Could Iwata’s days be numbered?

Infendo

The evidence is fairly obvious- Nintendo’s change in business strategy under the leadership of CEO and President, Satoru Iwata, brought the company back from the depths. Back in the GameCube days of the early 2000’s, many had ultimately consigned Nintendo to the same fate as Sega. And, let’s face it, some of us didn’t know what the hell to think after seeing the initial DS prototype or hearing Reggie utter the name “Wii” for the first time.

But, since his inauguration in 2002, the 51 year-old former HAL Laboratories president and programmer has consistently piloted Nintendo through its most innovative and financially successful period, overseeing the release of the two best-selling platforms in the company’s history. The Nintendo DS has sold almost 150 million units and stands ready to eclipse the Playstation 2 as the highest selling video game console of all time. Hell, there are more Nintendo DS’es out there than there are iPhones (true story). And the breakaway success of the Wii and motion-based gaming proved a truly disruptive and emergent force which expanded the video game market in ways that even Sony and Microsoft couldn’t ignore for too long.

Since Iwata got his hands on the steering wheel, Nintendo has seen record profits, unanticipatedly high sales, and a soaring stock that increased seven times in just four short years. At times, the Wii and DS platforms have boasted double the total market share of their competitors combined, and have hosted some of the best-selling video games in the history of gaming.

But the Nintendo of today is not the Nintendo of several years ago.

The company’s stock has fallen almost 60 points since its all time high in late 2007 and is now worth only slightly more than double what it was when Iwata first took the helm. For the past two years, sales and profits have plummeted as well, culminating with the Big N reporting it’s first ever quarterly operating loss and a 66% decrease in profits in the last fiscal year alone- the lowest performance Ninty has seen since before it released the original NES. Couple that with the stunted and unimpressive launch of the 3DS, a several month-long game drought across all of its consoles, and a decline in investor confidence so serious that stock actually dropped when Nintendo unveiled the much anticipated Wii U at this year’s E3.

To make things worse, Nintendo’s recent 3DS price slash has resulted in the first ever instance of the Kyoto-based gaming titan selling a product at a loss. And the recent announcement of a confusing and bulky circle-pad add-on peripheral makes it seem that even Nintendo itself has lost faith in its own products. A quick check of any video game message boards across the web reveals a good deal of fan sentiment echoing this growing uncertainty. Many Nintendo fans have been voicing their skepticism and outright displeasure with the current state of the company. Fan-spearheaded campaigns to localize coveted foreign games seem to have fallen on deaf ears. And the industry at large has accused Nintendo and even Iwata himself of being out of touch with respect to the burgeoning mobile and indie scenes. Iwata’s keynote address at this year’s Game Developers Conference, despite it’s relevance, betrayed Nintendo’s fear of the iPhone and Android platforms. And let’s not even get started on Nintendo’s woefully inadequate implementation of online services and digital distribution.

The general impression (be it true or not) is that Nintendo has seemingly gone from a brazen Fox McCloud, expertly blasting and barrel-rolling his way through an overwhelming onslaught of enemy ships, to an incompetent and obsolete Slippy Toad, unable to shake even the simplest of threats off of his six.

Could Iwata, who has recently taken a 50% pay cut and issued a very embarrassing apology to his company’s most loyal fans, become a corporate scapegoat? Could Nintendo’s struggles reach a point where his resignation or termination would be viewed as a necessary move to reinvigorate investor faith and reboot the company’s current image?

As gamers we know that hitting the reset button doesn’t always work. Sometimes you need to blow into the cartridge to get things running the way you want. I doubt something as simple as a change in leadership would make as big of a difference as many would like it to. Frankly, I think Iwata has done exponentially more good than bad for Nintendo and I’d like to see him stay- but convincing investors of that may not be so easy. As fans we may have to wait a bit longer for that game we want, while raising our collective eyebrows at the eShop and grumbling under our breaths about how much we paid for a console which we could have waited several months to buy at a discount. But to someone who has thousands or millions of dollars at stake in the company, chances are that they’re not primarily motivated by how much fun they are being provided with at the moment or in the future. In the short term, some of Nintendo’s board members could conclude that creating the illusion of a big change may prove more valuable than the actual implementation of the real thing, at least as far as wrangling disenfranchised investors is concerned.

But despite recent performance and increasing outside criticism, Nintendo still holds its own in the industry. It still dominates with respect to hardware market share in both the home console and handheld markets. In fact, if you include handheld sales, Nintendo has consistently sold more consoles worldwide than any of its competitors year after year since the release of the Famicom, with the only exception of the year 2000. And, of course, the games speak for themselves- they always have and will most likely continue to do so. A quick look at the list of the top 50 best selling video games of all time reveals that the top 17 games are ALL Nintendo games. In fact, of the 50 games on that list, a whopping 34 are Nintendo first and second party titles. The second place company on that list is Sony Computer Entertainment… with five games… the highest ranking one at slot #25.  The difference is practically tangible.

But sometimes in business it doesn’t matter how much success you’ve achieved, especially if the last thing your employer remembers you for is failure. Remember Gunpei Yokoi.

What say you, readers? Is the Era of Iwata nearing its end or is it just beginning?