On Saturday, Nintendo (TSE:7974,OTCMKTS:NTDOY) President and CEO Satoru Iwata passed away at the age of 55 due to a bile duct growth. Appointed in 2002, Iwata was the company’s fourth president, and the first from outside of the founding Yamauchi family. He guided Nintendo through a period of bright highlights, including the launch of the Nintendo DS and the Wii console.
Interestingly, Iwata’s passing coincides with the beginning of a new era for Nintendo. The company is in the midst of introducing mobile gaming for smartphones and tablets — a break from its previous consoles-only policy. Whoever takes over for Iwata will be responsible for navigating this delicate transition into the mobile app market, and for determining the future of the beloved gaming company.
Mobile future for Nintendo
Nintendo revealed plans to break from its consoles-only policy in March, when it partnered with Japanese mobile gaming company DeNA (TSE:2432) to create applications based on Nintendo characters for non-Nintendo platforms. According to a press release, the companies will collaborate to create new gaming apps based on Nintendo’s intellectual property in order to extend the company’s reach into the smartphone market. These apps will be original games optimized for smart device functionality, which illustrates Nintendo’s commitment to expanding into the mobile app industry.
Iwata was confident that this transition would spell great things for Nintendo, and investors seem to agree. Forbes reported that the company’s share price has risen over 50 percent since the start of the year.
However, news of Iwata’s death may have shaken confidence in the Nintendo’s future. According to The Wall Street Journal, DeNA’s share price fell 3.7 percent in trading on Monday. Meanwhile, MarketWatch reported a small decrease in Nintendo’s share price immediately following the news of Iwata’s death; ultimately, however, its share price stayed in line with the overall market to increase by 1.5 percent.
Precipice of change
Nintendo has not yet decided who will succeed Iwata. In the interim, Shigeru Miyamoto, the creator of Mario, Donkey Kong and Zelda, and Genyo Takedo will maintain their roles as representative directors.
However, this news hasn’t dampened speculation about who will take the helm at Nintendo, and Miyamoto and Takeda appear to be the two likeliest candidates for the position. The Wall Street Journal quotes SMBC Nikko Securities analyst Eiji Maeda as stating that “a leader must have good understanding of Nintendo culture, engineering skills and corporate management, not to mention charisma in leading talented developers. If we consider that, an outsider is pretty unlikely, and the strongest candidates at this point would be Mr. Takeda and Mr. Miyamoto.”
Whoever ultimately takes over as Nintendo’s president will have an enormous influence over the its expansion into the app market. It remains to be seen whether investors will have as much faith in this new leadership as they did in Iwata’s.
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.
