After last week’s quarterly finical briefing Mr. Iwata fielded questions from investors about Nintendo as a whole. The Q&A has been translated for those of us rusty on Japanese. (Or no Japanese) Nothing to ground breaking but an interesting, long, read.
Q: Please explain the current structure of the development divisions and the direction you, Mr. Iwata, are taking in order to establish an ideal one. You once told us that the two hardware development divisions had been consolidated. I have heard that other software development companies mainly adopt a studio, project or division-style development structure. Please explain Nintendo’s current structure, and how you, Mr. Iwata, are planning to change it.
Currently Nintendo has four development divisions and one of them is for hardware development. Years ago, there were two different hardware divisions – one for handheld devices and one for home consoles, with few personnel interactions. In fact, we had to use completely different technologies for handheld and home console development at that time. Technologies that were suitable for handheld devices or home consoles had nearly nothing in common, so it was reasonable to divide hardware development into two divisions. However, with recent technological advances, technologies for both systems are becoming more similar. Also, just because they are home consoles does not mean today that they can consume as much electricity as they possibly can. In fact, we have already been proactively working to reduce the consumption of electricity since the Wii era. Furthermore, the Wii U GamePad has a large screen, a battery pack, control inputs and wireless modules inside, so in technological terms, it required very similar know-how to that required for developing a handheld device. Based on such experiences, we had been working toward consolidating the two divisions for a while and started the process two years ago. Of course, it takes time for two divisions to completely assimilate, and we now are confident that it has progressed very well. Senior Managing Director, Mr. Takeda, is in charge of the hardware development division.
On the software side, there are two development divisions – the Entertainment Analysis & Development Division, where Senior Managing Director, Mr. Miyamoto, is in charge, and the Software Planning & Development Division, that I used to manage and now a member of the board of directors, Mr. Shinya Takahashi, is in charge. The Entertainment Analysis & Development Division mainly develops software internally and the Software Planning & Development Division develops it mainly with external second-party development companies, and internally in some cases. They cover such a wide range that they are divided into two divisions. Along with the consolidation of the hardware divisions, we have also been working on how the two software divisions can cooperate more effectively to decide which titles should be developed externally or internally and the resources necessary to complete the software, and we strongly believe that this effort has progressed well too. In 2004, we established the Software Planning & Development Division to relieve Mr. Miyamoto from handling the games co-developed with second parties to enable him to concentrate on internal development. After that, I was in charge of the Software Planning & Development Division, but as a competent person was ready to take over, I was able to step down from that position. In that sense, we have taken one important step forward because we found someone capable of upholding the role.
The last one is the System Development Division, where I am now in charge. It creates fundamental parts of software development such as the network, system software, OS, SDK (Software Development Kit) and libraries. As I am the only board member who has a background as a programmer, I am in charge of this division. In future, I would like to find a suitable person to take on this role in order for me to fully concentrate on my presidential tasks. Even though I might continue to be involved in development at Nintendo to some extent, it does not necessarily mean I have to be in charge of a specific division, and I would like to find the right person for the job.
What is most important is if these divisions can effectively cooperate with each other. If each one had completely different values or goals, their actions would become incoherent and the company would end up suffering from the ailments that typically plague large companies. In June last year, the Development Center was completed only a 5-minute walk from the headquarters and all of the development divisions were assembled there. Thanks to that, developers have more opportunities to meet one another and to work together in cross-division projects at some designated area of the building. So, from the viewpoint of the developers’ working environment, we are convinced that we have achieved a significant improvement as an appropriate return on what we invested in that facility. Even though we internally have four divisions, Nintendo is one company and consumers see any kind of output as Nintendo’s output, regardless of the division where it was developed. In that sense, we have divisions only for our administrative purposes and what is important is how each division can effectively cooperate so that all of them can work as one group. As for your inquiry, Nintendo has not adopted any form of studio, project or division structure, but as we desire to create something which can satisfy our consumers over and beyond division boundaries, it can be said that our structure is similar to the project model. In particular, under the recent circumstances surrounding the video game industry, what is highly evaluated does not always sell well. We have to create products that are easy to understand, do not cause consumers to feel stressed at any stage of the experience and that consumers are attracted to at a glance. The bar has been raised, so it is now even more important to ensure that even with different roles and positions, everyone is working toward a common goal. amiibo was born through such processes, and the same goes for our approach to smart device utilization, and we are planning to proceed in this way for new projects in the future as well.
The QOL (Quality of Life) project, however, is slightly different. As we had to create a new project and new business model, we formed an independent team called the QOL Business Development Department. In other words, we created a permanent project team in the form of a new department. People assembled from four divisions to create this department and it reports directly to me. I think that is all I can share with you about the development structure at this moment.