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What path now for Kimishima's Nintendo?

Nintendo's new CEO is a career businessman and banking veteran; can he put the company's creativity back on the path to sustainable profit?

No matter who Nintendo chose to replace Satoru Iwata following his tragic death at the beginning of July, it was going to be a divisive decision - not least because Iwata's own legacy is divisive. As a rare case of a creative, rather than a career businessman, being placed in charge of a company of this size, Iwata was at the helm for both the most extraordinary heights of Nintendo's success, the Wii and the DS, and the most damaging lows, the Wii U and the early months of the 3DS' botched launch. Might the former never have been achieved without a creative mind at the helm? Might the latter have been avoided with a more experienced businessman running things? We'll never know, but everyone who follows the company has an opinion, and despite almost universal warmth for Iwata as a person, consensus on his true legacy at the company is tough to come by.

Needless to say, then, Tatsumi Kimishima, the man announced today as the company's CEO, is a somewhat divisive choice. Although he seemingly had a good working relationship with Iwata, who placed him in charge of HR and made him managing director of Nintendo in 2013, he is in many regards the mirrored opposite of his predecessor as CEO. Where Iwata made his start by working on games with friends in a poky Akihabara apartment after classes at Japan's most elite technical university, going on to become one of the earliest employees of game developer HAL Labs once he graduated, Kimishima graduated from Hitotsubashi University (a Tokyo school best known as an elite commerce school for future business leaders) and went to work for Sanwa Bank, one of the world's largest and most profitable banks, for 27 years.

Kimishima is a suit, then, through and through. He even looks the part of the stern Japanese businessman; at 65, with a preference for steel-framed spectacles, it's not hard to imagine him turning down your application for a mortgage. He will almost certainly not be continuing the somewhat "cuddly", public-facing style of management preferred by Iwata, who used his background as a creative to great effect through hosting features like Iwata Asks (in which he interviewed developers of Nintendo's games and reminisced about his own experiences) and the company's live webcasts announcing new products and services. Kimishima, lacking development background, would be deeply out of place doing that kind of public-facing presentation, and is likely to treat the position more like a traditional CEO role - leaving the public-facing work to the firm's "creative fellow" Shigeru Miyamoto, and its "technical fellow" Genyo Takeda, who was formerly tipped as a possible candidate for the CEO's role.

"Kimishima, lacking development background, would be deeply out of place doing that kind of public-facing presentation, and is likely to treat the position more like a traditional CEO role"

That's not to say, however, that Kimishima doesn't have a lot of experience to recommend him to the position - and while it's unquestionably a bit of a shame to see the leadership of Nintendo pass into the hands of a career businessman rather than another creative, it's also easy to see why Nintendo's board chose him for the role, and indeed why Iwata himself may have anointed him as successor. Kimishima has been part of Nintendo for some 15 years, starting out as CFO of The Pokemon Company in 2000 before moving to the USA to run Pokemon USA the following year. The next 12 years of his career in Nintendo was largely focused on the US market, bringing to bear his considerable experience of doing business in the US; his 27 years at Sanwa Bank had largely been spent on postings to various financial centres in the United States. In 2002, the late Hiroshi Yamauchi appointed Kimishima as president of Nintendo of America; by 2006 he was CEO and chairman of Nintendo of America (his role as president was given to the more public-facing Reggie Fils-Aime) and he remained in this position of oversight of the company's US operations until Iwata appointed him as managing director of the parent company in 2013.

Thus, Kimishima has something beyond experience, gravitas and financial know-how to recommend him as Nintendo's new CEO; he has in-depth knowledge of the US market, perhaps unrivalled within the company. This arguably fills in the most damaging gap in the administration of Nintendo up to this point - the lack of experience, knowledge and understanding of markets outside Japan at the top of the company's management. The Japanese market is very different structurally, demographically and aesthetically to the United States, and different again from Europe; Nintendo has consistently demonstrated an ability to succeed in Japan (although the Wii U struggles somewhat even in its home territory, speaking to a deeper problem with the platform), but its success has ebbed and flowed much more dramatically in overseas territories, where the company's blinkered focus on Japan has often left it out of touch with trends such as online gaming, digital distribution and indie development, not to mention aggravating tension in the relationship between the company and third-party publishers.

"Kimishima has something beyond experience, gravitas and financial know-how to recommend him as Nintendo's new CEO; he has in-depth knowledge of the US market, perhaps unrivalled within the company"

While Kimishima may look every inch the traditional Japanese CEO, then, his tenure may be surprisingly progressive in terms of internationalisation for the company; comparisons with Sony CEO Kaz Hirai, who similarly spent many years working outside Japan and is attempting to apply the lessons of internationalisation to his company, will likely be made. Like Hirai, Kimishima is also joining a company facing a crisis and will be expected to make dramatic moves in order to ensure its future prosperity - moves which may upset both entrenched groups within the firm's management, and some of its most devoted and vocal fans.

Nintendo needs to transition away from its present model and find a new one that works for the company. Just about everyone accepts that the Wii U has failed despite being a solid, innovative console with some great games, while the 3DS, although absolutely a success, will certainly never rival the installed base of its predecessor, the DS. Even as the company's creative engines fire on all cylinders, turning out games of extraordinary quality on a pretty regular basis, its faltering platform sales mean that the ground is shrinking underneath it. Calls for the firm to "do a Sega" and abandon hardware platforms in favour of a switch to third-party publishing or working on mobile and tablet games are excessively simplistic and likely misplaced; but Kimishima's has not been appointed to oversee business-as-usual, but rather to reassure investors that a stable hand is on the tiller while Nintendo makes a major and perhaps choppy course correction.

"Which direction Kimishima turns the company remains to be seen, but it's deeply unlikely that he will stray far from the strategy laid out by Iwata"

Which direction Kimishima turns the company remains to be seen, but it's deeply unlikely that he will stray far from the strategy laid out by Iwata - although we have yet to see what exactly that strategy will consist in. It's also worth noting that the granting of newly created senior positions to Miyamoto and Takeda strongly suggests the establishment of a triumvirate of sorts, with the company's leadership increasingly being taken on by a committee of its most senior and respected figures, rather than being decided (in theory or in practice) by the CEO. Indeed, one of Kimishima's key roles may actually be to absorb some of the ire of Nintendo fans who feel betrayed by decisions to move into new product sectors like mobile games or non-game products, allowing Takeda and Miyamoto to remain unstained by such criticism.

As to the nature of Nintendo's path from here, a key bellwether will be what comes of the firm's deal with DeNA, which was set in place under Iwata's tenure but clearly had buy-in from the company's senior staff - including Kimishima, Miyamoto and Takeda. Takeda's promotion and his increasing public prominence likely draws a line under speculation that the company will leave the hardware space, so the partnership with DeNA will function alongside its future hardware efforts; how exactly those things interact and how they can be made to appeal to a global audience, not just the Japanese market, are key questions that will define Nintendo's future under Kimishima.

The reaction in the consumer press and especially in the comment threads of consumer sites to this appointment is a little predictable; "little-known former banker replaces a beloved former developer at the head of Nintendo" doesn't play well to the public gallery. Kimishima, however, comes with a wealth of exactly the kind of experience Nintendo needs right now, with a roadmap (or at least a partial roadmap) established by Iwata before his untimely death, and with the support of Miyamoto and Takeda, two of the industry's best creative minds. No doubt there are hard decisions on the road ahead, but this is an appointment worth being cautiously optimistic about.

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Latest comments (9)

Steve Peterson Marketing Consultant 3 years ago
Good analysis, Rob. It seems pretty clear that Kimishima-san has not been chosen to make bold new changes in direction. I think we should expect steady execution of the strategy that was already decided upon collectively. If things aren't going well at some point, changes will probably be decided collectively by the executive team. It will be interesting to see how the holiday season does fro Nintendo, and what they say about it in the early part of next year. Also, we should see the first mobile games before the end of the year, and what those are like (and how they are received) will be informative as to Nintendo's future.
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No doubt there are hard decisions on the road ahead, but this is an appointment worth being cautiously optimistic about.

why is putting a banker in charge "cautiously optimistic" I care about new and innovative games, I dont care about Nintendo's PE ratio

Edited 1 times. Last edit by Todd Weidner on 14th September 2015 7:08pm

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Alan Blighe Research Associate 3 years ago
Todd, I think its unfair to characterise him as a banker. He's done a lot since then. And while you or I may not care about Nintendo's PE ratio, its shareholders do. Nintendo need to keep them on board, or else they could easily force radical changes in the company's direction.

I get the sense of what you're saying, but after a few years of failure (perceived or otherwise) it may be important to steady the ship for a while.
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Show all comments (9)
Adam Campbell Game Production Manager, Azoomee3 years ago
His resume speaks for itself.
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And while you or I may not care about Nintendo's PE ratio, its shareholders do. Nintendo need to keep them on board,
I think its more important they keep their customers on board. Everything else comes from that..

Edited 4 times. Last edit by Todd Weidner on 15th September 2015 4:23pm

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Ben Link Video Game Enthusiast and Graphic Artist 3 years ago
I love this decision. Put the business savy man Kimishima in charge of President duties, and allow Miyamoto and Takeda to stay focused on creating games. How is Miyamoto suppose to create when he is running the company?
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Jeff Kleist Writer, Marketing, Licensing 3 years ago
@todd

You can't support a console on the customers they have. They need lots and lots of new ones willing to buy third party games in large numbers, or to eject from hardware
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They need lots and lots of new ones willing to buy third party games in large numbers,
.... and you think a suit is going to inspire millions of new players?

Edited 3 times. Last edit by Todd Weidner on 16th September 2015 4:35am

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Jeff Kleist Writer, Marketing, Licensing 3 years ago
@todd

No I don't. I think Nintendo is going to continue to slowly bleed out until such time as they either accept the nigh-inevitable, and go third party, preferably while they can still write their own ticket with Microsoft and Sony, or are acquired by Disney, Apple, or sound other giant conglomerate. This guy has a record of being against some of the bad decisions, and unlike the other Japanese suits has extensive experience living in the west.

i hope he can slow the bleeding. Long enough for more educated heads to move into positions of influence
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