Companies always look for profit, deals and margin upon them. Nintendo is no exception to this. Today the company announced its future acquisition of JESNET Co. Ltd., a videogame distribution company for Japan.
Before diving into the discussion we have to consider the fact that this kind of operation is going to impact solely Japan's videogames market. Therefore is no surprise we haven't seen yet a stock raise, especially with Nintendo's current stock price.
Videogame distribution is a procedure that in 2016 is changing drastically. Big companies like GameStop are slowly, but constantly changing their business from a classic distribution to selling accessories, tees, figures and so on. The digital market is expanding and Nintendo is aiming towards it from a really long time. On every FY result slides, Nintendo's CEO points out how much digital revenues are growing and how they are improving their sales with discounts.
Nintendo's April 2017 full acquisition of JESNET seems to be in contrast to this commitment, but it is part of a transition. Following the process of making a game to sell it to customers can guarantee to Nintendo the possibility to have discounted games and more profit margin on gaming distribution, not submitting itself under distribution companies. It is a profit deal.
With NX coming out in March, Nintendo is making sure that Japan, and in the future maybe also other markets, will benefit from a direct distribution, that means less expenses, a malleable and controllable process. From their perspective is a big step. Nintendo is becoming like a global company that apply local distribution throughout a fruit market model: make everything by yourself and sell it at the best price towards every possible distribution channel. Nintendo's games are becoming more "bio" in the sense of crafted all by on hand. Japanese customers will only give money to Nintendo in the future.
Experiments like Nintendo UK website that sells exclusive limited edition are a clear sign of what Nintendo is trying to do: maximise profits and margins. To facilitate the acquisition, JESNET now owns some of Nintendo's stock, and will work with AJIOKA, another company in the videogames business. Nintendo today begun a compelling program to be a bigger and better company, because retailers already figured out how digital sales are hurting their business and how they will have to react.