Hacker News Reader

Comment by danpalmer | Hacker News Reader

Nintendo is a 132 year old company (111 at the time this happened), with a "war chest" of $10 billion. They've been successful for far longer than Microsoft have existed.

I don't know what Nintendo would get out of being acquired, and I'm not certain that Microsoft would be able to put together a convincing acquisition deal.

View on HN

> I don't know what Nintendo would get out of being acquired,

Money. Old companies are merged, acquired, or spun-off all the time.

It's completely possible that Nintendo would prefer to spin off portions of their business which, while profitable, no longer align with their primary markets. Consider companies like General Electric; they started off producing equipment around electric power generation, installation, and use (lightbulbs and appliances), then they got into television, radio, computing, jet engines, health insurance, etc. Over the years they've spun off many of these divisions and today's GE looks nothing like OG GE.

You might want to check the "portions" of Nintendo business to realize why not. Even in core console gaming, they're notorious for not actually owning many studios, including some you would assume they do given how long they're worked together.

Notoriously, Nintendo didn't own Rare (who was a big studio for Nintendo bound games), didn't want to buy when they wanted to sold, and they ended up at Microsoft which is an acquisition that's very hard to spin as a success.

No kidding, Nintedo doesn't even own Intelligent Systems and those guys used to develop the Devkit tooling.

Get this: IS used to work from inside Nitendo's own factory.

Granted, while Nintendo does not own these companies they have strong control. Just last year Nintendo moved all their developers in Tokyo into a single tower.

I wonder if this is related to what someone mentioned above in the thread whereby Japanese firms seem to value implicit, mutually beneficial behavior

Likely a lot of old school politicking behind the scenes too. Especially as they’re a Kyoto company.

Is this why Game Freak is not part of Nintendo?

> Over the years they've spun off many of these divisions and today's GE looks nothing like OG GE.

That's why today's GE is close to bankruptcy and easily threatened by corporate raiders. Arguably if they has stayed focused on their core competency of high quality cutting edge engineering instead of stupid financial engineering, they'd have stayed releva6ans powerful.

Japanese corporate operations are quite different, historically, than the US. For example, Japan has over 33,000 companies that are over 100 years old. Many are several hundred years old. The oldest is around 1300 years old, I think. Continuously operating.

Obviously most of these are not 'technology' companies, but the culture of corporate creation/destruction/merger is somewhat different.

One of the things that really sets them apart is Keiretsu[1]. Seemingly competing firms often work together for their common benefit in the name of Keiretsu. It is very "foreign" and strange from a US cultural standpoint, but it is also why so many Japanese companies last as long as they do.

[1] https://en.wikipedia.org/wiki/Keiretsu

It is important to note that the Keiretsu are split vertically, no two companies within a keiretsu should be direct competitors.

At least such was the case. A major counter example is Mitsui and Sumitomo. The Mitsui and Sumitomo banks merged, which triggered partial merges of other Keiretsu companies: except the real estate. Mitsui Real Estate and Sumitomo Real Estate still operate as competitors. Both developing new housing complexes and office towers.

Nintendo did sell a business that didn't align with their primary markets, Rare. Rare generated hits for Nintendo (like Donkey Kong Country), but iirc, Miyamoto never liked them. From the DKC wikipedia entry:

In the years following the game's release, rumours spread that Miyamoto disliked Donkey Kong Country and found it amateurish, provoking him to create the hand-drawn art style of Yoshi's Island. He was allegedly quoted as telling Electronic Games magazine in 1995 that "Donkey Kong Country proves that players will put up with mediocre gameplay as long as the art is good".

Again according to wikipedia, DKC was one of the top selling SNES games, only Super Mario World and Super Mario All-Stars are higher on the list https://en.wikipedia.org/wiki/List_of_best-selling_Super_Nin....

Rare was funded by Nintendo but I don't think it was ever owned by them.

https://en.m.wikipedia.org/wiki/Rare_(company)

Rare was never owned by Nintendo - they were only ever a second party developer. Nintendo did provide them with significant financial resources and autonomy, however.

Another example of a company could be Game Freak and Creatures, the developers of Pokémon. Though it is now created with a joint-venture like company "The Pokémon Company" that is owned mostly by those three companies, with Nintendo owning 32%.

Interestingly enough, Nintendo studio acquisitions seem to be "rare" enough that they make news headlines, like the recent acquision of Next Level Games (makes of Luigi's Mansion 2 & 3), which will move from second-party to first-party:

https://micky.com.au/nintendo-acquires-bc-video-game-develop...

Is it really fair to count Super Mario World in the best-seller list considering it came with the console?

Why not? Everyone counted Wii Sports as the best-selling game of all time despite being a pack-in (and even today it's #4 having only been outdone by Minecraft, GTAV and Tetris Mobile).

As others mentioned, not owned by Nintendo, but also Rare was sort of spent as a creative force by the time they were purchased in 2002.

They lost a lot of developers to Free Radical.

I'm not sure what Microsoft acquired with Rare because besides Viva Pinata and Sea of Thieves the company has basically produced junk over the last eighteen years. They're not even in control of their main IP: Perfect Dark as Microsoft has parcelled that out to another studio for the reboot.

Rare did align with Nintendo’s core business - and was an exclusive Nintendo64 developer - but even Tim Stamper, co-founder of Rare, is apparently none-the-wiser...

> “One of the most interesting parts of the interview is Stamper's view on Rare's sale to Microsoft, and the question that seems to eternally be on everyone's lips: why didn't Nintendo snap up the studio beforehand? Nintendo owned almost half of the UK company, but for reasons unknown never tried to buy Rare outright, despite the fact that the Stampers were clearly on the lookout for buyers.

Stamper is at a loss as to why Nintendo didn't step in and open up its chequebook:

I've no idea why they didn't do that. I thought we were a good fit.” [1]

[1] https://www.nintendolife.com/news/2015/08/rare_co-founder_ha...

Couldn't edit after I saw the replies but thank you for reminding me Rare was always 2nd party. So not quite the same but Nintendo could have acquired them like Monolith Soft or Next Level Games

> Nintendo is a 132 year old company (111 at the time this happened), with a "war chest" of $10 billion.

Now they are successful, after the huge hits of the Wii, DS and Switch. Even with that the company was in a lot of trouble during the Wii U period in 2014, with executives taking 50% pay cuts.

When this played out in 2000 it was during the N64 era, with GameCube being close to launch. While those were not failures per se, they were very, very far behind the PSOne and PS2 in terms of popularity.

Everything lagged far behind PS1&2. Many even predicted the death of PC gaming during the PS2 era, so great was its dominance. PS2 still outsold PS3 for a long time after the latter console was released. Nintendo survived that era, Sega did not (as a console manufacturer).

> executives taking 50% pay cuts.

Something to be admired about their corporate culture over there

As a huge fan of Nintendo I am glad this never happened. A few years later Nintendo released the Wii console which was revolutionary in allowing users to go beyond a physical joystick and incorporate movements in videogames.

Also companies acquired by microsoft don't usually have a happy ending(layoffs, product stagnation) see - skype, linkedin, yammer etc

To me the interesting play would be to acquire Nintendo, move the Xbox division into the Nintendo division, and then spin that off into a new independent gaming company. Might be good for shareholder value in the end and put Microsoft in a better position to focus on their core enterprise cloud business while receiving fair value for its Xbox assets.

Nokia was founded before Nintendo.

Nintendo was at its lowest point not long back with the WiiU. In 2000 they were looking at lacklustre performance with N64 and Gamecube. (and already fallen behind Sony)

You could probably cite similar figures about Netflix and Blockbuster when the former approached them.

Netflix didn't approach Blockbuster to acquire it, but rather to get acquired.

I don't know whether Netflix started streaming service if they were acquired

132 year old? So are some random family restaurants. How does $10bil of money matter either way? Microsofts market cal is north of $1T, while Nintendos is less than $100B. And finally the question is not what Nintendo would get out of it. The question is what their shareholders stand to gain.

$10 bil of money means Nintendo has all the money they need on hand to continue to develop for their markets or new markets so what impetus is there to be acquire or merge? Nintendo is not a very big company comparatively.

Ah, merging to get access to money, yes I suppose they don't need that. My uneducated guess is that the reason for a merger would rather be merging the xbox with the switch, and merging the game libraries too. Can't say I know whether that's a good idea.

Yeah that could happen but why? The architectures are different. What benefit is there? Many Japanese companies actually treat North American Market as a secondary thought, Nintendo in a sense is one of them.

> The question is what their shareholders stand to gain.

thankfully, not the whole world thinks like that.

Why is that so bad? Shareholders are the owners of the company.

It’s a common misunderstanding that the only purpose of a company is to make shareholders happy.

It's not a misunderstanding its how companies work. If you make shareholders unhappy you simply risk them leaving. Thats why on average companies do things that make them happy. Oh, also the shareholders pick the board and the board does things for the company. You can see the relationship now?

I know how companies are governed, and it is of course an empirical fact that most large listed American companies are run to maximise stockholder value. But that does not mean that it is the purpose of all, or even most companies. People run companies with a variety of reasons, including things like having fun or making the world a better place. More importantly, companies have moral obligations not only to stock holders, but to the employees, the environment, and the communities they operate in.

You're right - that is a misunderstanding. I think you accidentally replied to the wrong comment seeing as I didn't say or imply that.

Shareholders are known for optimizing for short-term liquidity or value gain, because even if some shareholders have a long-term view, shorter-term holders can buy in and force their views.

However, in many cases this is in direct conflict with much larger value growth that requires a longer investment term. Or in conflict with valuing greater long-term stability over a quick short-term gain.

Yeah, that's how the game works. Its like democracy - people can and do vote for idiots.

When you accept outside funding in exchange for shares, control gets shared. Honestly, do we really need to debate this?

You are the one who asked why it was bad. Why ask a question if you don't want to know or debate it? Was it purely rhetorical?

No, what I'm saying is not up for debate is the fact that control gets shared when you take someone else's money. Its a known framework in which everyone operates.

Your "shareholders are known for" is simply a BS talking point. Every person who has a 401K is probably a shareholder somewhere. All those hundreds of millions of people value long term stability too. Nintendo is not a penny stock.

It's a different thing to say "I value long term thinking" and acting that way, and rewarding long term thinking. It may be that people are simply too stupid to see that the ship is being hacked up for fuel, and thus they put their faith in the captain doing so.

Yes, and especially not Nintendo, which was a family-owned company at the time. Imagine Papa Gino's going to a family pizzeria offering to buy them out and being told "no, and also fuck you".

Just to add on that... the original founder put a rule in the company that it must remain a family business, to the point that when they didn't had a heir, the guy adopted someone and gave him the family name, to keep the family going.

Only reason the company is not with a family CEO right now, is because the last family CEO personally gave the greenlight to the shift, because he genuinely believed Iwata (the person that would replace him) was more skilled than he was at managing the company... Yet seemly he still paid close attention to the company even after retiring.

Right now the children of the last CEO that theoretically own Nintendo biggest share block, but seemly nobody is sure of that, only information I found is that seemly one of them sold the shares to Nintendo itself (thus increasing the shares the other members had of Nintendo, percentage-wise).

Hiroshi Yamauchi took Nintendo public in 1962. He was the largest shareholder until his death in 2013. In 2008 he owned 10% of the shares, and as of 2020, all japanese individuals total share was under 5% [2].

Here's a financial statement from 2000 [1].

I can find no evidence Nintendo was a family-owned company at any point in recent history. Have a source showing even majority shareholder status by some family combined?

[1] https://www.nintendo.co.jp/ir/pdf/2000/001122e.pdf

[2] https://www.nintendo.co.jp/ir/en/stock/information/index.htm...

In a sentimental way, I guess so. But if Nintendo is a public company, they probably committed some kind of fiduciary wrong in not consulting their stockholders.

They don't have to consult stockholders in order to make business decisions. They just have to be honest with them.

I feel this is more of an American capitalistic perspective.

Nintendo would hopefully become higher quality under Microsoft, that's what they'd get out of it. Microsoft has shown they can culture a good developer ecosystem, Nintendo is awful for third party developers. Nintendo also struggles with new technology, their systems are always a step behind and they were critically late to having games on the app stores (the extreme success of Pokemon Go after a decade of thinking smartphones weren't worth it is an egg on the face of the Nintendo leadership).

They really just have a strong brand, that's about all Nintendo has going for it. Microsoft can steward the brand like they did for Minecraft and it wouldn't lose any value, we'd just get higher quality games and hardware.

Nintendo made so many brilliant games in the Mario franchise. Likewise with Zelda (and Metroid and there will be more if you look closely). Their consoles are typically robustly made. The controller-drift issue with Switch being a notable recent exception.

As for their systems being "behind", the xbox and playstation motion sensing controllers came _after_ the Nintendo Wii made them popular. The Switch came with a new idea of a console which is both a handheld and one connected to a television. The 3DS came with a lenticular 3D display. Unless you measure being ahead/behind in the sole axis of computational power, they are setting trends and taking gaming to new places.

They are a serious pain when it comes to how they hound fanmade products which might feature any of their IP, have a substandard system for online play, or a poor developer experience but being of sub-par quality is definitely more in microsoft's department than Nintendo's.

It's not good for a platform developer to be the only one making killer games. This is a lack of diversity that is a weakness. The titles you mention are the only good franchises on Switch, third party titles have not had the same success. Meanwhile, Microsoft has had huge third party success for their platform with Call of Duty and other publisher titles.

No doubt Nintendo has been innovative with the control schemes for their systems, but nothing has really stuck. The 3D display was a gimmick, they even released a second version without it because it was so gimmicky.

I'm not impressed with making a robust console in 2020 as a selling point. I have an iPhone, my expectations for robustness are higher now. The Switch is cheap and clunky and the screen is low res. Great, it can handle falls - welcome to 2005 electronics.

> It's not good for a platform developer to be the only one making killer games.

[Citation Needed]. Nintendo has clearly earned a reputation for first party games above any other manufacturer. Nothing really competes with their first party games like BotW, Animal Crossing, Smash Bros, and so on.

I can get Call of Duty on PC, Xbox, Playstation. I don't really see how that's a compelling case for the Microsoft platform. The latest Xbox seems better than the PS5 in my opinion on hardware and price, but the PS5 still seems like a better buy because they have exclusive games and the Xbox Series s/x does not.

I'd say among gamers it's pretty universally agreed that the Switch is not a competing console with PC/Xbox/Playstation. It's an "And" console. You don't get a switch as an alternative to one of the above consoles, you get it as a supplement to the others. Unless you're a casual gamer, in which case you probably just get the Switch.

> "[Citation Needed] Nintendo has clearly earned a reputation for first party games above any other manufacturer."

https://www.businessinsider.com/nintendo-reliance-on-first-p...

I mean this isn't controversial within the games industry. Having diverse sources of revenue matter to support themselves if their first party games take a stumble for whatever reason is critical. It's not like Nintendo hasn't had downturns in the past, e.g. the Wii U era.

Fully agreed. Nintendo has a very differentiated market of game offerings on their platforms, and that's the reason people buy it. They don't buy Switch for the (underpowered compared to competitors) hardware, or something else.

That's imo the biggest problem Xbox console is facing. Does it have good third party games? Plenty. Does it make sense to buy Xbox if you already own a PS4/PS5 or a gaming PC? Not really, since the overlap of third party games available on all of them is giant. The only game I know people care about that is Xbox exclusive is Halo series. I don't know a single person who owns a PS4/PS5+Xbox or even gaming PC+Xbox. I know tons of people owning a PC+PS4/PS5, and I know a ton of people who own either a PS4/PS5+Switch or gaming PC+Switch (or all 3 of them). And that's Nintendo's unique offering, being an incredible complement to other consoles, not a direct competitor, while also being a great product of its own that doesn't just function as an add-on.

Mind you, I am not saying that Nintendo shouldn't increase the number of third party games present on their platform, quite the opposite. The increase of third party games on Switch is a really welcome development. However, under no circumstances should they decrease the number of first party games, otherwise they would end up in a losing position.

Right, but casual gamers are a large market and Nintendo does well catering almost exclusively to them.

Maybe it handles falls so your phone doesn't have to?

I disagree with most of your points and your conclusion. Especially the "create a good developer ecosystem". You provided no examples either, which makes me think you have never been involved with Microsoft as a member of the game development community. My experience, was poor. To say the least.

I'll look for the article to link here (which I probably initially read on HN) but it was a blog post that described a developer's experience slogging through Nintendo docs and working with Nintendo and it being very slow and difficult. He went on to describe that he had none of these problems when dealing with Microsoft (and to a lesser extent Sony).

Ah I remember. Thanks for the reply sorry if I sounded too negative.

Do you have any examples of how Microsoft acted as a good steward for the Minecraft brand? I haven't seen anything positive come from their control. On the other hand, the brand hasn't regressed either, but you would surely expect something more than that from new owners.

Parity with the java edition would have been a good start, followed by actual support for more than just cosmetic modding.

Reply on news.ycombinator.com