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Article / 14 July 2015 at 11:56 GMT

What's next for Nintendo shares?

Head of Editorial Content / Saxo Bank
Denmark
  • Shigeru Miyamoto named as possible heir to late Nintendo CEO Iwata
  • Nintendo shares surged in March after Iwata announced mobile strategy
  • Low-profile CEO could result in flagging momentum for Nintendo stock

By Michael McKenna

The passing of Nintendo CEO Satoru Iwata has seen an outpouring of support and tributes from all corners of the gaming world. Remembered as an unconventional, player experience-focused leader, Iwata was the first CEO from outside Nintendo’s founding Yamuchi family and his 2002 appointment, according to the Wall Street Journal, “marked a major shift to younger management”.

One of Iwata’s most recent moves was his March 2015 decision to move Nintendo into the smartphone-gaming segment, a market that had long been neglected by the gaming giant.

As the tributes continue to pour in, some have begun speculating as to who will succeed Iwata, with outlets such as the WSJ and Fortune citing Nintendo executive and Super Mario Bros. creator Shigeru Miyamoto as the odds-on favourite. Like Iwata, Miyamoto was also a game developer prior to becoming an executive and it is this hands-on experience that led Fortune to call him the “heir apparent” to Iwata's throne.

Super Mario Bros.
And by "hands-on experience", we mean "the creation of our entire childhood"... Photo: iStock 

Miyamoto, however, isn’t so sure. In 2011, he told the WSJ that “I never wanted to be president […] if I was chosen, I’d have to run away. I’m not suited for that kind of job”, adding that he prefers operating with a degree of remove from Nintendo’s commercial heart.

Nintendo shares have enjoyed a robust 2015 on the back of Iwata’s mobile games announcement, spiking from JPY 13,470 to JPY 19,100 on the news and continuing to JPY 22,770 before retracing to their current level just shy of JPY 20,000.

Although Nintendo’s sudden shift of focus toward mobile gaming was a boon for investors, the company still faces headwinds in its core console market where sales of its flagship Wii U device struggles to compete against Microsoft’s Xbox One and Sony’s PlayStation 4. 

In fact, in a June 19 interview with US radio network NPR, Miyamoto himself said that people simply didn’t understand the system, whose tablet-style controls were not as obvious a selling point as the graphical power and online experiences of its competitors.

It is likely that investors would perceive Miyamoto as adding value to the role of Nintendo CEO, especially given his long history with the company, his history of producing blockbuster games and the focus that he has traditionally (like Iwata) placed on player experience.

If the legendary designer is serious about not wanting Nintendo’s top job, however, the company is faced with a difficult selection process; it is not likely that the market will reward a more conservative choice, and it is difficult to think of a candidate who would not appear as “more conservative” beside Miyamoto.

Nintendo
Nintendo shares soared when Iwata announced his mobile plans, 
but can his successor continue their momentum? Source: Bloomberg

— Edited by Martin O'Rourke

Michael McKenna is a consulting editor at TradingFloor.com

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