updated 02:17 pm EDT, Sun June 8, 2014
European operations consolidated in Frankfurt, redundancy causes layoffs
After three consecutive years of losses, Nintendo is being forced into the position of closing down one of its offices. The gaming company will close down its office in Großostheim, Germany to consolidate its European operations to Frankfurt. In the process, Nintendo will eliminate 130 permanent positions in the company as the two offices consolidate.
In a statement to Eurogamer, Nintendo confirmed the closure and subsequent sale of the office and warehouse as the company maneuvers for a better position. Nintendo has moved into consultation for its business in Europe to find more flexibility for the changing business conditions in the world of gaming. In addition to closing down the Großostheim office, the company will look at further reorganization and outsourcing.
"These intended measures have not been made lightly and have only been arrived at after thorough analysis and careful consideration," said the statement. "The intended measures will sadly have a direct effect on some of the employees based in the Großostheim and Frankfurt offices in Germany, and would lead to the release of approximately 130 permanent employees."
Laying off a large amount of people isn't an uncommon practice in the gaming industry, as projects and maximizing revenues often come into play in development cycles. However, for Nintendo these sorts of moves do not occur very often.
In 2013, Nintendo CEO Satoru Iawata answered questions about profitability in regard to corporate restructuring during a shareholder question-and-answer session. Iawata defended Nintendo's need for a large employee headcount, stating that a greater number of people are needed the more complex and advanced products get. Short-term gains in operating expenses weren't in the best interest of the company.
"If we reduce the number of employees for better short-term financial results, however, 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," said Iawata.
While the background behind the consolidation in Germany wasn't covered in the statement, Nintendo doesn't appear to be taking the action lightly. The company said that they would be working with the Works Council in Germany to "provide clarity and support" for the employees affected.