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Let's Not Get Too Excited About Nintendo's 'Mergers and Acquisitions'

Illustration for article titled Lets Not Get Too Excited About Nintendos Mergers and Acquisitions

In the past, major video game companies like Square and Enix merged. It's a big deal when something like that happens! Nintendo president Satoru Iwata recently mentioned "M&A" (aka mergers and acquisitions), setting off speculation around the internet. But what does he mean? It's not yet clear—he could just be talking about licensing Nintendo characters.

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Recently, Nintendo's boss was interviewed by respected Japanese newspaper Nikkei. Iwata mentioned "M&A" in one particular exchange. Here's how the Nikkei's English language page translated the exchange:

We'll change the way we sell products, by managing customer information via the Internet. We'll offer discounts to steady, regular customers. We'll cultivate emerging markets and launch new businesses in health and other areas. In an emerging country, you can expand the user base only after you offer a product line different from advanced economies in pricing.

We should abandon old assumptions about our businesses. We are considering M&As as an option. For this reason, we'll step up share buybacks.

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This set off a flurry of speculation among English language video game sites. This is interesting and all, but what exactly is Iwata banging on about? The answer is far more nuanced than an initial read may suggest.

In the Japanese version of the Nikkei, Iwata said, in part, "M&A(合併・買収)の可能性を否定しない." Technically, that means: "I will not rule out M&A." In the quote, the paper explains "M&A" in Japanese: "M" is "gappei" (合併) or "merging/consolidating" and "A" refers to "baishuu" (買収) or "buying/purchasing." The Nikkei clearly defined the English term M&A for its Japanese readers.

What's more, Nikkei's Japanese edition states that Nintendo is thinking about using its own stock reserves for M&A (保有する自己株式をM&Aに活用する考えという).

However, that original Japanese Nikkei article is titled, "Nintendo's President: 'I Won't Rule Out' the M&A of the Character Business" (任天堂社長、キャラクタービジネスのM&A「否定しない」). The paper clearly says "Character Business" (キャラクタービジネス), which we can take to mean character licensing.

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For example, Iwata is quoted as saying, "The possibility of Mario smartphone wallpapers and stamps are not off the table." In another Japanese article published by Nikkei from the same interview, Iwata talks more about expanding the licensing of Nintendo characters for things like candy prizes and children's clothing. Here's Iwata: "We need to be more flexible in considering such things we previously said we wouldn't do."

Anyone who lives in Japan will know that Nintendo characters are already licensed out for a bunch of products. For example, there has been Mario shampoo and Kirby chewing gum, among many other products.

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It certainly sounds like Iwata is using "M&A" to refer to expansion of its character licensing. Or maybe, Nintendo plans on buying, and this is speculation on my part, companies to expand its branding through clothes, toys, and possibly smartphones. As the Nikkei noted, the Nintendo president didn't offer specific details, and Nintendo wouldn't offer specifics when we asked them for more information.

One thing that still seems unlikely is that Nintendo is seriously considering a merger on the scale of Square and Enix, or anything so dramatic.

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任天堂社長、キャラクタービジネスのM&A「否定しない」[Nikkei]

任天堂、従来型ビジネスを維持 健康テーマに新事業も [Nikkei]

任天堂、新興国に廉価版 「M&A、選択肢に」 岩田社長に聞く [Nikkei]

Nintendo chief: low-price games in emerging markets, M&A an option [Nikkei Asian Review]

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To contact the author of this post, write to bashcraftATkotaku.com or find him on Twitter @Brian_Ashcraft.

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DISCUSSION

Kevroeques
Kevroeques

Just gonna stir the pot here- In my opinion, there was nothing worse for Squaresoft than merging with Enix. Enix still holds strong, and its games are pretty much as they always were (although I often look at games like Valkyrie Profile, Actraiser and Soul Blazer, and wonder where these types of epic, smaller series games went), but the Square side of it has suffered ever since. It's like they fired all of the teams who brought the creative renaissance to the end of the PS1 era and the very beginning of the PS2 era, what with the myriad of different franchises, great one-off games, experimental titles and what have you- all were completely unique, and all were hits.

What people fail to understand is that if Nintendo were to merge with Sony or the like, they would cease to be what they are for one huge reason: control over their assets. Nintendo would not be able to keep its production size if it became part of another company, meaning creative talent would probably be curbed. Also, they would likely no longer be able to put as much time as they wanted into polishing games before release due to deadlines being dictated by a corporation that likely doesn't fully understand what it is they do. We all tend to forget that Nintendo's games, whether they be huge key franchises or smaller titles, have a very dedicated system of debugging and finishing that set them apart from many other games, and that's why they usually take forever to come out- if they lose these things, they lose what makes them a special game developer. Lastly, if improper usage of characters happens, they can easily become forgettable, or end up in horrible situations (think Smash Bros vs PS All Stars).

Nintendo, for better or worse, is a special company. They do their own thing, and they do it exactly the way they want to. Sometimes it works out, and the results are phenomenal. Sometimes, it flounders, and the results are bad, but often made much worse by anti-fans and overcooked speculation (I have no love for the Wii U, but it is playable, the controller works great, and the games are fun- people would have you believe that re-released the original monochrome Gameboy as their current console). When it works out, everybody is happy, the market rejoices, and new things get invented for or implemented to gaming as a whole. They set standards and have applied almost every piece of tech and method of play to gaming , correctly, for the first time, and the entire market almost uses them as a barometer and uses the tech after they engineer and introduce it. So why is it that when they fuck up once, everybody gets on them like an angry wife who wants a divorce suddenly? I'm getting tired of gaming becoming more of a couch-politician and wannabe stock trader thing than it is a thing for gamers. Y'all are crazy.