Nintendo: Layoffs not needed for profitability

President Satoru Iwata says letting staffers go could boost short-term results, but would be problematic in the long run.

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Layoffs could help Nintendo boost short-term results, but would hurt overall company morale and are not needed to hit financial targets, according to Nintendo president Satoru Iwata.

"Regarding why we have not reduced the number of the personnel, it is true that our business has its ups and downs every few years, and of course, our ideal situation is to make a profit even in the low periods, return these profits to investors and maintain a high share price," Iwata said during a recent shareholder meeting.

"I believe we should continue working toward this ideal. 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."

"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 he is confident that Nintendo can become profitable under its current business structure due to exchange rate trends and a belief that its platforms will become more popular in the future. The Wii U has struggled thus far, selling 3.45 million systems to date, below company sales projections.

Iwata explained that the "valuable contributions" Nintendo employees make to the company are too important to lose for short-term benefits.

"I also know that some employers publicize their restructuring plan to improve their financial performance by letting a number of their employees go, but at Nintendo, employees make valuable contributions in their respective fields, so I believe that laying off a group of employees will not help to strengthen Nintendo’s business in the long run," he said. "Our current policy is to achieve favorable results by continuously cutting unnecessary expenses and increasing business efficiency."

Elsewhere during the shareholder meeting, Mario and Zelda creator Shigeru Miyamoto said Nintendo underestimated the scale of high-definition game development for Wii U, resulting in software delays.

"When it comes to the scale of software development, Wii U with HD graphics requires about twice the human resources than before. Please allow me to explain that we may have underestimated the scale of this change and as a result, the overall software development took more time than originally anticipated just as we tried to polish the software at the completion phase of development," Miyamoto said.

"However, we are almost out of this phase, and we are also trying to create something unique utilizing an easier development approach called 'Nintendo Web Framework.'"

Iwata later explained that the Nintendo Web Framework is a system Nintendo recently established to expedite and simplify Wii U game development.

Nintendo has a number of marquee first-party Wii U titles in the pipeline, including Mario Kart 8, Super Mario 3D World, Donkey Kong Country: Tropical Freeze, and an all-new Zelda game, among others.

Discussion

385 comments
SS4kronos33
SS4kronos33

MK8 looks awesome.i cant wait to play it.also i cant wait to play the donkey kong game either.zelda is the one game i cant wait to play most of all

The-Longshot
The-Longshot

:-) Awesome. So happy for all the folks that get to keep their jobs and so proud of Nintendo for seeing their value in the company's long term success, Huzzah!! Its just like Iwata-san says "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." Very wise man.

jrabbit99
jrabbit99

Glad to see they won't be letting people go!

WeWerePirates
WeWerePirates

Oh Nintendo, some times I love you, (like right now for this) and then other times you do horrible things to your fans. (lets play debacle, region locking)

Snakepond1
Snakepond1

I love Nintendo. But, I think they were not ready or maybe did not anticipate HD development time and costs. Layoffs is not needed, but a little more money into making games or buy some studios.

rayonmachristie
rayonmachristie

We as gamers want a diverse console market so will all those that keep saying nintendo should go software only please take your time and think what that entails. 

YearoftheSnake5
YearoftheSnake5

Nintendo may do and say some questionable things, but this is something I feel most people(myself included) can agree with. Firing people just because you don't have s**t together on a business level isn't going to produce good long-term results. If you want profits, make games people will buy, try to drive down manufacturing costs, or something else that doesn't impact the company's development potential.

GrandMaster555
GrandMaster555

Nintendo is the last video game company.  If I could do anything to help you guys I would.  I don't want to see Nintendo go away.

Gaming right now is full of wasted talent.  It's just like Hollywood.  The guys up top have no reason to be there except their Wall Street buddies put them in charge and all the artist, developers and graphic designers suffer because some greedy publisher and their CEO gets all the money.

If i was a company I would never go public.  Screw everyone else.

ethanm1834
ethanm1834

It's a nice statement it really is and I hope for their sake and the sake of their employees it works out.

Firing people is always a negative out look among the public. Well let me rephrase, layoffs because their tends to be a difference. However Nintendo while not doing great with the Wii U, doesn't exactly need to lay off people at this time because of the money made from 3ds and the money they made from the Wii. 


Will there come a time where they need to do that? Perhaps, but not in the near future.

Warlord_Irochi
Warlord_Irochi

"Regarding why we have not reduced the number of the personnel..."

It's because you outsource around 70% of your workforce, so you can throw this statement and be technically correct while you drop 50 people (that many this time) in programming, QA and localization department.

I'm beginning to think that he does not look outside of Japan's department. Does this guy know how things are being handled in US and Europe?

Warlord_Irochi
Warlord_Irochi

"Layoffs not needed for profitability"

Then stop firing around 150 people per year in Europe's department, you hypocrites...

HonorOfGod
HonorOfGod

Nintendo the fact that you even bring it up smells bad. You don't look so hot nintendo.

soulless4now
soulless4now

They should relaunch the system under a different name or something. It's no longer funny to see confused parents at the store who don't know whether they're supposed to get their kid a Wii or Wii U accessory. :\

berserker66666
berserker66666

"Wii U not needed for profitability". Stick to Wii.

Naylord
Naylord

All Nintendo has to do to get mega profitable is to become third party. I love Nintendo games but I'd rather not buy a Wii U just to  play Smash Bros

aussiemuscle
aussiemuscle

If only other business leaders were as switched on as Mr Iwata, unemployment wouldn't be such a major problem around the world. If you lay off all your staff, you save a heap of money, but then who's going to do the work?

Ra-Maxima
Ra-Maxima

Nintendo should close their Hardware and focuses on their software gaming

chipwithdip
chipwithdip

@YearoftheSnake5 With demands as high as they are, driving down manufacturing costs is much more difficult than just listing it on a forum. The problem with games today is that the budgets are getting higher and higher, and gamers don't care. All for slightly better looking visuals or fun little effects, if not for anything that actually makes sense (more game modes, smarter AI, more complex games in general). The cost of making a game has sky rocketed for all the WRONG reasons. We aren't getting more challenging or more complex games. We're just getting eye candy and standard competitive modes with online, and it's costing devs a fortune. Most of the time, anyway.

shinta125
shinta125

@ethanm1834It's also partly has to do with the way japan does business and hiring for life, that sadly, is changing and some are adopting the more western way of hiring fast and laying off faster.  Nintendo choose to keep it's traditional japanese business model for the long term gains.

shinta125
shinta125

@Warlord_Irochi Nintendo has already addressed earlier that they do not want to outsource anymore and plan on fixing that and that means we may never see Kamiya make a Star Fox game or a Takamaru Ninja Castle game. As for Europe and America I don't know the full story about that but for some studios like even Retro Studios they still  follow the western model more than the japanese business model.

BrutalPandaX2
BrutalPandaX2

@Warlord_Irochi 150 people is a reasonable lay-off from any company per year. At least they aren't laying off thousands every half a year.

nintendoboy16
nintendoboy16

@Warlord_Irochi There's a difference between "firing" and "laying off".

Firing is kicking someone out of their work for stuff like misbehavior in the force, of if they are late too much.

Laying off is having no choice, but to have them leave the work field because they can't economically afford it, no matter how good they do.

shinta125
shinta125

@HonorOfGod They didn't bring it up, an investor did, so Iwata just gave an answer to his question. Nothing really fishy here.

OldKye
OldKye

@soulless4now Partner with Sega and make DreamForge "Where dreams are made real"(Yes I spent some time on that lol)

Being honest here think about it 

Sega: Famous for releasing technology long before anyone cared to have it(Sega game gear color handheld years before GameBoy was lol)

Nintendo: Famous for releasing technology that's innovative but behind the times.(Wii and Wii-U are explanation enough)

Together they could give Sony and Microsoft a run for there money and consumers win with better competition!

yavix
yavix

@Naylord Quit hoping your going to get around buying a Nintendo console to play Nintendo games. Nintendo isn't going software only ever, so if you want their games buy their system.

abHS4L88
abHS4L88

@Naylord 

Uh no, they would quickly lose a lot of what make them relevant as well as their biggest "muse", lowering the overall quality and uniqueness of their games, screwing them over in the long run. 

corrus
corrus

@rayonmachristie @Snakepond1 Nintendo to give money for games or buy studios ?????????????????????????? HAHAHAHAHAHAHAHAHAHAHAHAHA they know only to take money not to give

Warlord_Irochi
Warlord_Irochi

@BrutalPandaX2 People with project-based contracts, with half the rights of a direct Nintendo employee and with a working environment you don't want to know, believe me.

It's the same every big company does, of course, but sickens me how Nintendo plays the "friendly and loving" role when they are as rotted as every big company.

Warlord_Irochi
Warlord_Irochi

@nintendoboy16 Ok then:

Then stop laying off around 150 people per year in Europe's department, you hypocrites...

That adds even more strength to the "hipocrisy factor" here ^^;

chipwithdip
chipwithdip

@OldKye @soulless4now Too many cooks in the kitchen? I feel like there's no real way to balance Sega's IPs with Nintendo's as one big company. Same for their interests. I think that'd backfire. Besides, Sega is a company that ran itself into the ground. Best Nintendo could do is buy out Sega, but then that'd probably shoot all hopes of getting a Resonance of Fate sequel. >_>

By "all hope", I mean my patented "Reserve Hope In A Can" hope. It's the hope you can utilize when your more logical, immediate hope dies out.

Zaledo
Zaledo

@corrus @rayonmachristie @Snakepond1 Because it's totally not like they're a business that's suppose to make money or anything.

Also, I can't hear you over my not having to pay for my own goddamn internet.

abHS4L88
abHS4L88

@corrus

Really? Weird because when I buy Shin Megami Tensei IV and register it on Club Nintendo (since I already have Fire Emblem Awakening registered), I'm going to get $30 credit for the eShop. I wonder who's giving away that money if Nintendo never gives money away. 

Also I could've sworn I've seen articles of how Nintendo has gone to local children's hospitals, supplying them with games/entertainment to help take their minds of their sicknesses. Such is the actions of a greedy company, nothing like Microsoft, who tries to enforce anti-consumer policies. 

Warlord_Irochi
Warlord_Irochi

@chipwithdip@Warlord_Irochi@BrutalPandaX2
 @chipwithdip Project based contracts lasts as long as the project, but according to the German Law (Nintendo Europe is in Frankfurt) they can extend that contract as long as the project lasts. That said, Nintendo has a tradition of making you jump to one project to another since they do not specify in your contract what the project is.

That translates in the fact that you may stay for 6 months, 5 years, or whatever. You will get kicked when they no longuer need you and, in all that time, you will not be turned into a permanent worker. All for the shake of saving some more money.

Now we could talk about that law in Germany being wrong, indeed, but that doesn't exonerate those who abuse its mechanics.

chipwithdip
chipwithdip

@Warlord_Irochi @BrutalPandaX2 When you have a PROJECT BASED CONTRACT, your job security should, likewise, drastically decrease when your PROJECT is done. Long-term employees are a different subject, but for programmers enlisted on a project based contract, why the hell wouldn't you be a bit wary when your project nears its end? The explanation is in the problem's title.

OldKye
OldKye

@chipwithdip obviously it's a never happen kinda gamer dream lol I knew that when I posted it I could go on for another 5mins on top of what you said why it would never work nor does Sega even still have most of the people from it's console development division.

It's one of those "gee if we took the best parts of both worlds that would be amazing" as kinda a nudge nudge *punch in the kidney*  why did these positive points never occur to these competitors.