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Nintendo's warchest allows them to take risks, Wii and DS are proof of that
It is up to consumers to ultimately make judgments about our entertainment business. Therefore, before we launch new products, it is difficult to accurately predict which ones will do well or how long it will take until they spread explosively. We work hard to lower the impact that this unpredictability has on our business by launching various titles throughout the year. Nonetheless, it is still possible that we will experience times when, for example, the demand for a hardware system is significantly lower than the number of units manufactured, or we have to make a substantial investment in marketing. In such an unstable business environment, I think that we are only able to take risks because we have a strong cash position.
I think the essence of the entertainment business is that you cannot expect big results if you do the same things as your competitors or follow what they have already done. Therefore, I think that the significance of holding a strong cash position is to enable us to take risks and achieve good results.
When Nintendo developed a dual-screen handheld game device and made an entirely different controller for the Wii console, did you not question why we would do such a thing? These endeavors went against the grain at that time and majority of people in the industry believed that Nintendo would not succeed. A strong cash position is necessary for us to be able to make such decisions without facing a crisis after just one misstep. Once you understand this, I think it will help you to understand Nintendo’s business more. - Satoru Iwata
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I think the essence of the entertainment business is that you cannot expect big results if you do the same things as your competitors or follow what they have already done. Therefore, I think that the significance of holding a strong cash position is to enable us to take risks and achieve good results.
When Nintendo developed a dual-screen handheld game device and made an entirely different controller for the Wii console, did you not question why we would do such a thing? These endeavors went against the grain at that time and majority of people in the industry believed that Nintendo would not succeed. A strong cash position is necessary for us to be able to make such decisions without facing a crisis after just one misstep. Once you understand this, I think it will help you to understand Nintendo’s business more. - Satoru Iwata
Link