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Nintendo Conference Q & A Session - September 29, 2010
Q & A
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Q 1 I have some questions about Nintendo 3DS. You have just announced the launch date of February 26, 2011. Tell me the reason why you will not launch it in time for the holiday season, when the biggest demand can be expected. Was it just because you cannot make it in time for the year-end? Regarding the price, 25,000 yen appears to me to be a bit expensive because, for one thing, it is more expensive than Wii, your home video game console. What is your opinion on my impression?
A 1

Satoru Iwata (President):

First about the launch timing, when we made the original financial forecasts for this fiscal year, we thought that it would be desirable to launch Nintendo 3DS by the end of this calendar year and, with that as the premise, we made the financial forecasts and the plans. The developments are making progress, and we have been proceeding ahead in order to start mass production. By now, however, we have come to understand that, if we launched it this calendar year, it would be difficult to produce a sufficient amount. Also, in terms of the completion level of the product, we believe that it will reach the most satisfactory level by our standards if we will launch it on the date we just announced.

For platform businesses, rather than focusing on the current fiscal year's performance alone, the most important thing is to provide a healthy launch for a new platform because, as part of Nintendo's core business, such platform will need to be able to support Nintendo’s business performance for the years to come. As it is desirable to prepare a sufficient amount for a sound launch and, at the same time, as we will also be able to further raise the product’s completion level, we have come to the launch date that we just announced. On the other hand, I recognize that it has generated a negative effect upon this year's annual financial forecasts.

About your second question of the price point, you indicated your concern that it is more expensive than Wii. Portable video game machines integrate both a gaming device and a screen. You do not need any other hardware devices to be connected in order for you to play with it. We do not think, "the price relationship between portable devices and home consoles must stay intact simply because it used to be that way." While it is always better for the price to be as accessible as possible, in terms of its cost, and in order to make a healthy and sustainable business for both the hardware and the software, and given the positive reactions since E3, which give us the indication on how the public are likely to appreciate the value of Nintendo 3DS if they can have hands-on experiences and, above all, by taking other factors into careful consideration, we have concluded that we should propose this price point to our consumers.

Q 2 You announced today that you will collaborate with Nippon Television and Fuji Television regarding their video distributions. Do you have any plans to expand the collaboration with other TV broadcasters or with movie producers?
A 2


Let me first explain how we came to agree to the collaborations that we just announced. After Nintendo exhibited Nintendo 3DS at E3 this year, Nintendo had opportunities to show some of the Nintendo 3DS demos we had shown at E3 to these two TV broadcasters, and they responded to our demos so positively that we held some types of study meetings for several months to discuss any video distribution business possibilities. During the meetings, we started to see new potential in our ability to provide our consumers with short 3D content everyday through SpotPass communications, and we realized that each of us has unique resources to bring together for this unique opportunity. This is how we were able to make the announcement today. As for the detailed plan for the future, I have nothing more that I can announce now.

As for movies, some of the Hollywood movie production companies showcased their movie trailers at E3 this year when we made the relevant announcements. Because movie producers appear to be interested in Nintendo 3DS, we may be able to construct some relationship between 3D movies and Nintendo 3DS but, again, I cannot make any announcements today.

When we launch Nintendo 3DS, it will probably be the first 3D device to be sold in a significant volume in the mass market. An increasing number of people will see business opportunities by looking at Nintendo 3DS from that perspective. Nintendo does not have any intention to exclude such possibilities if they come to us with their proposals.

Q 3 You announced the SpotPass communication function as one of the key functions of Nintendo 3DS today, and you explained during the conference that you are willing to expand the access points for Nintendo 3DS. How extensively are you intending to expand it? How large a budget are you willing to invest in it, or how many access points would you like to establish in the end?
A 3


This is something we have bitterly experienced but, however hard we may try to tell people how much more interesting Wii and Nintendo DS will become when they are connected with the Internet, and even when our proposals required no or minimal additional cost burdens to them, such as the use of free software, those who are willing to get connected could not constitute the majority of our consumers. As soon as they realize that they need to do something extra to get connected, a number of people appear to think, "It’s not for me." For example, we made offers such as, "Download from the Internet the free-of-charge Wii Channel that we have just created for you, and the enjoyment which Wii can offer you will be expanded." We made such proposals several times, but for consumers to actually download and enjoy these services, we first need to make them aware of our proposals, to encourage them to connect Nintendo hardware with the Internet, activate Wii Shop Channel, search for the specific screen where the subject software is available and ask them to actually download it. If they already have an Internet connection at home, there will virtually be no additional costs. However, in reality, those who actually go through these processes have not been able to form the majority of our hardware’s users. So, when we were designing Nintendo 3DS, we asked to ourselves how we could possibly deliver our proposals to our consumers without asking them to do anything special in order to be able to receive such new proposals.

Should the purchasers of Nintendo 3DS be willing to pay monthly fees, we could integrate a function similar to the ones embedded within mobile phones so that the machine would always be connected with the Internet. However, people who are willing to pay monthly fees for entertainment products will not become the majority. Because of this background, we wanted to create a situation where Nintendo 3DS could connect to the Internet from time to time just as long as their owners carry it around wherever they go in their daily lives, so that they could receive new messages, offers or even new software, from Nintendo. This is why we have incorporated the function called, "SpotPass."

For more and more people to use SpotPass, we have to increase the number of access points where they can get connected to the Internet without the need of any special setting procedures. Of course, those who already have an Internet environment at home can connect by going through a simple (manual) setting process but, still, only a small percentage of our consumers have actually gone through this process. We have learned this truth through our own bitter experiences. Contrary to our expected scenario, not so many Wii and Nintendo DSi owners have actually used our services.

Specifically, as to how much investment needs to be made for the access points, I don't have any figures at the moment. However, as I said today, we will add a Nintendo Zone function to the DS Stations that we've been installing at retail outlets, the Nintendo Zone services currently being deployed by McDonald's Japan at their restaurants will support Nintendo 3DS as well and, through the collaboration with NTT-East and NTT-West, Wi-Fine service locations of NTT BP will be used as the access points for SpotPass. I mentioned these three examples today during my presentation, but we have no intention to stop here. Wherever there are wireless Internet access points where a number of people come and go, and whenever we can offer Internet connections for Nintendo 3DS with some reasonable costs for the company, we are eager to deploy these services.

By doing so, we hope to be able to make Nintendo 3DS a very unique and interesting device, and we will deliver a variety of different information to the owners without the need for them to do any special operations. Nintendo 3DS will hopefully be always connected to the Internet and change everyday. Above all, as I explained its concept today, we want Nintendo 3DS to realize "Something New Every Day."

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