Business, Economics and Jobs

If Japan wants "Abenomics" to work, it should look at Nintendo

Société Générale global strategist Kit Juckes offers the perfect anecdote highlighting the real problem Japanese industry – and by extension, "Abenomics," the experimental program of economic stimulus launched by Japanese Prime Minister Shinzō Abe – faces.

Japanese products like the Nintendo Wii still can't compete with the likes of Microsoft's popular Xbox console, even though they are less expensive.

Juckes writes (emphasis added):

I have no opinion about Nintendo's share price. But the Nintendo DS is being beaten into pulp by the fashion for mobile games. The WiiU likewise, and the Wii isn't competing with Xbox and [PlayStation]. All of this is a shame for those of us who wish our children would stick to cheaper devices. And for those of us who have lost iPads and smartphones to our teens. I approve of Nintendo on grounds of cost, even if it fails on 'cool'.

The good news is that the yen saves the day!! Profits are up despite falling sales. Dear Mr. Nintendo, please bolster your sales by cutting prices in time for Christmas, and give me some of your weak yen in disinflation, I deserve it! Oh and please use some of your profits to think up other cooler (and cheaper) games that can compete with the leviathans of the mobile gaming and video market. Do I like what the yen has done for the Nikkei? Oh Yes I do! Does Mr. Abe need to keep it up if he wants to avoid wasting the benefit of a weaker currency? Yes he does!

A rush of monetary stimulus from the Bank of Japan and fiscal stimulus from the Abe administration can help weaken the yen, making Japanese exports more attractive from a price standpoint.

What those stimulus programs can't necessarily do is restore competitiveness to Japanese industry by making Japanese products "cool" again, which is why structural reforms aimed at transforming the Japanese business culture are of utmost importance.

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