Iwata, who's said Nintendo will only make titles for its own products as long as he's in charge, should scrap that strategy to avoid further alienating investors who've driven the stock to six-year lows, fund manager Masamitsu Ohki said.
One option may be acquisitions as the past successes of the Wii and DS helped Nintendo, the world's largest video-game maker, build a $13.5 billion war chest in cash, equivalents and short-term investments. "Smart phones are the new battlefield for the gaming industry," said Ohki, a fund manager at Stats Investment Management Co. "Nintendo should try to either buy its way into this platform or develop something totally new."
On July 6, Nintendo shares jumped the most in almost four months after Pokemon Co., a former unit, said it's developing a game for the iPhone and handsets running on Google's Android software. JPMorgan Chase & Co. sent a note to clients saying the move indicated Nintendo may begin making titles for products outside its proprietary hardware.
Hours later, Nintendo denied any change in strategy, and the shares surrendered gains. "They just don't get it," MF Global FXA Securities Ltd. said in a sales note that day, referring to Nintendo. "Sell the stock, because a management once feted for creative out-of-box thinking have just shown how behind the times they are."
Revenue at San Francisco's Zynga Inc., the biggest developer of Facebook games including "FarmVille" and "CityVille," surged fivefold to $597.5 million last year. Some traditional games companies have taken notice. Sony Corp., maker of the PlayStation video-game console, began offering the PoxNora strategy game on Facebook last year, while Microsoft Corp. makes its Windows Phone software compatible with the company's Xbox Live gaming service.
Electronic Arts Inc., the second-largest U.S. video-game publisher, agreed last month to buy "Plants vs. Zombies" developer PopCap Games for as much as $1.3 billion to extend a drive into titles played on sites including Facebook. That's more than triple the $400 million Japan's DeNA Co. agreed to pay last year to buy iPhone-games developer Ngmoco Inc. (SF Gate)