 80's and 90's. They definitely need to expand their demographic past the family, however, I hope Iwata continues to focus on video games, and continues to improve upon that market. Some of the way he words his approach worries me, but we shall see what the future holds for Nintendo.

MoonKnight7

#29

MoonKnight7 said:

@unrandomsam

If the idea is good enough, it's always smart to try and expand your business. Whether it fails or not will be another article for another day.

Everyone else is just being optimistic, we all know it is a risk, just like anything else.

zool

#33

zool said:

,........ the Nintendo tablet. It will be out in time for Christmas 2015 with a Mario game. My guess is that it will have an Android OS with an Nintendo skin.

Cresartist

#36

Cresartist said:

Nintendo has to at least TRY to invest in other things.

Microsoft's big seller isn't Xbox, it's their Operating Systems and other software.

Sony's biggest seller isn't the Playstation, it's their other electronics, like their Television sets, sound systems, and DVD/Blu-Ray players.

Nintendo gets their money from home Video Games, and they have been since the 1970's. They should at least TRY to make other things... Hmm.

Dinosaurs

#39

Dinosaurs said:

QoL will be hardware. Nintendo's business is set up around Chinese manufacturing not app-making. The balance board will essentially get its own console is my vision of it.

RoomB31

#41

RoomB31 said:

@mercurio2054
I mean late in announcing, when you're up you announce things to keep you up, not when you're down, which is the case now, so even if they've been working on it for some time, they should let us peak in to get us excited. That being said, late is better than never.

SCAR392

#43

SCAR392 said:

@Fireninjastar
Exactly. They have enough money to explore other business.

Like others have said, it's like how Microsoft and Sony have other types of business.

I always think of things like weight scales, (alarm)clocks, adjustable chairs, etc. whenever QoL gets brought up. Maybe they could make a mini projector that displays random info, and you can control it with your Wii U, or it can be a stand alone device.

HopeNForever

#44

HopeNForever said:

Looks like Nintendo's going back to its roots as being a game card manufacturer that diversified into other realms of lucrative businesses. Let's hope they don't fall for failed ventures, like they did with love hotels a very long time ago! Hoo! I think they are still printing card games to this day though!

Of course, in this day and age, where the company did indeed establish itself as THE image of a video game company for the past three to four decades, not to mention making very notable contributions to video game history along the way, both in Japan and on global scales, I really hope Nintendo knows to diversify whilst staying within the game we all know and love - the gaming industry. (Pun fail methinks)

unrandomsam

#45

unrandomsam said:

@SCAR392 Microsoft and Sony also have lots of failures. If you look at the failure to success ratio that either of those two have then most new ventures fail.

Yosher

#46

Yosher said:

So long as they don't stop making consoles and video games I don't mind this one bit.

edhe

#48

edhe said:

I do worry that with a second business alongside the videogame one, and with the difficulties Nintendo are currently having with the WiiU, that Nintendo may be more inclined to sell off the console arm, were this new venture to prove successful.

Bill Gates has been quoted as saying he would fully support the spinning off of the Xbox brand, if the current head deemed it neccesary, and I'd hate this to happen to Nintendo.

On the other hand, if Nintendo stick to videogames, they live and die by their fortunes in that business. It's a tough one, but I'd have to say, with how they're struggling, it might be for the best if Nintendo attempt to diversify. Hopefully, it'll pay off.

VictorySong

#50

VictorySong said:

@unrandomsam I meant most of Sony's other product lines aren't bringing them much of a profit. I'm not too worried about Sony though...seems Kaz has a plan to get them back on track and what he's done so far looks promising. Just have to wait and see. Iwata on the other hand has me slightly worried...not that I think I could do a better job I just don't agree with the way he is handling things right now. Of course I don't know exactly what his ideas are and that's what has me worried.

kereke12

#51

kereke12 said:

Well as long as Iwata does the right thing. I don't care what they do as long as they don't bring there game to mobile.....I believe Nintendo will succeed.

Rect_Pola

#52

Rect_Pola said:

If they're sticking to entertainment as their drive I won't worry about their dedication to games. Especially if they continue to attract and keep naturals like Miyamoto and Aonuma around.

ledreppe

#53

ledreppe said:

I agree with this approach, and I can't wait to see what the unified platform has in store for the future of their video games business and how successful the new QoL business will be.

JaxonH

#54

JaxonH said:

Makes no difference to me. Long as they keep making games, that's all I care about...

LordGeovanni

#55

LordGeovanni said:

I hope that they stick with games for at least the rest of my life. (80+ or more :P ), but I understand why they are branching out. Sony started as a speaker company if I understand correctly. Now you can get Sony TV and a bunch of other technology related things too. Microsoft has the XBox One(Eighty), but also has computers almost completely controlled. It is not surprising that Nintendo would like to expand to new ventures.

What ventures would I like to see? They keep promoting a "Quality of Life", but that just (for some odd reason) makes me think that they want to start producing toilet paper... o.0
I would rather them have things like what they have already stated, entertainment style things. Maybe something like Manga or Anime, or perhaps toys like action figures. I know that I would get the Manga/Anime stuff, but not action figures... Maybe they will continue into board games?

Noonch

#56

Noonch said:

I'm ready for a Nintendo phone, but instead of a slide out keyboard...a slide out controller!

BertoFlyingFox

#58

BertoFlyingFox said:

I'm all for it, sounds like they're expanding their business in order to avoid all their eggs in one basket. I'm interested to see where this all goes, comics would be awesome.

Iggly

#60

Iggly said:

All of this QOL stuff seems like a neat idea, I'm just curious how it will affect the future of Nintendo as this is a lot of info to grasp.

IceClimbers

#61

IceClimbers said:

@gatorboi352 While health and fitness stuff like Wii Fit is definitely part of QoL, there's a lot more to it than that. Improving your QoL can mean just about anything, such as doing things you enjoy and living life in the moment.

JuanitoShet

#63

JuanitoShet said:

Nintendo knows what they're doing - these are the toughest times they've had in a while, but they'll be fine. Their future business ventures will help them out, I'm sure.

With that said, it's great to hear that they listen to us. We keep getting our consoles, our games, and we'll be happy doing our gaming. :B

AshFoxX

#64

AshFoxX said:

Nintendo "google glasses" that work as AR monitors with software that allows you to capture/train pokemon in your own neighborhood, and that wall-ball game that was featured in Heavy Rain... Or try those Nintendo love hotels out again, this time in EU and US as well.

heathenmagic

#67

heathenmagic said:

@GamerOZO

Haha. It must be so hard for any company like Nintendo. They have to please people in order to get ahead. I think people are getting harder to please, they move on to things and seem to want more and more each time. And tough economy doesn't help things much......

djepic209

#68

djepic209 said:

@gatorboi352
The Blue Ocean strategy is for a company to ignore all competitors and go against the norm into an open blue ocean, Nintendo wanted to compete with themselves and not the other 2 hardware giants. Had nothing to do with the wii sports/fit games. Not directly

Blue-Thunder

#71

Blue-Thunder said:

I think it's a little bit worrying this kind of talk and even though he denied it I think he is "pessimistic about the future of the video game business". It's not good if this is how the guy in charge feels.

Ren

#76

Ren said:

"...there is no demand for games" hmmm. I think he's missing something here. But then there isn't a whole lot that Iwata HASN'T missed in the last couple years. Well the 3ds has some life left, I'll enjoy that while it's around.
New leadership could be the last hope for this sinking ship.

DarkKirby

#77

DarkKirby said:

I still would like Iwata to explain why he's willing to try anything except appealing to the hardcore gamer market.

What he spouted about there not being a demand for games is total Yoshi manure, as the 3DS is making money, it's not because it does things OTHER than play games.

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