As the new sheriff at Nintendo, Satoru Iwata appeared to be Hiroshi Yamauchi’s opposite—a manager without any likely guarantee that wrath or guilt would get the job done. Instead, he would proffer his design and product expertise, as well as marketing and people skills, potentially winning a staff buy-in and sustained loyalty on recognition that he was technologically appreciative of the amazing work of the rank and file. In some ways, the struggles of HAL Laboratory (where he had served as president of the software development group) had also prepared him for Nintendo’s financial needs. “I was appointed [HAL] president in order to help reconstruct it. At that time, I was completely unable to read financial statements. I was a game developer, so I was forced to study the financial aspects of running a company,” Iwata said in a later interview.
The core of that experience, though, was in rolling up his sleeves and designing software, and later figuring out what platform could make the results viable. “Since I myself come from a development background, I think I understand the minds of developers better than most executives. When I am discussing things with the developers here, I am not just a bystander.”
Iwata later admitted after a few years at the helm that he would have had no chance of succeeding by imitating the older man, Yamauchi. Rather, he tried to make his relative youth, lack of company baggage, and candor assets for the firm, while elevating the profiles and self-esteem of those working for him, even if they were older or had more Nintendo experience, which was almost always the case.
The Board
Iwata initially reported to Vice President Atsushi Asada, while an executive committee assisting him included Shigeru Miyamoto, Genyo Takeda, Yoshihiro Mori, and Shinji Hatano. His first job at Nintendo had been coordinating Miyamoto’s software development group with Takeda’s hardware division as head of the Corporate Planning Division, and now that brief had expanded and become essential to the company’s revival plan. Takeda had led Nintendo’s Research & Development since 1980, and was responsible for its many technological advances, as well as shepherding the production of its last two TV-linked consoles, the GameCube and Nintendo 64.
A major creative voice within the company since its laser–shooting range era in the 1970s and its first video games, Takeda became a Nintendo director in 2000, but had spent recent years talking about hansei, or “reflective regret,” for the sales failures of its hardware. As Nintendo prepared to bring his GameCube to market at nearly the same time as Microsoft’s Xbox, plans were already under way for its next generation of consoles, as was standard development policy. Iwata’s background as a game creator was sound training to understand the environment facing the GameCube and the mind-set of software supplier firms, which had seen sales fall as the gaming population stagnated and had become increasingly gun-shy about resource commitment. The number of Japanese gamers had declined by about 20 percent, meaning outside software firms faced a tougher time recouping their substantial investment and thus had become more selective in their allegiance.
Without such advance development, a new console such as the GameCube would be short of games, creating a deadly spiral if its sales did not quickly merit third-party software production. Indeed, that worst-case scenario was starting to brew with the new console, and that designer flight would torpedo its sales potential. Still, as Iwata took the helm in June 2002, he boldly predicted total sales of 50 million GameCube consoles by 2005.
That vote of confidence for Nintendo’s latest Cadillac, though, stretched the imagination, as the PS2 had only sold 30 million in its first two years, and Sony expected just another 20 million consoles in the third. However, in a way that Yamauchi could no longer impart convincingly, Iwata’s new role also included championing and selling products, whether great or not, honing this skill as GameCube pitchman at the E3 game summit in Los Angeles in 2001.
Iwata continued to tout the “Nintendo difference” compared to rivals Sony and Microsoft, showing games, including “Luigi’s Mansion,” “Metroid Prime,” and Miyamoto’s latest “Pikmin” edition. Analysts, though, said the company would need to find software reinforcements by the Christmas holiday season or it would not be a happy new year, and that call proved correct. However, there were also missteps. In the same role at the 2003 E3 event, Iwata touted a four-way version of retro favorite “Pac Man,” which some observers said was stupefying, as it underscored every preconception of Nintendo losing its way and grappling for old standards, while the rest of the now $27 billion industry focused on adults.
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