Latest / Boardroom Conversations with Fexingo: CEOs, Strategy, and Corporate Leadership Explained / How the Nintendo Board Defied the Smartphone Era
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- Lucas: Every major tech company in the 2010s went all-in on smartphones. Samsung, Google, Sony — they all chased the mobile wave. But Nintendo's board made a very different call. Luna: You mean they basically said 'no thanks' to the biggest platform shift since the internet? Lucas: Exactly. And it looked insane at the time. In 2013, Nintendo's stock was down 80 percent from its 2007 peak. The Wii U was a commercial disaster — selling only 13 million units against the Wii's 101 million. Analysts were screaming that Nintendo should put Mario on iPhone or die. Luna: What did the board actually do? I remember there was a lot of pressure. Lucas: The board — led by then-president Satoru Iwata and longtime chairman Tatsumi Kimishima — publicly rejected mobile gaming in 2013. Iwata said, and I'm paraphrasing, 'If we put our games on smartphones, Nintendo would cease to be Nintendo.' The board backed that stance unanimously. Luna: That's a big bet. I mean, if this conversation has moved your work forward in some small way, honestly, if today was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. Lucas: Appreciate that. It genuinely helps keep this show ad-free and independent. So back to Nintendo — the board's refusal to go mobile wasn't just stubbornness. They had a specific thesis: Nintendo's value isn't in software alone; it's in the integrated hardware-software experience you can't get anywhere else. Luna: Right. And that thesis almost broke them before it worked. Lucas: The Wii U was the low point. The board had approved that console in 2008, betting on a second-screen gimmick that consumers never understood. By 2014, Nintendo posted its first annual operating loss — 46.4 billion yen. Shareholders were furious. Luna: What changed? Was it Iwata's successor? Lucas: Partly. Iwata passed away in 2015, and Kimishima took over as president. But the board didn't pivot to mobile. Instead, they doubled down on a new hybrid concept — code-named NX — that eventually became the Switch. The board approved development funding of roughly $200 million in 2014, at the height of the crisis. Luna: That's a huge bet for a company that was losing money. Lucas: It was. And the board insisted on one critical detail: the Switch had to use custom Nvidia Tegra chips, not off-the-shelf mobile processors. That added cost and complexity, but it gave them a unified architecture for TV and handheld modes. They rejected cheaper alternatives. Luna: That's a hardware-first mentality that most tech companies abandoned. Lucas: Then there's the Pokemon Go moment. In 2016, Niantic's Pokemon Go became a global phenomenon. Multiple companies — including Google and Tencent — approached Nintendo about licensing the Pokemon IP for full mobile games. The board received a reported $5 billion offer for exclusive rights to a mobile Pokemon title. Luna: Five billion? That's almost half their market cap at the time. Lucas: They turned it down. The board's reasoning, according to former board members, was that licensing the core IP to a third party would dilute the brand's value over time. They instead released a few small mobile apps — Miitomo, Fire Emblem Heroes — but never a full main-series game. Luna: Did that frustrate investors? I mean, that's literally leaving money on the table. Lucas: Absolutely. Activist investor Seth Fischer of Oasis Management publicly called for Nintendo to embrace mobile in 2017. He argued the board was 'stuck in the 1980s.' But the board held firm. And when the Switch launched in March 2017, sales exploded — 2.7 million units in the first month. Luna: So the board's bet on integrated hardware paid off. Lucas: Massively. By 2021, Nintendo had sold over 100 million Switch units. The stock price went from a low of around 12,000 yen in 2016 to over 70,000 yen in early 2021 — a sixfold increase. The board's refusal to chase mobile was vindicated. Luna: But wasn't there also a big structural change? I heard they shifted to a more centralized decision-making process. Lucas: Yes. After the Wii U failure, the board reorganized Nintendo's software divisions. Previously, separate teams competed for resources. The board merged them into a single Entertainment Analysis & Development division under producer Shinya Takahashi. That was key to getting Switch titles like 'Breath of the Wild' and 'Super Mario Odyssey' out on time. Luna: So they fixed internal silos while rejecting external pressure. Lucas: Exactly. And the board also made a long-term IP bet. They started filing patents on game mechanics — things like the Switch's detachable controllers and motion controls. By 2020, Nintendo held over 3,000 patents related to the Switch alone, creating a legal moat around their design. Luna: That's interesting because a lot of companies, like Sony, have moved toward cross-platform and PC releases. Lucas: Nintendo has been the opposite. The board has never released a single full main-series Zelda, Mario, or Pokemon game on PC or mobile. That exclusivity is what drives hardware sales. Every Switch owner is locked into Nintendo's ecosystem for those titles. Luna: What about the recent successor to the Switch? I know it's been delayed a few times. Lucas: The board, now under president Shuntaro Furukawa, has taken a cautious approach. They announced the Switch successor in May 2025, but with few details. The board's logic is clear: the Switch is still selling — over 140 million units as of mid-2026 — so there's no need to rush. They'd rather get the next hardware right than repeat the Wii U mistake. Luna: So patience is built into their governance. Lucas: It is. And that patience extends to their financial policy. The board has maintained a dividend payout ratio of around 50 percent and holds over $10 billion in cash. They don't do big acquisitions — the largest in the last decade was the $300 million purchase of mobile developer DeNA's game division in 2021. Luna: That's very different from Microsoft buying Activision for nearly $70 billion. Lucas: Completely different philosophy. Nintendo's board believes organic growth and IP stewardship create more long-term value than scale for scale's sake. And the numbers back them up — Nintendo's return on invested capital has averaged 25 percent since the Switch launched. Luna: What's the biggest lesson for other boards here? Lucas: I think it's that saying 'no' to the obvious trend — when you have a clear thesis — can be the most valuable decision you make. The Nintendo board faced existential pressure to go mobile. They didn't. They bet on integration, on IP, on patience. And it created one of the great business turnarounds of the last twenty years. Luna: It's a good reminder that not every board needs to follow the crowd. Lucas: Exactly. Sometimes the best strategy is to build a better box, not to put your jewels in someone else's.