David Rosenthal: evaluation

Transcript context

…The people who would have competed with them were Atari and Sega. Both were basically defunct by this point. Nintendo had this lane wide open because everyone else who's trying to come into the industry is coming after the core gaming segment, the serious gaming segment, or the high ARPU (average revenue per user)—people that are buying $60 DVD discs to play. To the other side of how are they allowed to screw up so badly in the home side, I don't want to say it doesn't matter, but it doesn't matter. Nintendo's revenue and operating profits more or less stay flat from the NES era all the way through to the mid 2000s. Even though the home console business basically just gets doused in gasoline and lit on fire, the handheld side completely replaces it. Nintendo's always doing a solid $4–$5 billion in revenue a year, call it, and maybe half a billion to a billion dollars in operating income. There's no gun to their head. Yeah. Handheld, very good business for Nintendo. When you couple that with a generation of home console that is also a good business for Nintendo, when they absolutely knock it out of the park, define a brand new form factor, and a brand new way to play games that has mass audience, then they do the most revenue in the company's history. That's going to be the Wii, and we're going to get to that. All right, the Wii. There's a little bit of a lead up to the Wii, which is some leadership changes. Satoru Iwata comes in and succeeds Hiroshi Yamauchi as president of Nintendo Ltd, the parent Japanese company. Right around this same time, in 2003-ish, Reggie Fils-Aime works his way up the ranks and comes in as the president of Nintendo of America. You've got this pretty awesome tag team of leadership that is ready to do something very different. The GameCube comes out. They know right away that this is a miss. They're still doing everything that you think they would do to try to occupy the time until they have something really great, but they're already foreshadowing very early. They're like, yup, yup, yup, we hear you, developers and gamers. We need to be doing something different.…

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