Shareholder pushes Nintendo to join mobile gaming race

HONG KONG Wed Feb 26, 2014 11:55am GMT

A logo of Nintendo Co is seen on the company's Wii U game console at the company headquarters in Kyoto, western Japan January 7, 2013. REUTERS/Yuriko Nakao

A logo of Nintendo Co is seen on the company's Wii U game console at the company headquarters in Kyoto, western Japan January 7, 2013.

Credit: Reuters/Yuriko Nakao

Related Topics

Quotes

   

HONG KONG (Reuters) - Seth Fischer, one of Asia's best-known hedge fund managers, has written to Nintendo Co Ltd urging the Japanese console maker to develop and sell games for mobile platforms run by Apple Inc and Google Inc.

Fischer, of Hong Kong-based Oasis Management Co Ltd, sent a similar letter in June to Nintendo, in which Oasis owns shares. His latest missive adds to investor pressure for the company to move on from making games only for its propriety consoles.

Some investors want Nintendo, which recently slashed its sales forecast for the Wii U console, to capitalise on the spread of smartphones and tablets by releasing games that can be played on any mobile device.

"Nintendo needs to embrace this thematic change in consumer demand, behaviour and expectations to stay relevant," said Fischer, Oasis' chief investment officer, in a letter on Wednesday obtained by Reuters.

Fischer, who once managed $3.3 billion (1.9 billion pounds) for DKR Soundshore Oasis Fund, opened his own hedge fund in 2011 which manages about $200 million.

"It is readily apparent that the standard elasticity of demand principle no longer applies in the consumer entertainment market when access requires the purchase of a physical product," Fischer said in the letter to Nintendo Chief Executive Satoru Iwata.

DIGGING IN

Nintendo has dug in its heels on a game console strategy that has dragged it into operating losses for three years in a row, ignoring calls to go mobile and promising instead to wow customers with health-related innovations.

Unlike rivals Microsoft Corp and Sony Corp, whose recently released XBox One and PlayStation 4 have seen strong sales, the creator of "Super Mario" has resisted pressure to open up game development to other firms.

"We consider individual requests separately within the company but I don't think we would announce the results thereof," a Nintendo spokesman said in response to Fischer's letter.

The spokesman declined to comment directly on any consideration Nintendo may have given to Fischer's request.

Fischer could not be reached for comment.

Nintendo relies on the popularity of its franchises, such as Mario and Zelda, to drive sales of its hardware, but investors fear Nintendo is missing out on opportunities offered by smartphones or tablets, over 1 billion of which are in use and account for a rising proportion of games played.

Mobile games developer King, for example, generated $1.9 billion in revenues in 2013, or $5 million a day, from its game Candy Crush Saga which has been downloaded more than 500 million times since its 2012 launch.

The importance of mobile platforms for technology companies was driven home last week by Facebook Inc's $19 billion purchase of messaging app WhatsApp, which followed a similar acquisition by Rakuten Inc the week before.

"As the holder of what is arguably the largest library of casual games, Nintendo is well placed to make an immediate entry into mobile," Fischer said.

(Additional reporting by Reiji Murai in TOKYO and Denny Thomas in HONG KONG,; Editing by Michael Flaherty and Christopher Cushing)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (4)
Bob_askins wrote:
Nintendo does that and it will be their end. There’s no real big profit in smartphone gaming, at least not like these people believe. The idea that people are not buying nintendo consoles because of smartphones is like saying that people are not buying game consoles because they are buying computers. It’s absurd.

Then again the shareholder mentioned another industry myth: “casual games”.

Also, in order to play those games, people should invest in a smartphone. Is not that different from buying a game console except for the purpose.

Sometimes I cannot believe these guys and their advices are that dumb. They must have other intentions.

Feb 26, 2014 6:43pm GMT  --  Report as abuse
Stealth100k wrote:
Nintendo is making the right decision.

“Nintendo has dug in its heels on a game console strategy that has dragged it into operating losses for three years in a row, ignoring calls to go mobile and promising instead to wow customers with health-related innovations.”

No, this isnt the case at all.

“Unlike rivals Microsoft Corp and Sony Corp, whose recently released XBox One and PlayStation 4 have seen strong sales,”

That isnt the case at all either.

Nintendo will hit profit again while delivering high quality products which currently arent possible on mobile.

Sorry but this site doesnt get it.

Feb 26, 2014 11:14pm GMT  --  Report as abuse
smashbrolink wrote:
“As the holder of what is arguably the largest library of casual games,”

………

What is this man talking about?!

MOST OF NINTENDO’S FIRST-PARTY FRANCHISES CATER TO ALL GAMERS.

If they want casual games, they should be asking ALL OF THE THIRD PARTIES THAT FLOODED THE WII WITH THEIR CASUAL SHOVELWARE!

Whoever caught wind of this story, do everyone in the gaming community a favor; contact this knuckle-head and let him know that asking Nintendo to put their first-party games onto smart phones is a very poor use of their time and efforts, and that they should be looking for ways to urge Nintendo onto path of LONG TERM PROFIT instead of relying on SHORT TERM GAIN FROM MOSTLY CASUALS.

If these investors REALLY want to start seeing returns from their stocks in Nintendo, tell them to START UP A STRONGER ADVERTISEMENT CAMPAIGN.
One that will BUILD HYPE FOR THE BIG HIT TITLES THAT ARE COMING TO THE SYSTEM IN 2014!

Games like Bayonetta 2, X from Monolith Soft, Super Smash Brothers, Mario Kart, Zelda U, and all of the incredible Indie games like Child of Light, Cryamore, Reven, and third party collaborative efforts like Hyrule Warriors.

Going mobile is a short-term fix that would not sustain Nintendo.
If these investors want big returns, they need to look at LONG TERM, not short term.

If they cannot do that, then they need to be urged to sell their stock back to Nintendo so that Nintendo will be free to do what they feel is best instead of being tugged in a thousand different directions to try and please these people THAT ARE NOT GAMERS AND DO NOT KNOW WHAT NINTENDO’S FANS ACTUALLY WANT TO SEE!

Feb 26, 2014 3:04am GMT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.