Iwata on the need for new business platforms
Over the past few months, we’ve heard Nintendo discuss plans to expand its business platforms. The company intends to branch out into other areas outside of video games – like health.
President Satoru Iwata explained why this is necessary during a financial results briefing last week. If its console or handheld platforms were to falter, “our business would become mediocre”. And if both faltered, “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,” Iwata explained. “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.”
Read on below for Iwata’s full comments.
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.
