Satoru Iwata has a tough act to follow. In late May, he took over as president of Nintendo Co. (NTDOY), the maker of playing cards that Hiroshi Yamauchi bought in 1949 and transformed into the video-game giant we are all familiar with. Yamauchi, now 74, was instrumental in creating a $20 billion global industry--and, in the process, transforming his Kyoto-based family business into a powerhouse with famous franchises such as Super Mario and Pokemon.
Succeeding Yamauchi is daunting, yes. But Iwata, 42, has already proved he's the right candidate for the job. When he joined Nintendo two years ago, the company was at a crossroads. Sony Corp. had jumped the gun by launching PlayStation 2, its second-generation game machine, a year ahead of schedule. Microsoft Corp. (MSFT) had raised the ante by unveiling details of its own game console, under stealth development. For its part, Nintendo had two products in development--the sequel to its popular handheld Game Boy and the 128-bit GameCube console.
It was clear to all that the company needed a dynamite strategy to stand above the fray. Enter Iwata. By the spring of 2001, he had created a new vision for Nintendo as the developer of simple and fun-to-play products. Instead of following the trend of developing ever more complex and time-consuming games, Nintendo concentrated on offering fare that was simple yet entertaining. The strategy worked: Thanks to strong sales, Nintendo's operating profit in the fiscal year ended Mar. 31 jumped 41%, to $953 million, on sales of $4.4 billion, up 20% over the previous year. So Yamauchi appointed him his successor.
Games are Iwata's natural environment. He started designing computer games for fun while still a high school student, then moonlighted for a game software house, Hal Laboratory Inc., while studying computer science at the prestigious Tokyo Institute of Technology. Despite the protests of his family, Iwata joined Hal, then a small startup, upon graduation and developed game titles for Nintendo's early consoles. When Hal went bust in 1992, Iwata took charge of the company and revived the business over the next few years. That's when he caught the attention of the Nintendo president. "He has the instincts you need to survive in this business," Yamauchi says.
For his part, Iwata is confident he can maintain the momentum by pushing his simple-is-best strategy. "This is the entertainment business, and it's our job to serve up a tempting fare," he says. He's off to a blazing start.