Good news for those who work at Nintendo: You're not going to get laid off anytime soon. At least, that's the news coming from Nintendo president Satoru Iwata, who shot down the idea that Nintendo should perform a corporate restructuring in the wake of two years' worth of operating losses.
The bad news? The company is still in a bit of a bind with its latest console. In January, Nintendo cut sales estimates for the Wii U from 5.5 million units to 4 million units for its current fiscal year.
Worse, the console is still struggling to acquire a flagship title that could encourage customers to give the Wii U more of a fighting chance. It might be too late once games like Mario Kart 8 and Super Smash Brothers square off against next-gen console offerings from Microsoft and Sony.
"I do not think we should become too pessimistic about the current situation with the Wii U," Iwata said in an interview with CNBC last month. "I think we should pour that time and energy into our [development] efforts, so eventually we can encourage third-party [publishers] to want to support Nintendo."
According to Iwata, Nintendo's operating losses are mostly the result of the exchange rate between the yen and the US dollar — "appreciation of the yen against the dollar generally negatively affects Nintendo's financial results," Iwata commented at the company's 73rd Annual General Meeting of Shareholders late last month.
He also added that Nintendo has had to scale up its head count due to "increasingly complex and advanced product development," which forced the company to incur additional costs. While sacking a number of its personnel might benefit Nintendo in the short term and make investors do a Mario-esque leap into the air, Iwata doesn't believe that it's the ideal solution for giving Nintendo's share price a mushroom-style boost.
"If we reduce the number of employees for better short-term financial results, however, employee morale will decrease, and I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world," Iwata said.
As for Nintendo's strategy going forward, Iwata was brief: "Our current policy is to achieve favorable results by continuously cutting unnecessary expenses and increasing business efficiency."
One example? Research and development into the tricky Wii Vitality Sensor. Remember that head-scratching accessory that Iwata said could "let people unwind or maybe even make it easier to fall asleep" when Nintendo first teased the device's existence at E3 2009? In theory, the device could be used to take a reading of one's pulse and analyse a Wii user's stress level. In practice, Nintendo wasn't able to achieve a perfect success rate for the device throughout its testing process.
"The Wii Vitality Sensor is an interesting device, and we did various experiments to see what is possible when it was combined with a video game. But, as a result, we have not been able to launch it as a commercial product because we could not get it to work as we expected and it was of narrower application than we had originally thought," Iwata said.