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Nintendo Employees Generate $2.5 Million Each
by James Brightman

Nintendo was so successful last year that each employee generated $2.5 million, more than double what Google's employees generated. And with the Wii off to a red hot start, Nintendo is set for another fantastic year. In fact, according to Fortune, the Wii has already "won." More within...

The latest issue of Fortune magazine has a well-written cover story on "How Wii Won," detailing some of the same "Blue Ocean" philosophy we've heard dozens of times at this point, but perhaps more interestingly detailing some of the financial aspects of what's contributed to Nintendo's success.

Judging by Nintendo's last fiscal year in which the company produced $8.26 billion in revenue, Fortune points out that each of Nintendo's 3,400 employees generates a staggering $2.5 million. How does that compare with other corporate juggernauts? Microsoft's employees generated $624,000 each last year, while Google's generated $994,000 each – still less than half of Nintendo's employees. On a profit scale, Nintendo's total income was almost $1.5 billion, or $442,000 per employee, last year, compared with Microsoft's $177,000 and Google's $288,000. It's astounding no matter how you look at it.

As opposed to Sony's game division, which has been languishing with a nearly $2 billion loss in the last fiscal year, and Microsoft's game division, which has yet to become profitable, Nintendo's Wii has turned a profit on every unit sold from day one. The console is far less powerful than either the Xbox 360 or PS3, and that's made it much easier for Nintendo to make money with the machine. In fact, the chip that makes the "magic" (i.e. motion sensing) happen (ADI's three-axis accelerometer) costs just $2.50.

The article is full of effusive praise from industry leaders as well. "We looked at the capabilities of the Wii early on and saw that it was solving the most important element in the game industry - accessibility," said Ubisoft CEO Yves Guillemot. "Nintendo has been very open with us," he added. "They're willing to do things that are a bit crazy. They see what we want to do and help us to make it as good as possible."

"Nintendo is a pioneer," said John Schappert, COO of EA Studios. "They're zigging when others are zagging. It's another growth curve for the industry."

Even Microsoft Corporate VP Peter Moore couldn't help but praise the Wii. "Nintendo has created a unique and innovative experience," he said. "I love the experience, the price point, and Nintendo content." He was quick to add, however, that Microsoft "provides experiences that Nintendo cannot provide."

The only executive who truly questioned the Wii was Jack Tretton, the president and CEO of Sony Computer Entertainment America. "You have to give Nintendo credit for what they've accomplished," he admitted. "But if you look at the industry, any industry, it doesn't typically go backwards technologically. The controller is innovative, but the Wii is basically a repurposed GameCube. If you've built your console on an innovative controller, you have to ask yourself, Is that long term?"

Whether it's long term or not no one can really say, but it sure is paying off for Nintendo now. The company can't even keep up with demand. "We cannot simply make 1.5 times as much or two times as much," said Nintendo President Iwata. "When you're making one million a month already, getting to 1.5 million or two million is not very easy."



Editor's comments

Isn't proclaiming the Wii the winner a bit premature? Sure, selling 5.8 million units just 5 months after launch is phenomenal, but when console cycles last 5-6 years, a 5-6 month period doesn't exactly prove anything. Of course it depends on what Fortune means by "won." Certainly from a financial standpoint Nintendo has won. Their cash position and profitability on the Wii from the start is proof enough of that. Or maybe Fortune means winning over new consumers. That's been Nintendo's goal, to broaden the audience, and so far it's been working. Whether it all ultimately leads to a market share victory is another matter.

It also appears that Fortune senior editor Jeffrey M. O'Brien, like many in the mainstream media, doesn't really "get" the video game industry.

"While game consoles typically attract youngish males with an antisocial streak, the Wii is bringing people of all demographics together," he says.

Why must major publications like Fortune perpetuate this sad, stereotypical notion about gamers? People who buy consoles aren't just "youngish males," and this idea that they have "an antisocial streak" is the same kind of mentality that feeds into the media's desire to blame video games and gamers for real-life acts of violence. Most gamers are in fact the opposite of anti-social, engaging in co-operative play, online multiplayer, and discussing topics in online communities and forums. More importantly, they're everyday people like you and me, with regular jobs, relationships and other interests besides video games.
 
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