IR Information

Corporate Management Policy Briefing/
Semi-Annual Financial Results Briefing
for Fiscal Year Ended March 2009
Oct. 31, 2008 - Satoru Iwata, President
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So, the first 6 months of our fiscal year moved rather smoothly. But one of your concerns must be how the drastic change in business environment will affect the video game market amid the financial crisis simultaneously taking place around the world.
Of course, the sub-prime loan problem is not recent news at all. Around the time of Bear Stearn's collapse this spring were the increased concerns over economic slow down. As a matter of fact, it is said that the overall U.S. consumption statistics have been low starting from this year. The video game market, however, has been showing a strong growth amid such a difficult economic environment. It is understood as a fact by now that the changes in the overall economic trend hardly affect the video game business by now, and that experimental rule seems to hold true so far this year. However, the changes taking place today are impacting so many businesses that many people must be concerned about our future prospect.

This graph is based upon NPD figures and shows the weekly unit sales of Wii, PS3 and Xbox360 hardware in the U.S. Xbox360 was marked down this September and its entry model has finally become cheaper than Wii. As a result, Xbox360 increased its sales but it hardly affected the sales of Wii.

As we have increased the Wii hardware production, the number of hardware we were able to deliver to the market this year significantly increased, so the comparison with last year does not have significant importance. However, when we compare this year's Wii hardware sales with that of last year's as described by light blue color in the graph, it appears that economic crisis so far has not slowed down its sales at all.

While NPD issues its data only once every month, we have been carefully monitoring our own weekly sales data for our own products but, so far, we do not sense a sign of slowing down. Of course, we will continuously monitor the sales carefully, but I believe that it is highly possible that we can achieve our sales goal.

Some may still think that slow down might have started from October, after seeing smooth sales just until September.

For your information, it has been said in the industry that the holiday sales season of this year may see a slower start-up in sales, but according to what I heard from Nintendo of America, Wii sold about 210,000 units last week which are significantly more than the sales made around the same time a year ago and which show the sales in line with historical seasonal weekly sales increase.

This graph compares the monthly unit sales of DS and PSP in the U.S. for this year and last year. Lighter colors indicate last year and the darker colors indicate this year.

DS continues to perform very well over last year.

The gaming population expansion initiated by DS took off last in the U.S. among the global market, so the situation is very different from Japan. Although DS appears as though it is not often talked about as of late in the U.S. as Wii has an even stronger momentum, this graph illustrates that DS actually has been keeping its high level of sales. In the most recent week, about 140,000 DS units were sold, which indicates the steady sales increase in accordance with the seasonality.

This graph shows the European home console hardware sales. While the graph shows a similar trend to that of the U.S., promotions on PS3 and Xbox360 have been more aggressive, such as the hardware price cut, launch of new models and free software bundles. In particular, Microsoft already cut prices twice in Europe and has been engaged in aggressive promotional activities. Nevertheless, the price cuts of other hardware and free software bundles appeared to have rarely affected the Wii sales.

We are now looking at the portable hardware sales in Europe. DS hardware sales last year in Europe was very strong, but this year's sales have been exceeding them.

Of course, it is necessary for us to carefully monitor and observe our business in such a rapidly changing business environment. However, so far, we have not seen signs that our overseas demands for DS and Wii will be affected by economic factors. The local retailers have been concerned that consumptions in general may slow down, but as long as Nintendo products are concerned, they are more concerned about keeping sufficient stocks. In general they are requesting more Nintendo products today.

There is a group of software called Touch Generations which have become ultra-long sellers and have been driving DS markets in the U.S. and in Europe. In particular, these three Touch Generations titles have greatly impacted the game business, which has historically been extremely dependent upon new software to drive sales, in a way that has been revolutionary even to us.

More than three years have passed since the launch of Nintendogs, and the cumulative shipment units of the software has exceeded the 20 million mark, or 20.03million to be more precise, at the end of September 2008.

The cumulative shipment units of Brain Training, or Brain Age in the U.S., reached 14.48 million as of the end of this September.

And, the cumulative shipment units of More Brain Training, or Brain Age 2, reached 12.03 million as of September 30 2008.

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