Satoru Iwata Slashes Salary; Nintendo Struggles to Find Balance in Trying Times
Nintendo's prominent leader Satoru Iwata announced today that he would slash his own salary in an effort to prove his dedication to rescuing the company from its recent issues. Nintendo suffered throughout the last nine months, settling the fiscal period that ended in December with a definite loss. While Nintendo at first projected gains of over $900 million dollars, Iwata's announcement came alongside a revealed third quarter loss of nearly $15 million dollars. This is a stark difference, but comes as no surprise in light of the struggling Wii U.
It's not unusual for Iwata to take measures that other CEO's might not. Iwata also announced his desire to harness smart devices and other electronics for Nintendo. In the third quarter briefing for investors, he outlined his plans to interact with customers and clients of Nintendo via the devices. Surprisingly, Iwata drew a very concrete line between interacting and actually releasing games for the handheld devices. While the briefing was cryptic at times, one thing was clear; Nintendo has no plans to release its games to the smartphone or tablet market any time soon.
Many people say that releasing Nintendo’s software assets for smart devices would expand our business. However, we believe that we cannot show our strength as an integrated hardware-software business in this field, and therefore it would difficult to continue the same scale of business in the medium- to long term.
- Satoru Iwata
Iwata also announced a new platform business--a business that isn't planned to be anything like their current offerings. Exactly what this meant was not revealed in the briefing. A diagram as follows was presented within the document as a way of loosely describing their concept. Theories about what the actual concept would look like in operation abound. "Redefining the definition of video games" is rather cryptic. It's difficult to decide whether Nintendo intends to branch further into social media, or whether social campaigns will act as an adjunct to their current offerings. It's also possible that non-game offerings will somehow be worked into their marketing strategy in a much larger manner.
The briefing also made clear that Iwata and Nintendo wish to hold firm to their traditional goal of innovating ways to improve people's "QOL"--simply put, Quality of Life.
Iwata also made clear that he understands why Wii U has failed--simply put, Nintendo hasn't been able to make the device appealing enough to a wide enough user base to stay competitive. Complaints about the device have been legitimate; it's not exactly the most comfortable device to hold, and the design itself isn't exceptionally innovative. Additionally, a weak entry onto the market has scared off many of the device's publishers. Lack of publishers leads to a direct lack of games--and a lack of games means that fans of Nintendo lose interest or fail to gain interest in the first place. Nintendo's hopes for the device's improvement are outlined in the image right of this text.
But will the improvements be enough to save the Wii U from becoming obsolete and forgotten? It's difficult to say for sure. This isn't the first time that Nintendo has struggled. The company has a history of overcoming struggles. What started out as the Nintendo Playing Card Company, Limited in the early 1900s has now become one of the biggest players in the video game and entertainment industry. However, marketing video games today has changed drastically in comparison to only a decade ago. Nintendo's focus on improving what many feel is a poor product are admirable, but may be short sighted.
As for Iwata's decision to cut his salary in half because the company is struggling, it's a decision that is not entirely unheard of overseas. While the decision would be surprising to those living in the Western world, Japan remains a proud, responsible culture when it comes to the business world.
Iwata's decision to take a pay cut is his way of admitting personal responsibility for the company's failure, and is also a way to maintain his honor. Even though western businessmen may think it odd, it is an honorable thing for Iwata to do. Without the pay cut, it's feasible that layoffs would have occured or cutbacks would have taken place elsehwhere. But exactly what does Iwata's "cut" consist of?
Details are difficult to source, but this article from 2010 suggests that the video game Don made $770,000 per year, quite a bit less than many would expect. Without a doubt, the cut amounts to several thousand dollars at its minimum. And while Iwata certainly won't need to worry about putting food on the table, it's a big cut for any businessperson to make.
With the right focus, Nintendo stands a very good chance of walking out of the slump on an even keel. It is difficult to predict just how innovative integrating with fans online will be. Likewise, it is difficult to determine if continuing to fix that which is broke is truly the right choice for Nintendo. However, taking a pay cut remains commendable. Nintendo will have to seriously review their strategies to make a comeback, as marketing has changed so drastically. No longer the locked-down, rigid process it once was, it now requires heavy attention to customers and the product fan base--and even the direct involvement of fans in development.