Nintendo proposes 'new business structure' in light of losses

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Facing its third year of continuous losses, Nintendo president Satoru Iwata has commented on the struggles facing the company. In a surprise news conference, Iwata admitted he misread the markets and said the company needed to change.

"The way people use their time, their lifestyles, who they are—have changed," Mr. Iwata said. "If we stay in one place, we will become outdated."

According to the Wall Street Journal, Iwata says that Nintendo is considering a "new business structure," and will likely give more details in a strategy briefing at the end of the month. Will Iwata resign?

"In Japan, I can be my own antenna, but abroad, that doesn't work," Iwata said, noting that sales in Japan were better than abroad. This could open the floodgates for Nintendo of America to be more aggressive in making serious decisions for the company as a whole.

Regardless of the company's recent misfortunes, Nintendo is far from dead. While the company is projecting a loss of $240 million for the current fiscal year, it still has more than $4 billion in cash reserves to sustain itself.

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  • reply
    January 17, 2014 11:55 AM

    Andrew Yoon posted a new article, Nintendo proposes 'new business structure' in light of losses.

    Facing its third year of continuous losses, Nintendo president Satoru Iwata has commented on the struggles facing the company. In a surprise news...

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      January 17, 2014 12:15 PM

      Their strongest market in the last few years (decades?) has been handhelds and this is what they need to build on. They took baby steps to making their home console more like the DS with the WiiU, but they need to just go full bore and make one machine that is both portable and can dock at home for big screen use. Don't waste time and money on a dedicated home console that will never catch up to Sony and Microsoft's machines in terms of features and install base. Just focus on one machine, but make it viable for multiple markets; portability for public trans in Japan and a simple tv connection for families in the US.

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        January 17, 2014 12:16 PM

        Of course, people are saying that the real threat to Nintendo are smartphones and tablets. Moving exclusively to handheld might be dangerous for them.

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          January 17, 2014 12:31 PM

          I don't think we'll ever see mobile developers target precision-control based games. Yeah, there are controller like add-ons for iPhone and the like, but will those ever take off? Nintendo may have the hardcore portable gaming market cornered, at least for the foreseeable future.

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          January 17, 2014 12:33 PM

          I would say that this was true 2 years ago.

          I think there's been a recent surge of people picking up their handheld consoles despite the phone in their pocket.

          It's becoming more apparent that while touch devices can provide a gaming experience, they don't provide the same gaming experience as a device with a controller.

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          January 17, 2014 5:36 PM

          Moving exclusively to handheld would be shitty even if phones weren't a threat. I want my full console Mario (and other Nintendo) games dammit.

          However if the next gen can pull off 1080p at 60fps when attached to external power, then sure put it on a portable with a TV dock. I'd still rather have Nintendo living room games on playstation or Xbox though if they aren't going to make consoles.

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        January 17, 2014 12:33 PM

        Nintendo is in a dangerously similar position with handhelds as home consoles, the tide just hasn't turned yet. There're a slew of higher powered, better general purpose devices, with far better 3rd party developer support and online services. Nintendo's traditional advantage is price and first party games. Here they lose on the price of software (but not the initial buy in) but get an extra win on input methods. But they're fighting against a device that everyone increasingly always/must have and then need to convince them to augment it with a second device with poor battery life and expensive software. People have proven they're quite happy to kill time with a touch based mobile game, so even if the controller based one is better if the touch version is good enough, free, and works on the device they already have, then Nintendo has a hard sell. Everyone sees the money in smartphones and wants in on that market. Nintendo has been making great money on handhelds for the past 5+ years but few others actually want to risk getting into that market with the current market trends. It was already questionable when Sony first attempted it and in retrospect they'd never have done it with where they are now.

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        January 17, 2014 1:09 PM

        So I'm not the only one who thought of this.

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        January 17, 2014 8:23 PM

        This would excite me greatly. I wonder if it would be possible in the future to combine the WiiU box with the WiiU tablet into one device and have it be light enough to still be practical.

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      January 17, 2014 12:21 PM

      License out software, get out of consoles, build sub model for legacy library across existing licenses, get aggressive with 3ds development, take risks with new IPs, fire all marketing department folks, evolve from friend codes

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        January 17, 2014 1:17 PM

        This would fix most of their issues. Double points if they allow their portable to run android apps

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        January 17, 2014 1:18 PM

        They killed friend codes awhile back.

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        January 17, 2014 1:19 PM

        This is the perfect strategy, but I willing to bet pride will prevent them from being able to stomach it.

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        January 17, 2014 1:46 PM

        This would be so bad for gamers. We want a competitive Nintendo, just like we want a competitive Sony and a competitive Microsoft.

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          January 17, 2014 2:53 PM

          We haven't had a competitive Nintendo since the SNES.

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            January 17, 2014 2:58 PM

            Depends on what you're looking at I guess. Their handhelds have always killed it, and the Wii was a gold mine for them, probably because it wasn't a direct competitor to the other guys.

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              January 17, 2014 3:15 PM

              Wasn't the N64 rather successful?

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                January 17, 2014 4:59 PM

                For Nintendo, yes, for most 3rd party devs it wasn't.

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                  January 17, 2014 5:30 PM

                  Well, right now we're discussing Nintendo's strategy, so I guess it fits.

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              January 17, 2014 4:20 PM

              Being successful doesn't mean they were also competitive.

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        January 17, 2014 2:23 PM

        So basically what Sega did? Except Sega hasn't done a great job of managing it's IP. But, that's been even before the exited the hardware business. And, Nintendo has more and better IP to work with.

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          January 20, 2014 2:24 AM

          Sega especially aftern being eaten alive by Sammy has been gamewise quite shite since they quit after Dreamcast.

          Most of their own games have been horrible, especially Sonic games, also other games have just been ports of old IP and so on. Many things that they have produced and published have been ok.

          It would be so bad for gaming if Nintendo were to quit making consoles. 3DS and Wii U are wonderful devices.

          Wii also had amazing games not just by Nintendo but by others as well, Madworld, Pandora's Tower, Xenoblade Chronicles, Fatal Frame 4 (shamefully not in western countries, this was only released in Japan and it is simply amazing title)

          Seriously Nintendo should make Fatal Frame 5 for Wii U and release Fatal Frame 4 in the western countries for Wii U as high res port. They haven't forgotten this series at least since they released Spirit Camera for 3DS.

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      January 17, 2014 12:25 PM

      can't wait for F2P Mario

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        January 17, 2014 12:28 PM

        hope this is sarcasm

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          January 17, 2014 12:31 PM

          99 cents to proceed to world 2 or redo the same levels to grind out stars to unlock free.

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            January 17, 2014 12:32 PM

            oh you

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            January 17, 2014 1:39 PM

            haha.. that would be awful

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              January 17, 2014 2:28 PM

              that's where popular gaming for the masses has headed and if they are looking to become more modern and not be left behind, they could totally go that route.

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      January 17, 2014 12:30 PM

      "In Japan, I can be my own antenna, but abroad, that doesn't work," Bye Reggie :(

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      January 17, 2014 1:28 PM

      Uhh... Iwata-san, do you REALLY want to give Reggie control of the US market?

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      January 17, 2014 2:27 PM

      Ya know, even with the slow down in sales, I still wonder if Nintendo really hedged their R&D bets so that the main cpu/gpu design didn't cost them all that much since it's largely based on the Wii. They spent most of their time just re-engineering the control/direct interaction side of the console. I could see the clear case for a business model that calls for only minor enhancement on the core components and then allows you to iterate on the inputs - meaning release systems with different kinds of controlling mechanisms. This one hasn't panned out all that well, but if I'm close it could mean Nintendo could revamp a new input scheme and release a new console in a year or so. Yes, it may fracture the marketplace a bit for them, but given the design of the U's tablet, it's quite possible to be backwards compatible with a new system even if the new system uses a completely different input controller.

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      January 17, 2014 2:47 PM

      At the end of the day it's about the games for gamers. You can make the console do other things, but then you're just building a walled off PC. They should 1) get their back catalog out there on a bunch of platforms because everything these days can run it and 2) work at bringing their modern stuff to PC, Microsoft, and Sony. I'm sure the latter two would love to pay extra for exclusivity periods.

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      January 17, 2014 2:53 PM

      Remove Iwata and get this boat turned around. That's your business plan.

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      January 17, 2014 4:40 PM

      They need to fix their marketing department. It's not doing enough like the old days. Remember the tight Legend of Zelda commercial for the original game? That was Nintendo. Direct is not enough. I was talking with a MS rep who admitted that like Nintendo they have done a piss poor job at marketing Win 8, XB1, and stuff like Lync and Skydrive. It's not the hardware. They have plenty of games. Start doing what Steam and Sony are doing with game sales. Almost never does Nintendo do sales like the Steam Summer Sale, PS4 14 sale, etc.

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      January 17, 2014 4:44 PM

      How about building some hardware that is technically on par with the other consoles?? That would have been a good first step.

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        January 17, 2014 5:13 PM

        I think the console is good, and the implementation of the game pad is amazing, but just poorly launched.
        The Wii U should have been release Fall 2014 or even 2015.

        There were rumblings of Sony & MS next gen throughout 2012. Gamers dumping money into amazing console games. Publishers ramping up for next gen development. PS4 officially announced Feb 2013, and I think Xbone followed in May. Now you have gamers saving up their piggy banks for Fall 2013.

        At this point I think Nintendo can either become extremely aggressive with ALL their first party titles on the Wii U, and lower the price also. Or they abandon the Wii U and enter the high-end market again but in the middle of PS4 & Xbones console life which would surely stir things up quite a bit. They are not in a position to release a low end console in comparison to Sony and MS since that is what the Wii U already is. I guess a third option would be to abort the console market and chase the hand held, but that's another extremely aggressive market. Perhaps even more than the consoles.

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      January 17, 2014 5:14 PM

      Completely handheld focused Nintendo would be so fucking rad.

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      January 17, 2014 5:18 PM

      [deleted]

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        January 17, 2014 5:34 PM

        porn is the only thing that can save it now. team up with weVibe 4 and Wii U fuk me tonight?

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        January 17, 2014 6:16 PM

        The funny thing is that most people wouldn't know the system had been out for a year.

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        January 17, 2014 8:39 PM

        My mom originally thought it was like getting an OS upgrade for the original Wii.

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      January 17, 2014 5:39 PM

      Erm, bring back the 3D adventure game. Death to time limits.

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      January 17, 2014 5:42 PM

      “We are thinking about a new business structure,” Iwata said at a press conference yesterday in Osaka, Japan. “Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business. It’s not as simple as enabling Mario to move on a smartphone.”

      Bloomburg
      http://www.bloomberg.com/news/2014-01-17/nintendo-forecasts-net-loss-on-stagnating-sales-of-wii-u-games.html

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        January 17, 2014 5:49 PM

        It's hard to know what the quote about smart phones means not knowing the context.

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          January 17, 2014 6:13 PM

          the quote has plenty of context along with the rest of what they discussed and their business results. They need to seriously reevaluate their current business model and how they execute against that model. They appear to be slowly recognizing this as their wish that the Wii U sales magically turn around has not materialized even without competition around.

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            January 17, 2014 6:34 PM

            Your right. It's like someone asked them if they plan to move to mobile devices and politely no.

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        January 17, 2014 7:49 PM

        They should replace Iwata. He sunk the ship tot he bottom of his blue ocean startegy.

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      January 17, 2014 8:07 PM

      I haven't turned on my Wii U in a while. I wanted the Mario game but then xbox one came out and I never got around to it. The Wii U menu/interface just seems so fisher price and slow and shitty. Nintendo makes me sad.

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      January 17, 2014 8:36 PM

      PRICE!!! $199. It needs to compete with last gen consoles. Americans are poor these days and are buying the cheaper Nintendo machines to scratch that Nintendo itch.

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      January 18, 2014 1:36 AM

      I think a Nintendo theme park would be money in the bank. Don't mind me, just rambling.

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      January 18, 2014 5:00 AM

      -> Continue Wii U development. Agressively work on feature rich 8 core Wii U and give it a better name.
      -> Drastically cut Wii U price by E3
      -> Continue 3DS business
      -> Focus on complimentary smartphone/tablet apps for iOS and Android. Make sure rewards for playing these games tie-in to substantial 3DS and Wii U unlocks and extended play capabilities.
      -> Release collectible Pokemon figures for use with a decent Wii U Pokemon game

      Personally, I don't want Nintendo out of the hardware business. However, if they do... The Wii U gamepad is amazing. I don't know if they'll team up with Valve or Sony, but I could see them doing that instead of courting MS in any way (maybe they will though). I wouldn't be surprised to see the Wii U gamepad re-packaged and sold as something to connect a PS4 and/or a Steambox to. Frankly, I see that possibility as a clear win for Nintendo. Selfishly, I'd love to play my Steam library from a Wii U gamepad. It's already been done in some form. Make it official and make it happen. Heck, they could even exit the hardware market with this strategy.

      I'll stop musing here.

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        January 18, 2014 5:05 AM

        If MS really does decide to sell off the Xbox division, Nintendo could buy it. This is some weird fanboy pipedream though. While I don't see it happening, anything is possible (however unlikely).

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        January 18, 2014 5:11 AM

        Holy shit. If Nintendo did a Skylanders/Infinity style Pokemon game it would just print money.

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      January 18, 2014 8:48 AM

      now this is the kind of news I expect to hear from Nintendo. I don't care what it is but it seems they are awakening from their slumber. Lets see what happens.

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      January 18, 2014 7:06 PM

      Like I said back during last E3, Nintendo had gained momentum with their previews, but failed to keep it going by not announcing the price cuut back then. They waited too long for the price cut. It would have sold more units diurong the summer when people were still 6 months away from PS4 and XB1.

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      January 20, 2014 2:30 AM

      The worst idea was to name the console Wii U, some gamers do get the pun in the name, but for casual folks, the most people that walk on this planet would've known it better and clearly if the name was Wii 2. People are dumb and don't get clever names that easily.

      Rename it Wii 2 in the western world, start a big ad campaign for it, sign up 3rd party people to really invest on the gamepad. ZombiU was a great example how to nicely use the gamepad.

      Also unleash a mobile app for at least Android and iOS to access Miiverse and the combined eShop so that people could chat remotely and also access the shop to buy games remotely for both systems.

      Also put some money on the line and sign up all the stars of indie business like Jonathan Blow and Team Meat to make games for your console.

      They need to still invest more in the online account system and kill the account system that is tied up to the console itself, people need to be able to login to another machine and easily transfer their games if they happen to buy some new limited edition version of the console and replace an old one.

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