In an interview with Nikkei, Nintendo president Satoru Iwata says they would be open to mergers or acquisitions as possible options in the near future. This is one of the reasons why they will be stepping up their share buybacks. He emphasizes that the company must abandon old assumptions about their business if they want to achieve success in new emerging markets.
“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 M&As [mergers and acquisitions] as an option. For this reason, we’ll step up share buybacks,” says Satoru Iwata.
Satoru Iwata insists that building up their cash reserves during their successful years is why the company is able to overcome failure. Former Hiroshi Yamauchi had stressed the importance of being conservative with their savings when things were going well.
“…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,” says Iwata.
Judging from Iwata’s comments, it sounds like Nintendo is willing to become more aggressive with how they spend their money in the future. It makes sense since you need to spend a little if you want to remain competitive in a rapidly changing world. Should Nintendo consider acquiring any companies or studios in the future? I would love to hear your comments below.