IR Information

Corporate Management Policy Briefing/Third Quarter Financial Results Briefing
for Fiscal Year Ending March 2012
Q & A - Jan. 27, 2012
BACK | 1 2 3 4 5 | NEXT

Q 5-1

 Facing the fact that the sales did not reach your forecasts in almost all segments in the year-end sales season, I would like to know your possible strategic changes. Please tell me if your strategy has recently changed or accelerated in order to improve your business in the next fiscal year and beyond. For example, what part of the software lineup for the Nintendo 3DS, timelines for the Wii U, pipelines for the so-called big titles and online features have specifically changed for these next three months?

A 5-1


As a result, the sales of the Nintendo 3DS and the Wii in the year-end sales season did not reach our forecasts we announced in October last year, except for the explosive sales of the Nintendo 3DS hardware in Japan. The situation was similar for the Wii. In the U.S. and Europe, the Nintendo 3DS was able to create the momentum we had expected, but the timing at which the momentum was created was late, which eventually resulted in a smaller number of total sales for the year-end sales season. We therefore could not help changing our forecasts for the annual sales volume. We have something to reflect on, rather than change our strategy. In Japan, the two Mario titles and "Monster Hunter 3 (Tri) G" (Japanese title) were released with a strong market momentum, while we were able to maintain in various ways after the price markdown of the Nintendo 3DS. In the U.S. and Europe, on the other hand, as the momentum was once lost after the surge in sales due to the markdown, we had to revive it with the release of key software, which is one reason that delayed the sales peak. Another reason is that, not only for our products but for every product, the peak in sales came later than anticipated in the holiday season. There were so many reports like, "Shopping malls in the U.S. are so quiet that you could hear a pin drop even in the season when people usually rush there" or "In Europe, even the people on the street are concerned about the news coming day after day such as the possible bankruptcy of their government after the Euro crisis" that consumers hesitated to go to buy something until extremely good offers were available. In short, the lower sales were due to both our inefficiency and the bad market conditions. What we should reflect on is to keep the momentum in the market, and as I mentioned before, it is important to release software seamlessly. Specifically, a new platform is likely to have a gap between the launch titles, which many developers want to release, and the second wave of software. It is indispensable to avoid such a gap in our future business. In determining the launch date of the Wii U, we need to take into account not only what to release at the launch period but how to keep the sales momentum after then. In the past, I mentioned that having strong momentum is very important for game platform businesses, and as a matter of course, we are now more convinced of that and we need to have a backup plan ready.

Regarding the add-on content I mentioned before, effectively providing such content for a game which has sold well could be a way to keep the market momentum. The sales pace is getting slower day by day even for the biggest hit software. If we could announce some big news in connection with the add-on content for such software, many people would start playing it again, which could be an opportunity to revive the momentum. In this context, the add-on content should be considered as a key to extending the lifespan of products and to maintaining the sales momentum, as well as a chance to earn additional profits.

Q 5-2

 Your efforts to expand the social graph for the Nintendo 3DS, like "Swapnote" you told us about before, are so attractive that they seem to be welcomed by many consumers in Japan. But it is not clear to us how appealing they actually are. Please let me know if you have some data from your own survey on user profiles in Japan, the U.S. and Europe, or on a region-by-region basis, in addition to the network connection ratio of about 60%. If you don't have such data, your qualitative impression on users would be appreciated.

A 5-2


I'm afraid I cannot show you anything quantitative as I have no data here. The only quantitative thing I can tell you is that more than 10 million handwritten notes have been exchanged in the four weeks after the launch of the service, which you can see in the Iwata Asks interview posted on our website (in Japan) just the other day. So I can say that users are using this software actively to some extent. And, I believe that the number of handwritten notes to be exchanged will increase at an accelerated pace if we can have users continue to enjoy the software for a long time. In fact, we have some plans to encourage more people to use it, and you will find out what I am talking about when we reveal such plans in the future. Therefore, we believe this software will gain more popularity going forward. From a qualitative standpoint, "Swapnote" is very popular among women. Watching the people around our employees and myself, I have the impression that a lot of women of all ages enjoy using it. Therefore, this software works really well to have women feel familiar with the Nintendo 3DS. I will be preparing some quantitative data for the next briefing.

Q 6

 From what I've heard you say today, even though the schedule for bringing the Nintendo 3DS to profit is in sight, you need to sustain the platform value of the Nintendo DS and the Wii, expand the sales of the Nintendo 3DS overseas, work on the network services you explained today, launch the Wii U, cope with the high appreciation of the yen and expand the sales in Asia. Negatively speaking, there are a mountain of challenges, and positively speaking, there are many things you are able to do. My question is regarding how you will lead the company to get over the difficulty of tackling multiple issues at the same time. I heard Mr. Miyamoto once say that one great idea can solve multiple challenges at one time. How will you change or intensify the system with which you are able to generate such excellent ideas? Under ordinary circumstances, we can think about delegating more autonomy to the younger people, taking advantage of external resources, collaborating with third parties or increasing the number of second parties. When we stand on the premise that this is not an ordinary situation, what kind of approaches can be considered? Please tell me about these points.

A 6


It depends whether we see the situation as “there are a mountain of issues” or “there are a number of opportunities,” but I understand that one of your concerns is, “Isn’t there the danger that the company may be operated without any focus if the resources are decentralized and dispersed?” or “Isn’t each effort going to end up being done half-heartedly?” One of the most important missions of our operations is to keep focused upon the most important challenges by understanding what we need to focus upon at any given time. In this regard, we are not dispersing what we need to tackle. Once we decide the direction we need to head in to deal with each issue, we try to devise effective ways to work toward that goal every day. We do not feel perplexed because there are too many issues or opportunities to tackle. On the other hand, when we consider multiple issues at one time, we always try to seek an idea which can solve multiple issues simultaneously. The harder we try to find such an idea, the more discoveries we can make, and this can be done only when we are consciously looking for such an idea. All of the members of our management are very sensitive to such ideas, I believe, and when one of us becomes aware of and shares such ideas with the others, they immediately resonate among us, so I do not have any particular concern in that regard.

Among the challenges you just mentioned, the ones involving the Nintendo 3DS are the ones which will affect the company’s future. For a new hardware system, the third fiscal year after the launch is a very critical year, the one which can be referred to as the “year of challenges” from some viewpoints. How we can expand the sales of the Nintendo 3DS in the third fiscal year will determine the total hardware and software sales of its entire lifespan. As for the Wii U, although this system is categorized in the general video game description of a home console system, the play styles the company is proposing with the Wii U are not limited to the ones which are available only in front of TV sets, so I believe that we will not use the term “home console system” for this hardware. Whenever we launch a new video game hardware system, if we cannot sustain the momentum during the launch period and a certain period thereafter, it can invite very challenging situations just like the one the Nintendo 3DS experienced. Doing our utmost to avoid such a situation is another challenge the company is focusing on. As for other things, to sum up, we will make efforts to effectively implement what we have already prepared.

I recall that I also heard a concern at one of these occasions in the past that the company may lack sufficient resources, and I was asked, “How will the company cope with it?” It is obvious that Nintendo does not employ so many people internally. If we look at the number of our own employees, we are not a so-called “resource-rich” company.  When we view our company from a different perspective, on the other hand, it is an advantage because Nintendo has more freedom and flexibility to be able to collaborate with outside resources as long as we can find good partners. As a matter of fact, although many tasks used to be done only internally in the past, we are now working with people outside the company in several business fields. When we make any relevant announcements on such projects, we cannot just say we are working with this company on that project. Unless we can make more comprehensive announcements by discussing the details of the subject product, it may not make any sense to you. So, we would like to discuss this topic sometime later. There are several projects we will be able to talk about this year. I hope that I will be able to pick up examples which will show that Nintendo is taking care of the business fields in which it lacks internal resources.

BACK | 1 2 3 4 5 | NEXT

Page Top