Nintendo’s Presidency Past and Future

videogametriviaWhether summarizing the company’s financial situation and recent releases to investors, delivering news about new games “directly” to fans, or punching his American subordinate[1], Nintendo’s president, Satoru Iwata, has become the face of many of their news releases. So who is this man, and how did he rise to the position he is in today? And is he suited to remain in his position in this time of flux in the gaming market?

As perhaps may be appropriate for a gaming company, Iwata started as a game programmer. He majored in Computer Science in college, and as soon as he graduated in 1982 he joined HAL Laboratories, which was so named because they wanted to be “one step ahead of IBM.” HAL is a subsidiary of Nintendo that is best known today for making Kirby games. There Iwata worked on a wide variety of games including Earthbound[2] and Balloon Fight[3]. A combination of his programming and people-management skills allowed Earthbound to go from entirely non-functional to complete in only one year,[4] and his advice to use floating-point numbers rather than integers helped make the underwater stages in Super Mario Brothers play smoothly. His programming skills, intuition about game design and leadership ability enabled him to move up through the ranks, and in 1993 he was promoted to president of HAL. Unfortunately, by the time he became president the company had almost gone out of business. He turned the company around, and today HAL is a respected Nintendo studio.

While he was rising through the ranks of HAL, Iwata was made a board member of Creatures, another Nintendo-affiliated game development studio. He had experience working with Creatures, since it was involved with Earthbound. Its best known project, however, is Pokémon. As a board member of Creatures, he ended up being involved with editing Pokémon Red and Blue in order to allow for the different English script, the development of Pokémon Stadium, and the development of Pokémon Gold and Silver. His assistance helped make up for the fact that Game Freak, the primary developer of Pokémon, was chronically understaffed at the time.[5] In part due to successes such as these, in 2000 he was moved from HAL Laboratories to Nintendo itself as head of the Corporate Planning Division. There he helped set up The Pokémon Company to help deal with Pokémon licensing. His projects helped increase Nintendo’s profits 41% between 2000 and 2001, and led the then-president of Nintendo, Hiroshi Yamauchi, to select Iwata as his successor.[6] In doing so, Nintendo moved away from being the Yamauchi family company, as Iwata is the first president of Nintendo to not be part of that family.

Iwata’s time at the top has been turbulent. Only a few years after his promotion, Nintendo reached new heights with the Wii and the DS. The Wii outsold even the Nintendo Entertainment System, which had far less competition. However, this peak was followed by a precipitous fall, with Nintendo posting an annual loss for the first time ever in 2012,[7] an event from which the company has still not recovered. This has led some people to believe that Iwata is no longer suitable to be Nintendo’s president. For instance, many observers, including some of Nintendo’s investors, are of the opinion that Nintendo should start making games for other platforms, such as smart phones. Nintendo has strongly resisted doing so, and rumor has it that Iwata’s personal objections, not a company-wide consensus, are the reason for the resistance. Another reason some people have called for him to resign is a perception that he may be overstretching himself. In 2013, he took on the position of CEO of Nintendo of America in addition to his duties as president of Nintendo’s main Japanese branch. This year, he missed the Electronic Entertainment Expo, the largest video game trade show, as well as Nintendo’s annual meeting of shareholders due to a “growth in [his] bile duct”[8]. Some worry that this health problem was caused in part by him working so hard for the company. Nintendo’s recent woes, his perceived conservative outlook on mobile and PC gaming, and his health problems have all led to a class of people saying it is time for Iwata to move on to another role.

On the other hand, one of the strongest arguments Iwata supporters have is his overall humility and devotion to gaming rather than profit. After a poor 3DS launch in 2011 and a drop in profits in 2014, Iwata took a 50% pay cut,[9] despite the fact that his base salary was a relatively modest $770,000, as opposed to, say, the president of Square Enix, whose base salary was closer to $1.54 million.[10] Unlike most cost-cutters, though, he focuses on quality rather than quick iteration. When the development of The Legend of Zelda: Twilight Princess was in trouble as its release date approached, he offered the team a one-year extension. This is in stark contrast to the previous console Zelda title, Wind Waker, which was developed mostly under his predecessor. The game was released in a noticeably unfinished state – data left over on the disk indicates that as many as three more dungeons were planned, which would have almost doubled the main part of the game. Even when no money is at stake, he focuses on fun rather than convenience. He ended up doing squats in front of the entire development team of WarioWare: Smooth Moves when they showed their demo to him, despite the fact that he could have moved just the Wii Remote rather than his whole body.[11] Similarly, when shown a Gameboy Advance game that could be controlled by rotating the system, he proceeded to put the game on a spinning office chair just to see what would happen.[12] He also tries to keep an eye on how game development is happening personally, through having lunch with Nintendo’s senior developers once a week.[13] Clearly, with Iwata at the helm, Nintendo will always focus on delivering a quality, fun experience, even if it comes at the cost of lowering profits.

The arguments for and against keeping Iwata as president in many ways mirror the possible paths Nintendo could follow as it moves into the future. On one hand, it could follow the rest of the gaming industry. Like its rivals Sony and Microsoft, it could make a powerful system to lure third parties to make high cost, graphically advanced titles, and it could follow the lead of Square Enix and Sega and sell titles on smart phones and the like to cushion the blows when a big game does not do well. This risks being outcompeted or being forced into spending everything on a big gamble. On the other hand, Nintendo could continue doing what it did successfully with the Wii (and not successfully so far with the Wii U) – make its own unique games, mostly ignore what other companies are doing, and keep its venerable back catalog locked to Nintendo systems to convince uncertain gamers to buy Nintendo systems. This risks Nintendo becoming completely irrelevant to the gaming industry as a whole, locked into a tiny niche of nostalgia that cannot last indefinitely.

[1] E3 2014 Nintendo Digital Event
[2] http://iwataasks.nintendo.com/interviews/#/wii/special_edition_interview/0/0
[3] http://iwataasks.nintendo.com/interviews/#/wii/nsmb/1/0
[4] http://kamedani.tumblr.com/post/45700864819/mother-2-re-release-discussion-part-1
[5] http://iwataasks.nintendo.com/interviews/#/ds/pokemon/0/2
[6] http://www.ign.com/articles/2004/07/16/profile-satoru-iwata
[7] http://www.dailytech.com/Nintendo+Revenue+Plummets+Posts+Annual+Loss+for+the+First+Time/article24556.htm
[8] http://www.nintendo.co.jp/ir/en/stock/meeting/140627/index.html
[9] http://nintendoeverything.com/satoru-iwata-will-take-a-50-pay-cut/
[10] http://gamepolitics.com/2010/06/29/satoru-iwata039s-modest-salary#.U_LPcTB1yM8
[11] http://iwataasks.nintendo.com/interviews/#/wii/warioware_smooth_moves/0/1
[12] http://iwataasks.nintendo.com/interviews/#/wii/warioware_smooth_moves/0/0
[13] http://iwataasks.nintendo.com/interviews/#/wii/zelda-skyward-sword/7/1