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Nintendo's Iwata On The Hot Seat

by Matthew Kato on Jul 29, 2011 at 06:24 AM

I'm not a Nintendo shareholder, so I have no stake in the matter, nor am I a Wall Street expert. However, these two segments must be closely watching the performance of Nintendo president and CEO Satoru Iwata. Even with the best-selling Wii console, a history of killer franchises, and plenty of products around the corner, I think that Iwata's on the hot seat – and if things don't go right when the Wii U launches in late 2012, I think he will be asked to step down.

When the Wii was flying high, it looked like no one could stop Nintendo, but even that can have its perils. When Wii sales didn't match its year-upon-year figures Nintendo's stock price dropped. Although it may seem unrealistic to think that the Wii could continue to sell at such a breakneck pace, some of the fault has to go to Nintendo for not supporting the system enough – and the console itself from being robust enough – to keep it from being more than a passing fad with consumers.

Nintendo's stock price also tumbled when the Wii U was announced at E3, and just recently with the announcement of the 3DS price drop. If your own shareholders are not confident after you come out of E3 with a new console and an exciting, consumer-friendly price drop, then something is definitely wrong. Despite the boost in 3DS sales the price cut could create, Nintendo is having to take a bath on each handheld it sells. The endeavor is a calculated gamble that shareholders aren't initially excited about.

And then there is Iwata's own admissions that he could have presented the debut of the Wii U better by showing the console itself instead of just the controller, as well as his and the company's rethinking on Nintendo's heavy handed online strategy and relationship with third-parties. While Iwata's candor and willingness to change the company's direction is good, I wonder if the hole he and Nintendo have dug for themselves is too deep. Iwata knows something is amiss, as he's just agreed to take a pay cut.

Of course, Iwata is a very successful executive who has deservedly built up a lot of equity at Nintendo and around the industry for his guidance of the company. There is also the fact that Nintendo is a Japanese company, and there are numerous cultural nuances to take into account other than just Nintendo's stock price that could protect Iwata.

The next year will be very interesting to watch. The Japanese are stereotypically known for their long-term thinking, but in this global business climate and the myriad pressures and questions facing Nintendo and its products, Nintendo and its shareholders might not wait for Iwata to right the ship.