Nintendo takes long view on tech crisis, bumping employee pay by 10%

The continued economic turmoil of the last 12 months has transformed the once fertile tech landscape into a barren wasteland of declining profits and job losses. As our news feeds are consistently peppered with fresh rounds of redundancies from industry leaders, Nintendo Japan is going in the opposite direction.

This week Nintendo Japan released its Q3 financial report, revealing a lowering in its profit and sales forecasts

“For the third quarter, sales decreased by 1.9% year-on-year to 1295.1 billion yen, operating profit decreased by 13.1% to 410.5 billion yen, ordinary profit decreased by 6.1% to 482.5 billion yen,” the report reads.

It also revealed that sales decreased by 2% year-on-year. According to the company, this was partially due to the exchange rate decline as well as continued supply chain issues, with semiconductors and other components being less available in the first half of the financial year.

This allegedly had a particular impact on sales during the holiday season, which were down compared to the previous year.

Nintendo also saw its stock price fall by 7.5% after posting its latest financial results.

Nintendo flips the script

Profit and sales decline, as well as supply chain issues, are not new stories. These issues have been plaguing the consumer tech and gaming industry over the past couple of years.

In 2023 alone we have seen major layoffs from Amazon, PayPal, Alphabet, Google, Microsoft and Yahoo. Even closer to the gaming sphere have been redundancies across IBM, Dell and Intel.

Here in Australia, big names like Linktree, Mr. Yum, Brighte, Swyftx and Finder have also succumbed to the pressure.

Nintendo Japan’s Q3 results could have easily been dismissed as par for an increasingly depressing course. But unlike its counterparts, its response to declining numbers has been entirely different.

Rather than cut costs or scrutinising org charts for potential fat to trim, Nintendo is giving its employees a 10% pay rise.

“It’s important for our long-term growth to secure our workforce,” Nintendo president Shuntaro Furukawa said in an earnings briefing.

This isn’t a particularly surprising move for Nintendo, which has tended towards long-term views even during economic turmoil.

Back in 2013, former Nintendo Japan president Satoru Iwata also refused to reduce headcount despite declining performance.

“If we reduce the number of employees for better short-term financial results, employee morale will decrease. I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world,” Satoru said at the time.

The former president also took a 50% pay cut in 2011 after the price of the Nintendo 3DS was slashed due to poor performance.

But it’s not just Nintendo

But the most recent move by Nintendo doesn’t exist in a vacuum. Back in January, Prime Minister Fumio Kishida called for Japanese companies to bring employee wages in line with inflation and cost of living increases.

There are also been pressure from the Japanese government to increase salaries to combat labour shortages and declining birth rates and immigration.

According to Reuters, 53% of large Japanese companies committed to wage increases for 2023.

This is important context, but it’s still refreshing to see a tech company take a longer economic view with people investment at the centre, rather than simply reacting to the short term.