Nintendo Has No Plans to Join in the Gaming Acquisition Spree - News

by William D'Angelo , posted on 03 February 2022 / 2,586 Views

Nintendo president Shuntaro Furukawa in an earnings call following the release of its latest earnings report for the quarter ending December 31, 2021 said Nintendo plans to focus on organic growth and will not join in the gaming acquisition that is currently going on in the industry.

"Our brand was built upon products crafted with dedication by our employees, and having a large number of people who don't possess Nintendo DNA in our group would not be a plus to the company," said Furukawa via Bloomberg.

There were three big acquisition in the video game industry in January alone. Microsoft acquired Activision Blizzard in a blockbuster deal worth $68.7 billion, Take-Two acquired Zynga for $12.7 billion, and Sony acquired Bungie for $3.6 billion.

Nintendo in its earnings report announced shipments figures for the Nintendo Switch reached 103.54 million units, while 766.41 million Switch games have been shipped lifetime. For the quarter Nintendo shipped 10.67 million Switch units and 85.41 million Switch games.

A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel dedicated to gaming Let's Plays and tutorials. You can contact the author at wdangelo@vgchartz.com or on Twitter @TrunksWD.

41 Comments

thevideogameninja (on 03 February 2022)

The real question is how much could Nintendo allocate towards studio acquisitions?

We all know Microsoft can buy the moon and that Sony can throw their weight around here and there but I'm not so sure about good old Nintendo. Then there is the question of what studios they think would gel well with their target audience.

Seems to me that Nintendo has been doing well relying on 1st party developers. I can't really think of many big name 3rd party developers that have been just killing it on Switch and that are the reason people are buying games on that platform.

-STAY IN YOUR OWN LANE NINJA APPROVED-

aTokenYeti thevideogameninja (on 03 February 2022)

Nintendo is a $50 billion market cap company, not dissimilar in size to activision blizzard. If they wanted to gobble up one or two of the smaller publishers, they could.

But why should they? Mario Kart 8 sold 50 million copies. Animal crossing NH will probably hit that too. No other games company on earth has attach rates this astronomical. Nintendo is insulated from the acquisition wars.

KratosLives aTokenYeti (on 04 February 2022)

Nintendo has a specific userbase , which is why certain games sell so well.

psychicscubadiver thevideogameninja (on 03 February 2022)

They have $16B of liquid assets according to financial reports. I doubt they'd use it to acquire studios, but if they wanted to, they could afford some solid companies.

UnderwaterFunktown (on 03 February 2022)

Good. Just grow their existing teams instead.

Manlytears (on 03 February 2022)

Thanks! Best game related news of the day!

Greenfox (on 03 February 2022)

I think Nintendo's strategy is much smarter. Expand their studios instead of buying others. It's a more challenging process, but Nintendo won't lose its identity along the way (Xbox and PS are becoming, in my opinion, conglomerates without personality, in a pure Disney style). The only acquisitions that would make sense are those of companies very close and similar to Nintendo, such as Level 5, Platinum Games, Grezzo or Koei Tecmo.

KratosLives Greenfox (on 04 February 2022)

Nintendo isn;t the same as it used to be either. But I do wish sony would bring back some classics.

Koragg (on 03 February 2022)

Good, because Nintendo will never release the games on PC.

Pemalite Koragg (on 04 February 2022)

That seems to be just a missed sales opportunity in my opinion, because their games end up on PC anyway.

Which likely lends itself to how well Nintendo games are received in general.

Arfen (on 04 February 2022)

They should. Im not saying they have to buy Warner, Capcom, Square or any of the majors, but some of the talented and little ones they have work with (Grezzo, Level 5, Team Cherry, Tantalus, Wayforward, Panic Button....)

To put money into your own teams and do an organical grow is cool and I have no regrets on that. But they should to notice that teir own franchises dont have to mean a sure success (WiiU says hello).

Nintendo have all his teams working in a concrete franchises and games each one. That makes you to work with some sagas consntantly and a lot of others are not seeing the light in years.

To acquire some studios like those we talk gives you the opportunity to bring more and variety games and have some extra franchises that fit in the Nintendo DNA.

(PD: sorry for my english)

JWeinCom (on 03 February 2022)

Nintendo's business model is to sell their hardware. If they wanted to buy a company as big as Activision they could (it's not like they're going to have to open their wallet and start taking out bills, that's not how it works), but that would need to be funded heavily by debt. And, if those games are going to be exclusives, it's going to be nearly impossible to make that pay off in the long run. I'm pretty skeptical that Bungie or Activision will be making true exclusives either, but we'll see.

Maybe Nintendo has to change their business strategy for next generation, but making these huge acquisitions is not going to be the answer. We'll see in a decade I guess.

Mr Puggsly (on 04 February 2022)

For a moment I thought it would actually be cool if Nintendo bought Sega. Then we would perhaps gets some good Sonic games. But then I considered how Nintendo doesn't touch much of its classic IPs and has become kinda stagnant on the software they do put out.

I would prefer if Nintendo doesn't buy anything. Just keep making Mario, Pokemon and Zelda.

-1

LivncA_Dis3 (on 04 February 2022)

They don't need to buy any,
They have da best 1st party studios making millions for them already,

On the other hand the other company needs to buy another company just to make millions lol but before they did that they spent billions just to make millions? Where's the point in that hahahaha

-1

VAMatt (on 03 February 2022)

method114 VAMatt (on 03 February 2022)

While I agree. Nintendo has been counted out so many times at this point and always ends up making everyone who doubted them look like a fool. I wont doubt them anymore. Let them do what they want. They've proven themselves time and time again.

VAMatt method114 (on 03 February 2022)

I don't disagree. But, it is very possible that they've been wrong all of those times, and could be a much bigger, more successful company today had they made smarter decisions.

-7

method114 VAMatt (on 03 February 2022)

Maybe but no one can really know that one way or the other. All we do know is that they've been very successful making the decisions they've made. They've stumbled here and there but overall they've done very well.

VAMatt method114 (on 03 February 2022)

Have they done very well? They were the market leader 30 years ago. Those days have been gone for a long while now. Generally speaking, losing market share is not seen as a positive for a company.

I think it would be more fair to say that they've done okay. They've survived, up against some much larger competitors. That is certainly worth remembering. But, surviving is not the goal for all but the smallest businesses.

-4

method114 VAMatt (on 03 February 2022)

30 years ago gaming was in a completely different place. Microsoft and Sony hadn't even entered the market yet. Sega had to bow out. Nintendo is the only company still around and is on their way to selling the most consoles out of all the companies and their software attach rate is something the other companies wish they could achieve. This is a company that people were pretty much just wondering when they would finally go bankrupt and be forced to go third party dev like Sega and now look at them.

PAOerfulone VAMatt (on 03 February 2022)

They're the market leader NOW...
They've done a whole lot more than just survived.
I can't tell if this is satire or if you're completely serious.

Kakadu18 VAMatt (on 03 February 2022)

Are you joking?

JWeinCom VAMatt (on 03 February 2022)

Sorry dude, but that's fucking ridiculous.

In the SNES generation, they had about 5/8 of 80 million sales (counting only Sega and Nintendo).

Now, counting the XBoX One/Series S/PS5/PS4/Switch as one generation for simplicity's sake, they have about 1/3 of around 300 million.

So, if I offered you 5/8 of 80 million dollars, or 1/3 of 300 million dollars, which would you want?

VAMatt JWeinCom (on 04 February 2022)

Nintendo is nowhere near the top if gaming market share, revenue, or profit. Hardware sales are not profitable, they exist only to generate revenue and profit from software. They absolutely do not have 1/3 of the market. Video gaming industry revenue in 2020 was about $160 billion, of which about 8% went to Nintendo.

You all are actually missing the forest for the trees here. Nintendo seems to be clinging to a business model that is on its way out. You all seem to be unable to look past that business model yourselves. Console sales are a thing of the past, or soon will be. Having 1/3 of the console market (Nintendo has more than that, but whatever) isn't relevant. What matters to a successful business is revenue and profit, not unit sales.

method114 VAMatt (on 04 February 2022)

Nowhere near? So what companies do you in the top 5 of the gaming market share? Every list I've seen has them near the top based on revenue.

VAMatt method114 (on 04 February 2022)

You're right. Nowhere near was a poor choice of words. According to this (and several other lists) they were third in 2020 revenue behind Sony (which had about double) and Tencent. At this point, they've been passed by MS, but it is too early to see MS' true numbers.
https://www.alltopeverything.com/top-10-biggest-video-game-companies/

-1

PAOerfulone VAMatt (on 04 February 2022)

They’re in the top 5 of revenue and they made more than twice as much profit as Sony. Hardware sales are profitable if the hardware is being sold at a profit… Which Nintendo does.

JWeinCom VAMatt (on 04 February 2022)

I used hardware because it's a simpler metric. And since the point of selling hardware is to sell software, then more hardware sales would indicate better software sales and profits.

But we can look at software too. In 1992 they sold 76 million units of software. In 2021, they sold 230 million.

In terms of revenue, they are making four times what they did in 1992, about double adjusted for inflation. Earnings have gone from 1.3 billion, adjusted for inflation, to 4.53 billion.

So, another simple question. Would you rather have 1.3 billion dollars, or 4.53 billion? Look forward to seeing where you move the goalposts to next to avoid the obvious conclusion.

VAMatt JWeinCom (on 04 February 2022)

I haven't moved the goal posts at all. I simply said that Nintendo has done okay, rather than very well. I stick by that. It's plain as day obvious in the numbers.

A few posts ago it was claimed that Nintendo had one third of the market. I just showed that they have 8% of the market. This is down from claims of 83-90% 30ish years ago. There is no world in which a business is deemed a great success when it falls from 80 plus percent of the market to 8%.

I already said that it is impressive that Nintendo has managed to do as well as they have, given the fact that they're up against some much bigger competitors. But, the market has grown massively, and Nintendo simply has not kept up. There is no way to argue otherwise. The numbers show it clearly.

Here's an article that claims that Nintendo accounted for 83% of the market in 1988: https://www.nintendotimes.com/1988/09/01/nintendo-has-record-year-now-commands-83-of-the-video-game-market/

Here's a claim of 90% (this may be US only, not sure now as I've read a handful of these in the last few minutes) in 1990: https://www.nytimes.com/1990/12/08/business/waiting-for-the-zapping-of-nintendo.html

-1

JWeinCom VAMatt (on 04 February 2022)

Well, there's no point for you to continue, because you're trying to defend a point that's indefensible.

Whether it's 1/3 or 8% is based on how you're defining the market. The overall size of the market is hard to determine because I'm not sure whether things like wordle and smartphone games are or should be included. But, I already agreed to use 8%, for the sake of argument because it's irrelevant. 33% of 300 million units of hardware is better than 80% of 70 million. 8% of 180 billion is better than 80% of
like 5 billion. The argument is bad regardless of how you define the market.

Of course Nintendo didn't keep up. Because that's a ridiculous expectation. By your numbers, they would need to be making 162 billion dollars a year in revenue. No gaming company is doing anything remotely close to that in gaming alone. Nintendo would have to be selling about 10 times as many games as they are, meaning about 2.6 billion games sold annually. It's absurd to expect anything close to that. They would have had to have grown their business to 247 times its size in that time period. Even if they tripled their business every decade since 1992, which would be an absolutely amazing feat, they wouldn't be close.

The only way they could have maintained that market share is if they somehow prevented anyone else from entering the market, which would be almost certainly be involve illegal monopoly power. Companies who are early in the market drastically lose market share, inevitably. Like Apple going from almost 100% of market share in smartphones to about 30. In a content based industry, where people aren't basically limited to buying one product, the decline will be steeper. Netflix had probably near 100% of the streaming video subscription market at one point, now about 30. I am not aware of any company that has ever maintained that level of dominance for 30 years in an industry that was growing as fast as gaming has. Feel free to present an example.

Looking at marketshare in a vacuum over a period of 30 years is simply not a metric of success anybody has ever used. You set up an absurd standard, and are using it to justify an absurd conclusion. Nobody who wasn't trying to justify an absurd conclusion would argue that market share over 30 years is the sole metric of success, or even an especially good one in most cases.

What is a better metric? As YOU JUST SAID "What matters to a successful business is revenue and profit, not unit sales." When I gave you the profit figures, it suddenly didn't matter. Moving goalposts.

So, again, would you rather be making 4.5 billion dollars or 1.3 billion? If your position prevents you from acknowledging that making more money is better than making less money, then you really need to reconsider.

VAMatt JWeinCom (on 04 February 2022)

Obviously I would rather have more money. Nobody is arguing that Nintendo is making less money now than they were 30 years ago.

JWeinCom VAMatt (on 05 February 2022)

Good. Then if you would rather be in Nintendo's current position then their position 30 years ago, then it logically follows that their position has improved substantially over the last 30 years. And if their position improved as market share plummeted, then market share must be an incredibly poor basis for judging their overall success. So, if you want to argue that Nintendo has just "done ok", then you'll need a better leg to stand on. Considering that revenue and profits are pretty much the most significant measures of success (without getting into ratios that are primarily based on those figures) that would be an incredibly hard argument to make.

mjk45 JWeinCom (on 04 February 2022)

The better metric is software to hardware ratio , this can be seen when looking at handhelds v home consoles where the software sold is around half that of home consoles with similar hardware sales, but if you took hardware only you would come away with a different conclusion.

JWeinCom mjk45 (on 04 February 2022)

Not really. According to VGChartz figures, the Wii U has a better tie ratio than the DS. But I imagine you would agree that selling 1 54 million units 4 pieces of software each is far better than selling 14 million units with 5 pieces of software. The Vita and 3DS, again according to VGC, have basically the same ratio, but there's no doubt the 3DS was far more successful.

Tie ratio may be useful if you're comparing similar selling hardware, but even then there are limitations (for example did one sell higher priced software, was software less expensive to make, how much software was packed in etc.). In determining a company's overall performance, it's not very useful, and definitely not nearly as useful as profit and revenue.

mjk45 JWeinCom (on 05 February 2022)

Tie ratio just like all the other comparison methods isn't perfect and it was never my point to argue otherwise , it was why I mentioned similar sales it was made in response to your using hardware because the more hardware sales would indicate more software sales and profit line , for the rest of course any analysis needs to look at the wider picture but that isn't specific to tie ratio , and is one of the reasons why I disagree with VAMatt you can't narrow the picture to just talk about Nintendo and modern games wider reach without mentioning the other console makers, my take is rather than him playing what if using Nintendo , it would be far better to realise that each of the big three's circumstances are different and that's a major driver in their approach to the industry and their future in it .
An example of that is Xbox ones struggle resulting in game pass showing while in the same business different circumstances play a significant part in a companies direction there is no one size fits all concerning how they approach the future.

JWeinCom mjk45 (on 05 February 2022)

Yeah, tie ratio would be relevant in a comparison of hardware. If you're saying it's a better metric than marketshare, then maybe in some circumstances. If Nintendo sold the same amount of consoles between generations, but their software ratio went down, then yeah, that would be negative. If hardware went up significantly and tie ratio went down, I don't think that would be a big problem in most cases.

But if you're arguing it's better than profit or revenue, which is what I thought you were saying, then it absolutely isn't. The end goal of all of this is making money. If software ratio went down but profits went up, that likely wouldn't be a cause for much concern (but maybe some).

mjk45 JWeinCom (on 05 February 2022)

no not at all, like I said it was just me saying that if your going to use only hardware to make a comparison then tie ratio would be the better option but obviously using as many fit for purpose comparison tools as possible is always preferable.

JWeinCom mjk45 (on 05 February 2022)

More or less agree, although I think it would be better to say you should use both, not that one is better than the other.

mjk45 JWeinCom (on 05 February 2022)

true I confused us both by concentrating on just your
hardware quote with tie ratio's in what was a much longer and more involved narrative. when I meant that selling more hardware doesn't always mean more software and more profit.

Kakadu18 VAMatt (on 03 February 2022)

I only agree with the last sentence, but for other reasons.

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