Reggie Fils-Ame talks about web3, augmented reality and his gaming SPAC

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February 2019, Reggie Fils-Aimé announced that he was leaving Nintendo after 16 years, 13 of which he spent as president and chief operating officer of the company’s North American division. It was a prolific period that saw more ups (Wii, Switch) than downs (Wii U) during a booming gaming industry.

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Fils-Aimé, a lifelong serial executive, has retired from this aspect of the industry but still maintains a presence in gaming. He served on GameStop’s board of directors (later resigned in 2021), joined investment and consulting firm Brentwood Growth Partners, and even hosted a gaming podcast for a while (as is done during a global pandemic).

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Earlier this month, he released the book “game breaking“, which describes his journey from the Bronx to the Nintendo boardrooms. We sat down with Fils-Aimé to discuss his time at Nintendo, his plans for a $200 million SPAC, and how he sees games evolving.

I was going to ask about retirement, but “retirement” might be too strong a word.

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My form of retirement is to do what I like with the people I like to do it with. So whether it’s being on the board of directors, whether it’s the SPAC I’m in, whether it’s writing and releasing a book, that’s my form of retirement and I’m having a lot of fun.

What are the plans for SPAC?

SPAC is in the wide digital entertainment space. We went public last December. We had about a billion dollars in oversubscription, so we went public. $230 million is our military budget. But with a billion dollars left on the table, that means we can go for a fairly large acquisition and make it public through the SPAC process. We have until next September to determine our target and complete the deal. We are in the process of meeting with many different companies and many potential players.

Nintendo Switch Lite

Image credits: Brian Heater

What gaming trends are you most excited about?

I believe web3 will create some opportunities. In particular, I think blockchain could lead to some unique forms of digital entertainment. I also believe that the creator economy has unique opportunities. Everyone wants to be creative. These tools and the companies that use it have the ability to succeed. Another thing I would like to highlight is that while there have been a number of major acquisitions in the gaming space, I believe that this will lead to new independent companies led by creators who simply do not want to be part of these larger organizations.

Three companies have dominated the console market for so long. Do you see a place for another player?

I do. There are a number of companies that are approaching this next platform in new and unique ways. See what Valve is doing on the PC side. You have Steam and Steam Deck. What they are trying to do is to create a portable experience for games, mostly PC type. It could potentially become a standalone platform. I think what Epic is doing is very interesting. Obviously you have Unreal, which has become a mainstay for game developers. Unreal is now also being used by animators and people in the film industry. It may become a different type of platform. Unity plays in the same space, though I think they’re a little behind. I think there is room for other platforms as well, but they will be defined differently than, say, Sony, Microsoft, Nintendo.

Are you optimistic about AR and VR?

I am very optimistic about AR. I think augmented reality is leading to a more collaborative experience and there is already evidence of what augmented reality games can be. I’m not for sale in terms of gaming in VR. I think VR has some very interesting business applications, but I haven’t seen a good gaming experience in VR yet. One of the lessons of the Virtual Boy is that you shouldn’t let the hardware completely dictate the content. Obviously this happened before you, but the Wii U had problems too.

Absolutely. Nintendo has listened to this message more times than not, and I think more times than any other old platform. Their mentality has always been this: it has to be games, it has to be gameplay. Their developers always want to bring unique forms of gameplay. And that’s what makes technology bring it to life. It should always be in games.

Image credits: HarperCollins Management

From the outside, the company was disappointed, including the speed with which it mastered technologies such as smartphones. Nintendo seemed to be dragging its heels. You have arrived as an outsider. Have you experienced similar frustrations within the company?

My team and I have taken on the role of educating developers in Kyoto about key trends to think about in order to stay on top of how the industry is shaping up. The point is that you need to constantly communicate these promising paths. And you need to constantly repeat to get traction. But once a company truly believed in a direction and came up with a unique approach, they were usually incredibly successful.

Has Nintendo become more flexible or at least more open than when you started?

I believe it’s true. I think a lot of that started with Satoru Iwata. He was very interested in new and different ideas. And I think he definitely took the company in that direction. The company has always had a history of innovation and a history of creating completely unique things. But under his leadership, it was customary to take risks and move aggressively forward. And I believe it continues today.

One of the things I appreciate about the book is the discussion about relative failure. It’s safe to say that the Wii U didn’t deliver the success you hoped for. What lessons have you learned from this experience?

The gamepad as an innovation did not live up to our expectations. The company really believed that this would allow for different types of games, perhaps best illustrated by Nintendo Land. In the end, the company was unable to fulfill this offer. The second thing I would like to emphasize is that the pace of the content was not enough to keep up the momentum. The games were too slow to launch. The third point that I would like to emphasize was that we were still using predominantly internal development software, which was not easy for external developers to use and therefore create content for the system, which further exacerbated the content shortage because the first party could not deliver the games on time.

These were very hard lessons that we successfully applied to the Nintendo Switch. The Switch’s core proposition, that you can play on a big screen TV and then undock the platform and take it with you, is the main proposition that resonated with the player.

What are those backstage conversations like when it’s clear to you that it’s time to sort of cut your losses and move on to the next thing?

Conversations are incredibly difficult. The problem is that there is not always agreement. I, for one, pushed incredibly hard to try and get the entire offer down to $99. I was convinced that if we could do that, we would sell another 50 million pieces of Wii hardware and related software. But, unfortunately, the economy of the system did not allow this to happen.

As for Wii U, it became clear after we had already lowered the price – after we had already used traditional tactics, skill sets and color change – the platform still fell short of our expectations. It was an incredibly difficult conversation with the key developers at the Kyoto headquarters to start working on the next system and start thinking about what it will be like. But also, back to Nintendo of America to focus on interacting with retailers, focusing on launching some key pieces of software to keep some semblance of momentum going.

Image credits: Nintendo

Looking back at your time at Nintendo while writing this book, do you have any major regrets?

I look back at the moments, the key decisions, and admit that the final decision was not what I wanted. The pricing decision for the Nintendo 3DS is a classic example from my Nintendo days. I was convinced that the $249 launch would not be a success, and argued with all my might about the $199 launch. In the end, the final decision was Mr. Iwata’s and he said no. Within a few months, we had to drastically lower the price to $169. I believe that if we had started at $199, we would have been successful from the start. But what will you learn from this? How will you be able to sell these controversial decisions more effectively in the future?

You seem to enjoy the flexibility this new life brings, but if the right opportunity presented itself, would you take on a leadership role again?

Never say never. But I do not think so. Right after I retired, I was offered to lead a large organization. Like any smart person, you appreciate it, but in the end I decided that running a big business is not what excites me today. What excites me is going to the Bronx, connecting with young people, telling their story and inspiring them to follow their passions and live out their dreams. What excites me is writing a book and sharing my principles. What excites me is being in the boardroom and sharing experiences with other senior leaders to help them grow and manage their businesses more effectively. These are things that I cannot do on the scale that I do now as a leader.

We talked a little about SPAC. It may be that when we find a private company and try to make it public, I may need to play a certain role in that company, maybe become the chairman of the board or some other role. Of course, if this happens, I will consider it and do it. But now I am determined to share my experience and support and empower the next generation of business leaders.

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