IR Information

Semi-Annual Financial Results Briefing
for Fiscal Year Ending March 2012
Oct. 28, 2011
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Thank you for attending our Financial Results Briefing despite your busy schedules. I’m Satoru Iwata, president of Nintendo.

To begin with, I feel greatly accountable for missing our financial forecast for the half year ended September and revising downward our forecast for the full year.

Strong momentum is very important for game platform businesses and a strong software lineup to vitalize a platform is necessary to maintain this momentum. In the first half of this year, however, we could not make the continuing sales of the first-party software released last year as we had planned, nor, in the course of preparation of the next platform, could we release new key titles for the existing platform in a timely fashion due to completion delays until the latter half of this year.
As the worldwide number of pre-orders indicated, the Nintendo 3DS, our new platform launched this year, had high expectations from consumers as well as market and industry players. However, the actual sales after the launch did not meet the expectations, and based on the judgment that we could not get it back to its originally-anticipated sales pace as a sound successor to the Nintendo DS unless we took action, we made an immediate decision and announced the price markdown around three months ago, at the same time of the announcement of financial results in late July. The present result of the markdown is just an improvement of sales pace of the hardware. After the upcoming November, however, anticipated titles for Nintendo 3DS will be continually released, which we hope will bring a big boost in the year-end sales season. We would like to thereby fulfill our responsibility to ensure bright prospects for this platform toward the next fiscal year and beyond.
This year-end sales season seems like it will have much more impact than in usual years. I will be explaining this to you with some data later.

Before going on to the main subject, please let me tell you one thing:


That is what Nintendo is thinking about how to transmit information.

It has been several years since I started to make a presentation at the Financial Results Briefings, in addition to the opportunities like E3 and Nintendo Conference, and upload onto our website the video and text of the presentation on that night and the text of the Q&A session a little later. An opportunity to transmit information to investors can also be a chance to communicate information to our consumers at the same time, and I have felt it appreciated as a good disclosure policy.
On the other hand, however, I feel that our consumers, especially our avid video game fans, are not always eager for the same information as investors.
In parallel, as the popularization of social media, as typified by Twitter, drastically changed the way and speed of distributing information, my remarks at Financial Results Briefings have spread in an unexpectedly distorted manner several times.

Under these circumstances, we broadcast the first live coverage of a domestic event, Nintendo 3DS Conference, through the Internet last month. Although it was broadcast during the day on a weekday, we got great feedback from a vast number of viewers and after the conference the sales of Nintendo 3DS grew in Japan without any new software releases. We believe we were able to raise expectations for the platform by directly transmitting appropriate information to our consumers.

Based on this result, I have become more convinced that the time to directly deliver our messages to many consumers through the Internet has come, that our messages could spread via social media to those with whom we don’t have direct contact, and that the transmission of information to investors should be clearly differentiated from the distribution of product information to our consumers.


This led to our presentation just a week ago, “Nintendo Direct,” an approach to directly deliver new information on our games to video game fans through a webcast.
We usually invite our consumers to our events in the daytime. However, with the two days prior announcement on our official Twitter account and website, we made the recorded Nintendo Direct presentation at 8 P.M., a time which is convenient for many people, because we only aimed to distribute the information through the Internet.

Now I’m really sure we can improve the content by narrowing down the recipients. In the future, therefore, I will have my presentation more oriented toward investors at Financial Results Briefings and we will transmit information attractive to our consumers at some other times.


Until now, we posted the presentation at Financial Results Briefings as a video and text on our website by the end of the day of the briefing, but giving weight to immediacy and internationality, we decided to upload the slides and text in Japanese and English promptly after the presentation. Now that I will scarcely talk about our new products that require videos for efficient transmission of information at this kind of opportunity, we will be putting emphasis on the speed of disclosure through text. Thank you for your understanding.

Regarding the Q&A session, in addition, we will upload the summary text on our website some time later as we have done in the past.


First of all, I’d like to explain to you about the market situations around the world, first in Japan, then in the U.S. and finally in Europe.


First, about Japan.


Oct. 28, 2011 Apology and correction. This slide was replaced because there was an error in a publisher's name.

This chart shows the 20 best-selling software titles in Japan from January through the end of last week.

This includes eight titles for Nintendo platforms: one for the Nintendo DS, five for the Wii and two for the Nintendo 3DS, and three of the five for the Wii are evergreen titles released last year or earlier. In comparison with the fact that 13 titles for Nintendo platforms featured in the chart during the same period last year, however, Nintendo platforms have shown a smaller presence in the Japanese market because we were not able to achieve timely releases of key software titles which could lead the market.


Based upon data from Media Create, this graph shows the home console hardware sales situation of the Japanese market. Because there were no big-hit titles in the Japanese video game market in the first half of this year, and especially because there was a lack of new titles for the Wii until “Rhythm Heaven Wii” (Japanese title) was released in July, we lost momentum. In the recent data, the Wii’s sales have come back to the level of last year.


But the sales of the Wii largely increased in the year-end sales season last year, as you can see in this graph, due to our “When people get together, it’s time for Wii” promotion in Japan. This year, we have several big titles awaiting the year-end sales season, such as “JUST DANCE Wii ” (Japanese title), “Kirby’s Return to Dream Land,” “PokéPark 2: Beyond the World” (Japanese title), “The Legend of Zelda: Skyward Sword” and “Mario & Sonic at the London 2012 Olympic Games,” so we would like to revitalize the Japanese home console market from now on.


Next, let’s look at the Japanese handheld market. This is the year-on-year comparison of handheld hardware sales in Japan. Since the Nintendo 3DS was released in February this year, and also since the Japanese market is the quickest of all the nations around the world to shift demand from existing products to new ones, the sales of the Nintendo DS have largely dropped compared to last year. On the other hand, PSP from Sony has maintained its sales level from the year before.
The Nintendo 3DS gained momentum when it was released but it didn’t continue to sell as expected after that, which made us decide on the markdown of the hardware. After the markdown, the sales volume of Nintendo 3DS increased smoothly. The sales again went up after the Nintendo 3DS Conference on September 13, which was held when the effect of the markdown had started to calm down. As you can see from this case, the hardware is selling well right now in anticipation of the steady stream of releases of big titles starting from November. Also, because a pink version of the hardware was released in Japan and the first edition of Nintendo Direct was broadcast last week, the hardware sales increased to surpass 70 thousand units although it was a week before payday (in Japan), when sales usually decline. In preparation for the launch of “Super Mario 3D Land” next week in Japan, the hardware sales volume is growing.


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