A briefing for Nintendo shareholders and the media held on Thursday morning, Nintendo’s CEO Satoru Iwata outlined the company’s plan to create a third platform to sit alongside its Wii U and Nintendo 3DS game consoles. Mr. Iwata’s new strategy is essentially to channel Dr. Mario and enter the healthcare industry via wearable technology, similar to what Nike Inc. has done with their FuelBand product line.
"What Nintendo will try to achieve in the next 10 years is a platform business that improves people’s [quality of life] in enjoyable ways,” Mr. Iwata said.
Mr. Iwata is basing his new found business strategy on prior success off the Wii Fit add-on. There has been much innovation in the wearable technology industry since the Wii Fit was released more than 7 years ago, given the fierce competition and over saturation in the market. Nintendo does not possess the brand equity or consumer mind share to be competitive. This new healthcare strategy has all the makings of a money pit for Nintendo.
Earlier this month, Nintendo forecast a loss of 25 billion yen ($242 million) for the fiscal year through March 2014. It had earlier forecast a profit of 55 billion yen ($532 million). The results prompted Nintendo shares to fall 4.3 percent Thursday to 12,325 yen.
Mr. Iwata response to poor financial results is to slash salaries of key management personnel, along with his own for the next five months. These results demand a restructuring of management and product strategy, Nintendo should focus on its core business and abandon any hopes of entering a market it knows nothing about.