Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Nintendo marches on, ignores pleas to abandon hardware Add to ...

Nintendo Co Ltd. dug in its heels on a game console strategy that has dragged it into operating losses for three years in a row, ignoring calls to go mobile and promising instead to wow customers with health-related innovations.

Investors were unimpressed, wiping $1.2-billion from the value of Nintendo’s Tokyo-traded shares in little more than 30 minutes on Thursday, as CEO Satoru Iwata made his pitch for a “non-wearable” project in 2015 to help users stay healthy.

More Related to this Story

The maker of hit game franchises Super Mario and the Legend of Zelda has been under pressure to branch out from its underperforming consoles and capitalize on the spread of smartphones and tablets by releasing games that can be played on any mobile device.

But Iwata was resolute that Nintendo would not take Mario mobile, just a day after Chinese computer maker Lenovo Group Ltd declared its mobile ambitions with a deal to buy Google Inc.’s Motorola handset division for $2.9-billion.

He said mobile devices had a role as marketing tools to help potential customers “understand the wonder of Nintendo games,” although those games would still need to be played on Nintendo consoles.

“I’m not pessimistic about video games. We are not going to change our essential business of offering integrated hardware and software platforms,” Iwata said.

He also said there would be a merging of handheld and home game console software architecture, suggesting that users would be able to download and play the same game across platforms in the future.

Rival Sony Corp is launching a similar cloud-based service this summer for its Playstation and handheld Playstation Vita consoles.

Nintendo’s shares fell after Iwata’s remarks, adding to the heavy pressure the stock has come under since the company announced earlier this month that it would post its third annual operating loss in a row.

The stock closed down 4.3 per cent at 12,325 yen after rallying as much as 7.5 per cent to 13,850 yen earlier in the session, when investors welcomed the company’s plan to buy back up to 125 billion yen ($1.22-billion) worth of its shares.

Iwata announced on Wednesday that he would take a 50 per cent pay cut for the next five months, while other board members would reduce their salaries by 20 per cent, after admitting the company had failed to convince customers of the merits of its Wii U console.

Nintendo cut its full-year sales forecast for the console to 2.8 million from 9 million on January 17. On Wednesday the company said its operating profit fell 6.9 per cent in the October-December quarter to 21.7 billion yen. It expects a 35 billion yen loss for the full year to end-March.

Iwata said Nintendo was aiming to make an operating profit next year, with the handheld 3DS console driving profits. The company also had a big enough warchest to sustain it through a few more years of losses with 966 billion yen of net cash at the end of December.

The CEO was vague about the details of the new health business, hinting that the device or service could be used “beyond the living room” unlike the sports and fitness games available for its Wii and Wii U consoles.

“I’m sure you’re thinking of Wii Fit, but this is not like anything we have made before,” Iwata told a briefing of analysts and reporters.

“Looking after your health requires effort and many people quit quite soon after starting something. But we, as an entertainment company, can help people get over the difficulty of continuing their efforts in a fun way.”

 
  • SNE-N
  • MSFT-Q
Live Discussion of SNE on StockTwits
More Discussion on SNE-N
Live Discussion of MSFT on StockTwits
More Discussion on MSFT-Q

More Related to this Story

Topics:

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories