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.