IR Information

Financial Results Briefing
for Fiscal Year Ended March 2013
Apr. 25, 2013
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The Internet-connection ratio forms the basis for deploying a digital business. In the case of Nintendo 3DS, it has been the highest among all the handheld video game systems Nintendo has launched. In the Japanese market where the ratio is particularly high, it has reached 87%. It is no less than about 83% in the U.S. The ratios in these markets are still on the rise. The ratio in Europe leaves much to be improved, approximately 57%, but is higher than before.


For Wii U, the current Internet-connection ratio has risen to 80% worldwide. This is a higher number than the previous hardware systems we released. As Wii U is a game console you can enjoy most with an Internet connection, we will continue to inform our consumers about the advantages of using it online and further increase the net-connection ratio.


This graph shows the transitions of download sales until the last fiscal year. They were soaring up until three years ago, but were not able to rise for the past two years.
As you can see, however, the sales in the last fiscal year more than doubled from the previous year and became the highest ever, surpassing the record high three years ago.
The record-high fiscal year, ended in March 2010, was the time when both the Wii and Nintendo DSi systems were actively used. You can see our digital business has stronger momentum than at that time.
The deployment of add-on content last year and the digital download sales of packaged software we started last July are contributing to the current sales growth. Among other things,


with regard to "Animal Crossing: New Leaf" we released in Japan last November, many consumers have chosen its download version partly because the game is one that you can enjoy every day over a long period of time. The other reason is the short supply of the packaged version of the game for a long time as its sales pace was unexpectedly high, but we could not increase production due to its special memory chip. We are very sorry about this, but we think a considerable number of consumers chose the download version as an alternative to the packaged version.
"Animal Crossing: New Leaf" is now available only in Japan and South Korea, and has not been released in the U.S. or Europe yet. We shipped 3.86 million units of the game in Japan and South Korea in the last fiscal year and approximately one quarter of the total number of sales accounted for its download version, including the number of sales of "Animal Crossing Pack" of the Nintendo 3DS XL hardware with the download version installed in it.
Since last July, we have been continuing to make both packaged and download versions available. A characteristic of our digital business is


that we have also sold download versions at retailers in the form of POSA (Point Of Sales Activation) cards on the shelves, as you can see. Thanks to the fact that retailers do not have to stock actual inventory, some convenience stores, including 7-Eleven, have made POSA cards available.
Furthermore, we have tried to have retailers sell 16-digit download codes, with which consumers can download software by entering the codes on our hardware, at their e-commerce sites.
Although disintermediation is a common purpose of digital business, we intentionally adopted different methods because, as we mentioned before, we thought that one of the biggest hurdles is the limited exposure of the digital download products. If only the consumers who proactively visited the Nintendo eShop were aware of the digital download software that we deployed, there would be no chance that our digital business would dramatically expand.
Some might be skeptical about how much downloadable software would be sold at retail stores without any discounts from the suggested retail price of the packaged counterpart. Actually, however,


as you can see, more than two-thirds of the download version of "Animal Crossing: New Leaf" has been sold through retailers.
You can see from this chart that it is not necessarily correct to stereotypically position digital business as an enemy to retailers. Some of the consumers who bought the download version at a retail outlet might have had no knowledge of the Nintendo eShop before. Others might have had some psychological barrier to making online purchases, but chose the download version because they were able to make a payment at a retail store.
In addition, we have recently started trying to have retailers put download-only software, not the download version of packaged software, on their shelves. I will keep you updated on our progress in future presentations.


Here I would like to show you the results of our research, based on the Club Nintendo data, about the percentage of people who, after experiencing a download version of a game, have again chosen a download version of the next game. It also indicates how many consumers have weighed the advantages of a download version, which they can always have inside their Nintendo 3DS device and will never leave behind.
This pie chart shows the five groups of those who bought a download version of "Animal Crossing: New Leaf," including "Animal Crossing Pack" of the Nintendo 3DS XL hardware, and registered it on Club Nintendo, classified in terms of experience with paid downloads. As the members of Club Nintendo are generally more dedicated video game fans, the percentage of those who have chosen the download version has reached 30%, which is higher than the average in the market. Among those who have registered both "Animal Crossing: New Leaf" and "Tomodachi Collection," which was released last week and has sold no less than 400,000 units, this graph tells you the percentages of those who have chosen the download version of "Tomodachi Collection" in each group.
Unsurprisingly, people who have chosen the download version of "Animal Crossing: New Leaf" tend to buy the download version of "Tomodachi Collection." It is also easy to understand that those who have paid download experience are more likely to select the download version.
One thing I would like you to pay attention to is the big difference between the bars in yellow and in blue. It means that forty percent of people who purchased the download version of "Animal Crossing: New Leaf," even without any other paid download experience, and also chose the download version of "Tomodachi Collection" is no less than five times larger than that of those who chose the packaged version of "Animal Crossing: New Leaf."
In other words, it is clear that, once people have chosen a download version, they tend to choose another download version next time due to convenience. We believe that letting as many people try a download version as possible is required for significant expansion of our digital business.


Also, we are starting to gain confidence that the Nintendo eShop is beginning to play a very important role as one of the common ways to view Nintendo Direct, which is gaining ground as Nintendoís direct communication tool with our consumers. This seems particularly true for the generation of consumers who do not own their own PCs or smart devices, and it appears that the Nintendo eShop is becoming a very important place where they can access information about a variety of games at their convenience.
With some of our recent installments of Nintendo Direct, it became common to see total views for a single video reach five hundred to six hundred thousand in a matter of about 10 days on the Nintendo eShop while they did not show apparent growth on YouTube, meaning that people do indeed actively watch our videos on the Nintendo eShop. It is no exaggeration to say that the most preferred viewing option has now become the Nintendo eShop, and it is not uncommon to find that approximately 60 to 70 percent of total views come from the Nintendo eShop.
Moreover, the fact that people watch Nintendo Direct on the Nintendo eShop means that they can directly download demos and 3D movies. We feel that having our consumers regularly visit the Nintendo eShop to access new information about our games is going to be enormously beneficial for our digital business in general.
In any digital business, payment and settlement methods pose challenges that must be overcome for successful distribution of paid content. This time we are setting out on a new endeavor, which I would now like to bring to your attention.


As I have previously announced, Wii U features contactless near field communication functionality called NFC built into the Wii U GamePad that features a screen of its own.
"Pokèmon Scramble U," (temp.) launched yesterday in Japan, is the first title to take advantage of this functionality. With it we can achieve new ways to play. For example, a "Helper Pokèmon" (literal translation of Japanese name) will appear upon waving a NFC-compatible IC card over the Wii U GamePad, and one can also use NFC figurines that are sold separately to make them appear in the game and also write the data back into the figurines.
We are also exploring the possibility of using Wii Uís NFC functionality to provide a method for settling small payments in addition to creating new gameplay experiences.


Among the possibilities, we are considering using JR Eastís "Suica," which is the most popular public transport e-money card in Japan, to make payments.
If this becomes a reality, Wii U will be the first home game console that has a payment function that utilizes an e-money card and is connected to the Internet.


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