Why So Much Cash?
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- čas přidán 31. 03. 2024
- Nintendo is Japan's richest company, at least in terms of liquid cash. But not everyone has a positive view of Nintendo's financial outlook. What is the philosophy that drives them to keep so much cash on hand?
This is the first time I have seen a video that covers Nintendo's biggest strength. They built a financial policy that sets them up for the long haul and supports risk taking. That is why Nintendo's Market Cap is low versus the insane value of their IP. Nintendo make decisions stock holders absolutely hate like when they early last year announced giving the entire staff a 10 percent raise and the stock dropped %5+ that day.
Thats why we love nintendo, and not stock holders
Those stock holders are very short sighted.
You have to respect them for not caring about what shareholders or even fans want. Nintendo does what they want to.
I think their anti-consumer decision like 3D all stars and $60 Wii U port is for the cash reserve
@@QnjtGWonQNqVsbYyzjx4Nintendo is a business and like every business they are Pro-customer, Anti-consumer. There is some cross over but they are not the same. Look it up. Plus Nintendo gave the world a six month window with a warning prior to release for Mario 3-D All Stars, if you could not take advantage of the opportunity it is on you.
Physical copies were on shelves for two years after release. Moreover, Nintendo screwed themselves out of money by not keeping it indefinitely available digitally at least, they stand on their square and as Lenny Wright said just a post above yours you have to respect that.
How the hell did the CZcams algorithm know I always wanted in-depth financial analysis just about Nintendo from someone that sounds like the guy from Digital Foundry?
It can be very easy to forget, or simply never know, that Nintendo's been around for over an eighth of a millennium, and their fiscal strategy reflects an intention to stay that way.
Sometimes the answers are very practical and we don't see them because of how different Nintendo is compared to many other companies. I can see how employees share such strong confidence in Nintendo when they have more to back up their creativity and security than just words.
One thing I know...ps is boring af
I think the recent failures and controversy about other big, long running companies like Blizzard shows how smart the Nintendo approach is. Blizzard started as a big innovator with incredible talent, but through focusing on profit and letting bad culture grow and/or fester a lot of the long running talent quit and now they're hitting really hard times. While certainly a high profile case the same thing is happening at game companies all over from small to large companies. Even with all of their problems Nintendo's focus on innovation, talent growth, IP,, and a big, safe buffer means that as you say they can weather storms and never have to worry about suddenly realizing they've lost a big chunk of their core veterans.
this is the best nintendo prediction/analysis channel i have found. I love how grounded your videos are. I really got fed up of people pushing rumors and hunches like they are fact, it's so annoying.
With content mills and soulless mega corporations (buying up everything they can) being the norm, we’re lucky to have a company like Nintendo in the industry.
I like the Japanese approach of companies owning shares in each other so they get entangled way more than one business getting complete control over other businesses (buy them). I find this way more humane.
Yes. Nintendo wants to be a long-term profitable company with security and consistently high-quality output. Their cash reserves make them resilient and immune against attempts to take over. Remember the leaks about MS wanting to acquire Nintendo. And it allows them to survive flops.
Growing too quickly is often dangerous. Look at embracer, which somehow bought everybody and their dogs just to choke on it because a deal fell through.
Furthermore, Nintendo has good connections to several other companies and can rent staff from them
I personally wish they'd revive some old IPs.
When it comes to the 'outside Nintendo IP' like Endless Ocean, Another Code, Fossil Fighters and so on, they will likely only continue if the original partners are involved. I recall a dev story about Punch Out where Iwata only greenlit the project after running it through the original creator and receiving his blessing. The current leadership at Nintendo seems to take this stuff into account when reviving old IP, that and market feasibility I'm sure.
Well said.
Two supplemental points that I feel further back up your argument that Nintendo prioritizes their developers above all else: 1) Their legendary anti-piracy operations (and attention to the intellectual property ownership of their partners), and 2) Cases like Mario Party and Cruis'n, where Nintendo took the reigns of an IP from one company (Hudson Soft and Midway Games, respectively), and gave them to another company comprised mainly of staff who had developed the IP originally (NDcube and Raw Thrills, respectively).
super insightful as usual from you 👍
It’s wild to think of how conservative and deliberate Nintendo is as compared to the rest of the tech/gaming industry (particularly western companies)
I thought this was an April Fools video concluding in something like "Nintendo lost so much money with the Wii U and yet they're still around, clearly they don't need money lmao",
but it's an actual good and informative video! Who'd have thought!
Love your videos, keep up the good work! :)
every time you upload im blown away again and again by how quality your videos are. ive watched a few nintendo analyst channels before and kind of decided they werent my thing, but your scripts are so perfect and your arguments are so cohesive that i would probably be subscribed even if id never played a nintendo game in my life
Thank you!
Never underestimate a company that’s been in business since the 1800s. Unless leadership is too young and incompetent. Then it might end up like that one Warcraft 3 quote.
More generally speaking, as I understand it, there are two major business philosophies when it comes to cash management. The war chest approach, which Nintendo opts for, vs the 0 cash approach. The war chest approach offers more flexibility and more ability to withstand hostile market conditions, while the 0 cash approach offers a means in which all your assets are helping you make more money quarter to quarter. (I think generally the war chest approach is more typically seen in older, more 'traditional', companies, while the 0 cash approach is typically seen in younger, more 'disruptive', companies - so is super predominant in the tech sector. Which most video game companies seem to view themselves as being in, while Nintendo... Seems to view itself as a toy company which happens to mostly be making video games right now)
Your channel really is like a breath of fresh air. Your videos are always informative, mature but not overly so, and informed and grounded in facts, compared to a lot of speculative and rumor-informed Nintendo CZcams videos. I'm so glad I discovered your channel.
I just want this Nintendo mentality to rub off a bit more on The Pokémon Company. I've been playing the games since I was a kid and I feel like they're actually moving in a good direction game-wise given their recent titles but they do NOT give their games enough time to cook. I feel like they need to modernize their engines and tools and then give their big games at least a year longer in the oven while simultaneously finding talented third party studios to make in-between games for them which they can simply supervise instead of needing Game Freak to do the heavy lifting every single time. Even people's complaints about BDSP I feel had to do with the tight release schedule as if they had an additional year for that game they could have totally added in the missing post-game content from the OG games.
Hey this was very informational, many many things that I had no idea about, despite having eaten youtube videos about Nintendo for years. Thanks for making this!
Greatest video ive watched in a while! Thanks for a great insight!
Great analysis, subscribed.
This is a well articulated video!
Another insanly good video 🔥
Nintendo is the kind of company that has lasted for over a century and makes decisions to last for 10 more.
They prioritise the integrity and their longevity over anything else and will probably outlast firms like EA, Bethesda, and others who prioritise short-term profit in the industry.
Since there comes a point where you'll stagnate due to lack of quality and originality or willingness to take risks.
And I believe that for a majority of the triple a scene that point is fast approaching.
Especially with indie devs becoming more and more popular over time. I wouldn't be surprised if the current triple a devs got substituted for current indie devs in the long run. (However that might be a bit naive of me to say)
And while whatever shifts in the video game landscape happens in the future Nintendo will probably still be there kicking making great experiences and entertaining people globally.
What a renegade you are, releasing a normal and good video on the first of April
1:25 Common Iwata W, please someone scream this to Microsoft
Nintendo is saving all if its money to ensure its survival into the distant future.
6:40
When Switch launched in 2017 it was a unique console, a handheld with the capabilities of a main console and that was its success, now in 2024 there is a lot of Switch-like consoles but more powerful and with the capacities of a PC, What is Nintendo going to do to make the Switch successor not better but different and stand out above the rest?
Nintendo has always had its Exclusive Content to fall back on. Whenever that failed to impress, the console typically failed.
Take the Wii U. As a console riding off the success of the Wii, it did horribly. The Blue Ocean didn’t come back, and because most of its library was considered hindered by dumb gimmicks, it became one of Nintendo’s worst performing consoles.
Now the GameCube. Had horrible reception, basically kickstarted Nintendo’s childlike perception amongst the populace, but the software was amazing and has become one of their most beloved systems.
I firmly believe that despite its concept and execution being near flawless, even the Switch would have failed if the software didn’t come swinging.
Nintendo’s games sell their consoles, not the other way around.
I slightly disagree, the Wii sold not because of its games it sold because it had a fun gimmick, yes it had good games but most of the people bought it for the gimmick, I agree with the fact that Nintendo biggest selling point are their games, and with a bad launch lineup it can make it rough for any console like the 3DS or the mentioned GaneCube.
Anyways I think Nintendo is going to do something to make their own gaming tablet look and feel very different from the rest of the gaming tablets in the market because it’s their philosophy 6:40
It literally was not. The only capability it has was people's ignorance on how good the tech is, to get fooled by a tablet that was Sega Nomad of its time, as being "console quality."
And because the HDMI LLC has every single TV in the world under their oligopoly, to collect alms for that simple video passthrough. It was random consumer tolerance of when they ACCEPT to get the cost transfered to the buyer, or when they use FTC to nuke the device from orbit like PS Vita but not google miracast. It can ONLY happen once somebody takes the plunge and mimics like sony or Aya Neo can point at Nintendo "THEY got away with it!" if it goes to court.
Then they move right along to VOTE for these socialized "property" laws, that are the reason why all the manufacturing is in China and is illegal in USA, for any sustainable pricing based on how much THEY are willing to pay at the consumer end. Nintendo just has to pay tribute with $100 Switch docks littering the shelf space of retail stores, like some temple sacrifice generating wealth from just wasting the tax money to keep them displayed on the usury of HDMI copyright.
Good question (of course I'd recommend my Switch 2 playlist for various attempts to answers to this. 😂)
@@sboinkthelegday3892 I am not American, what’s the FTC and how did it nuke the Vita? I kinda don’t understand your comment
Former and late president Hiroshi Yamauchi said that it is a good thing to save up money for rainy days. Nintendo has a war chest full of cash. 💰
Does it have anything to do with the yen’s deflation?
nintendo as described in this video is so weird at first, being conservative financially so they can be progressive creatively, but makes sense if you think about it
This is why i find it hard to believe a hypothetical switch 2 is more than just a more powerful switch.
I have worked adjacent (and occasionally as a partner) to the local game industry here. Nintendo is an outlier compared to other gaming companies even inside Japan - as you said, the staff satisfaction is high, and the turnover is low. Anecdotally, the staff talk about their work differently to other game companies.
I lended them money just in case something goes wrong again
Those EXPENSIVE controller prices that’s why there sitting on all that cash.😂
Part of them holding on to cash is likely the weakness of the yen lately. They may be waiting for yen to strengthen to spend material amounts
My theory is They need more of that cash to develop their next console and the budget for Metroid prime 4
I think another reason they keep lots of cash is to avoid hostile (and no hostile) take-overs, by having the capacity to re-buy their stocks if a big buyer (hi, Microsoft) tries to approach.
You should never just buy a company without thinking about it. It is best to buy a company with which you already have a good relationship. For example, I wouldn't be surprised if Nintendo ever buys Level 5. 90% of all their games are only available on Nintendo consoles
Given how Level 5 wants to remain independent, I don't see it happening anytime soon.
Moon channel gave some really good insight to why part of the reserve exists, to protect their IP rights from the hungry giants, the likes of Microsoft and google who would absolutely love the have the rights to Zelda or Mario or god forbid the biggest franchise to exist period, pokemon
They look for every opportunity to seize, like sharks in the water, to loosen Nintendos grip over their IP
TL:DR the US copyright system is whack
Sadly IP Ownership is on a ticking clock, a long timer for sure but eventually all copyrights will become public domain against their will. Personally I think ownership should be respected no matter the size of the company or the type of individual.
@@NoxideActiveunfortunately, people would abuse that very hard
@@NoxideActive you know what?
I agree
@NoxideActive i don't think that an ip expiring is a bad thing, you can't hold onto something forever, also how low an ip last again? 100+ years?, i believe this is more than enough time for the company to profit from it and eventually hand it over to the people, sure many people will seize the opportunity and make works in bad spirit against the characters/world, i have seen how many people made lazy parodies about steamboat willie, but this also gives genuine fans a chance to make a tribute without the fear of having to give up in the middle because of copyright.
Copyright should last forever why should my property be taken from me.
If they went heavy into the expansion route soon enough the Wii U wouldn't have failed.
It would have failed regardless.
Why💰💰
Nintendo likes money 😂🎉
they've always done this
Yep. The Wii was a gold mine, and that allowed them to ride out the lean Wii U years without upending the table.
@@DanielZealand Switch profit exceeding Wii & DS profits combine years ago. Crazy right. Even quantity console lower than Wii + DS but profit way above them
They should have gave money to game freak so dexit wouldnt have happened.
nintendo only owns 33%, wich constitutes to pokemon go existing even though nintendo told them its a bad idea.
Extra cash on the side means they can scare more ppl with lawsuits if/when the need arrives
people have to understand that ip laws in the west dont align with the east. breaking some over there can be a federal crime.
Saving up for the TREMENDOUS cost of making AAA games on the level of these next-gen consoles, I'd assume.
For perspective: Microsoft spends around $500 million per game, while Nintendo has been able to get away with spending $15-20 Million on their top games. That's about to change with the shift to next-gen. Nintendo is one of 7 studios worldwide that can even MAKE games on this level.
Also, Nintendo is the only game company that turns a profit from console sales, rather than a loss. =P
oh I don’t know maybe they’re saving up to send their employees to the deep space when climate change makes earth uninhabitable
Nintendo should purchase Capcom
Why? And why not Bandai Namco, or Konami, or Square Enix?
Why?
Explain.
Don't just make calls. Do the homework and justify them.
@@SB-ex8nt just a feeling. I always felt like Capcom IP's complement Nintendo IPs. Plus it would give Nintendo the ability to make more adult games with some degree of separation. Similar to how Disney made rated R films under the Touchstone films banner. It's a market Nintendo could do well in.
Honestly, I feel like this would ruin capcom. Nintendo’s hardware isn’t good enough to run some of their best games.
@@supervideomaker9136If Capcom was working in house with Nintendo, they’d start benefitting off their genius software developers and probably gain access to their development kits.
Star Fox Zero and Luigi’s Mansion 3 are fantastic looking games but they run on their consoles just fine. Capcom would be fine.
But Nintendo isn't as big as sony or ms. ps is the market leader since ps1 era
You might want to stop with your nonsense.
@@stripedrajang3571no need to be mad. Truth always hurts
I am mad, but because there's no truth coming from you. You speak garbage.
@@Rizky-Gumilar, truth?
Nintendo is winning this current generation by a landslide. PS4 had a ton of early momentum but the Switch has since outsold it (look it up if you don’t believe me). PS5 and XBox in general don’t even come close to Switch currently.
Sony and Microsoft **as corporations** may be bigger but they are also MUCH larger and have to focus on way, WAY more things than just gaming, Microsoft especially. It’s true, but not a fair comparison.