Nintendo was struck by tragedy in July when President Satoru Iwata passed away at the young age of 55. After two months of searching, Nintendo officially announced that Tatsumi Kimishima would be filling his shoes and taking over the company. Based on his moves so far in Japan, we think he's a great short term choice for candidate, but he also has the potential to fix one of Nintendo's biggest and longest-running problems.
Nintendo is an international video game company, but they are almost entirely centralized in Japan. The Western markets (and in particular the North American market) make up a larger portion of sales than the Japanese market, but Nintendo's non-Japanese branches have virtually no decision-making power. Dan Adelman served as Nintendo of America's Head of Digital Content and Development for nearly a decade, and he frequently found himself unable to push ahead with ideas that the North American market wanted (including an end to region-locking and more indie-friendly development rules), because he was vetoed by Nintendo of Japan. As he describes it, even Nintendo of America President Reggie Fils-Aime lacks the power to make actual changes and can only make suggestions to the executives in Japan.
"I’ve had many meetings with Reggie about topics like this. Unfortunately, there are limits around what Nintendo of America, as a subsidiary, can impact. Reggie and others at Nintendo of America may provide a list of changes they’d like to make, but all of the actual changes would need to be made in Japan. Nintendo Japan is very open to feedback, but ultimately that’s where the final decisions get made." — Dan Adelman
In Adelman's case, he was eventually forbidden from having public social media accounts or giving interviews because he publicly supported changes that Nintendo of Japan had turned down. Last year, he chose to leave the company and continue to do a similar job independently of Nintendo.
Nintendo of America's lack of real power is becoming a bigger issue over time, because the Japanese dedicated gaming device market is shrinking at a rapid rate. Mobile games sales in Japan have increased substantially every year since 2010 while sales on dedicated gaming platforms have steadily declined. Last year, Japan's mobile revenue was nearly double the revenue of its dedicated gaming platforms at $5.8 billion to $3.2 billion. The latter figure marks the lowest revenue from dedicated gaming platforms in Japan in a decade, and it's not likely to improve.
While the mobile game surge is felt everywhere, its impact is much weaker in the West. Home consoles are essentially a thing of the past in Japan (and handhelds are losing popularity as well), yet PlayStation 4 is breaking sales records. PlayStation 4 has sold over 25 million units worldwide in less than two years, but just 1.5 million of them have been in Japan. The message is clear: if you want successful consoles, you need to focus on North America and Europe, not Japan. With this in mind, there's good cause for optimism towards Tatsumi Kimishima.
Over the past couple of years, Kimishima has been serving as Managing Director of Nintendo Co. Ltd, putting into motion some changes within the company that came to fruition with the massive company restructure announced on his first day. Kimishima has been focused on re-tooling the Japanese teams to improve efficiency (unlike Iwata, his background lies in business rather than game development), but most of his time at Nintendo has actually been spent in North America.
Kimishima began his video game career as the Chief Financial Officer of The Pokémon Company in 2000 and then the President of Pokémon USA over the next two years. During his tenure, Pokémon Gold, Silver, and Crystal were released, and his talents caught the eye of Nintendo, prompting them to hire him as President of Nintendo of America in 2002. Four years later, he was promoted again. Reggie Fils-Aime replaced him as President, and he became Reggie's boss, serving as Chief Executive Officer and Chairman of the Board for Nintendo of America.
When Kimishima took over Nintendo of America they were firmly in third place in console sales, as GameCube was lagging slightly behind Xbox and massively behind PlayStation 2. However, under Kimishima's leadership as President and then CEO, they bounced back strong with incredible marketing campaigns for DS and Wii that were extremely successful in North America, pushing them both to the top of the charts.
One of the big success stories from this era was the development and launch of Twilight Princess, which only happened because Nintendo of Japan chose to listen to the wisdom of Nintendo of America. Zelda producer Eiji Aonuma had his team working on a sequel to The Wind Waker, but after consulting with Nintendo of America, plans changed.
"At one point, I had heard that even Wind Waker, which had reached the million mark in sales, had become sluggish in North America, where the market was much healthier than in Japan. I asked NOA why this was. What I was told was that the toon-shading technique was, in fact, giving the impression that this Zelda was for a younger audience and that, for this reason, it alienated the upper teen audience that had represented the typical Zelda player. Having heard that, I began to worry about whether Wind Waker 2, which used a similar presentation, was something that would actually sell. In addition, because we knew how difficult it would be to create an innovative way of playing using existing GameCube hardware, we knew what a challenge it would be to develop something that would do well in the Japanese market, where gamer drift was happening.
"That’s when I decided that if we didn’t have an effective and immediate solution, the only thing we could do was to give the healthy North American market the Zelda that they wanted. So, at the end of 2003, I went to Miyamoto and said, 'I want to make a realistic Zelda.' " — Eiji Aonuma
There are some fans who may have preferred a Wind Waker sequel, but from a sales perspective, this was an incredibly productive decision. Wind Waker originally sold less than 5 million copies (it has broken that mark with the HD remake on Wii U) and Twilight Princess sold close to 9 million copies. Only Ocarina of Time has sold more copies (due to multiple re-releases and a 3DS remake), and no Zelda game since has even come close. Both in North America and Europe, Twilight Princess sold around twice as many copies as Wind Waker, and (alongside Wii Sports), it was one of the titles that helped Wii get off to an almost unbelievably successful start just five years after GameCube failed to make a dent in the market.
While we don't know how involved Kimishima was in that decision (although as President he certainly had a say), we do know that he personally advised Nintendo of Japan against Wii U, warning them that it was too similar to Wii and would be a commercial failure. This time, Nintendo of Japan opted not to heed his words. Kimishima's predictions were accurate, and Wii U is unfortunately on pace to be Nintendo's least successful home console of all time, both in terms of console sales and software sales.
Tatsumi Kimishima has well over a decade of experience in overseeing the North American video game market, and along with Nintendo executive Genyo Takeda, he's aiming to make Nintendo's leadership future-proof. With the rapid decline of the Japanese console market, there's no better way to promote a good future for Nintendo than to give more power to the North American market. Kimishima is uniquely qualified to handle such a transition, as he spent a decade on the other side looking in.