Nintendo Co. said Friday that its longtime president, Hiroshi Yamauchi, would step down next week after 52 years at the world's second-largest video game company.
His handpicked successor, Satoru Iwata, 42, will take over the day-to-day operations of the $4-billion firm as it is locked in a three-way battle with Sony Corp. and Microsoft Corp. for dominance in the $27-billion global game business.
The 74-year-old Yamauchi, whose departure had been widely expected, leaves Nintendo in solid financial shape, with $6 billion in cash and no debt.
The company, which posted $86.8 million in profit on $3.5 billion in revenue in its fiscal 2001, expects fiscal 2002 revenue to climb 16% to about $4 billion, driven primarily by the launch of the GameCube console system and the GameBoy Advance hand-held game machine. Nintendo will report its financial results Thursday.
Iwata, who joined Nintendo two years ago from Hal Laboratories, which developed games for Nintendo, will have to work hard to maintain the momentum. Sony leads the gaming pack with nearly 30 million PlayStation 2 game consoles sold worldwide. Nintendo has sold 4.5 million GameCubes, and Microsoft is trailing at about 4 million Xbox consoles.
Although Sony has declared and Microsoft has hinted at a desire to use their consoles as gateways for delivering digital music and movies to living rooms, Iwata has said he does not wish to change Nintendo's focus on games.
"We will not deviate from our core business," said Nintendo spokeswoman Perrin Kaplan.
Neither Yamauchi nor Iwata was available for comment. Iwata will report to Atsushi Asada, a Nintendo vice president who will become chairman. Yamauchi will stay on as a consultant and advise Iwata.
Yamauchi, who owns 10% of the company and is its biggest shareholder, is expected to appoint an executive committee that would include Iwata, Asada and four senior management directors--Yoshihiro Mori, Genyo Takeda, Shinji Hatano and Shigeru Miyamoto, the creator of Nintendo's "Mario" and "Zelda" game franchises. Each member would have an equal vote in all strategic decisions.
Yamauchi, a publicity-shy executive, took over the family business from his grandfather in 1949 and transformed it from a small trading-card manufacturer to the world's second-largest video game company.
In 1984, he introduced the Nintendo Entertainment System, a cartridge-based video game console, just as Mattel Inc. and Coleco exited the market. The NES, however, sold well thanks to a game called "Super Mario Bros," and that paved the way for the Super NES, 22 million units of which were sold worldwide. In 1996, the company launched the N64, followed by the GameCube in November.
Today, video game revenue rivals that of the movie and music businesses.