Nintendo to consider acquisitions and mergers
Nintendo is facing a fork on the road – as they attempt to rejuvenate their home console business and as well to fend off the looming threat of the mobile market to their bead’n’butter business of dedicated gaming devices.
Fortunately, for Nintendo they have an impressive war chest of money and assets, thus can weather the storm of harsh periods. Furthermore, it is also gives them plenty of room to maneuver and act swiftly.
In an interview with The Nikkei, Iwata spoke about how Nintendo should behave during times of hardship.
“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.”
Furthermore, Iwata elaborated on their upcoming strategy which funnily enough includes acquisitions and mergers.
“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 [mergers and acquisitions] as an option. For this reason, we’ll step up share buybacks.”
Expansions could be a worthwhile option for Nintendo, as acquiring more game developers can help with game droughts and in addition can expand their portfolio of games.