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Nintendo taps operations whiz to lead in turbulent times

Game company seeks to end dependence on magnetic visionaries

The popularity of the Nintendo Switch has lifted the company's earnings.

OSAKA -- Nintendo has tapped a corporate planning veteran to replace its retiring president in the hope that operational expertise, rather than charismatic leadership, is what it needs as smartphones alter the video game landscape.

Shuntaro Furukawa will take office as president on June 28. Outgoing chief Tatsumi Kimishima will move into an advisory role.

Furukawa will split management duties with Shinya Takahashi, head of entertainment planning and development, and Ko Shiota, head of hardware development. He will share representation rights with software luminary Shigeru Miyamoto, who will support the new leadership team.

Earnings beat expectations in the year ended March 31, Kimishima told a news conference on April 26. "And so, I thought, I can make the handoff to the next generation earlier than planned," he said. Sales more than doubled on the year to 1.05 trillion yen ($9.66 billion), and net profit jumped 36% to 139.5 billion yen, driven primarily by the hit Nintendo Switch game system. Net profit is seen climbing 18% to 165 billion yen this fiscal year.

Nintendo was ruled for years by strong, outspoken chiefs who depended largely on their own instincts. Kimishima predecessor Satoru Iwata took over from the founding Yamauchi family at a young 42. The genius programmer "took control of everything from development to operations," according to a former executive, and steered Nintendo until his untimely death in 2015 at age 55. "Losing Iwata was a major blow," the source said.

With planning chief Shuntaro Furukawa, left, taking over for Tatsumi Kimishima as Nintendo's president, the game maker seems to have lost its taste for visionary leaders. (Photo by Kento Awashima)

When Kimishima, a veteran of the former Sanwa Bank, stepped up, he told those close to him he did not intend to stay for long. His first year on the job was not easy. Profit plunged in fiscal 2015 as sales of handheld game systems struggled.

Kimishima worked for the rest of his tenure to make the company less dependent on a strong chief. Nintendo announced in April 2016 that it would install a slate of executive officers, which the president helped pack with promising 40-something talent.

The president also shepherded the Switch, Iwata's final brainchild, into being. His decisions on the timing of its introduction, as well as those surrounding production and sales, gave the system the hit status that the Wii U never attained. On the software side, Kimishima stretched the development timeline for the latest entry in Nintendo's hit "Legend of Zelda" series to five years from the initially planned two or three. This extra time let developers fully realize the game's potential and synchronized its debut with the Switch. A string of other top-notch titles for the platform have contributed to its ongoing success.

Kimishima is now ready to put Nintendo in new hands. Furukawa, while not a charismatic visionary in the Iwata vein, is seen as the ideal leader for a company currently lacking a medium-term management plan. As a longtime planning veteran, he has a sense of when to let projects run free and when to rein them in -- and is bold enough to discontinue game systems no longer performing as they need to, even when this means defying their protective developers.

These skills are essential at a time when the nature of the video game business is changing. The company's ticket to global fame was the Nintendo Entertainment System, released in Japan as the Family Computer in 1983. Yet by 2016, the market for smartphone games in Japan had grown to 969 billion yen, nearly three times that for game systems, according to game magazine Famitsu.

"The Switch accounts for a large share of our overall business," Furukawa has said. "We need to foster alternatives, including smartphone games."

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