IR Information

Second Quarter Financial Results Briefing
for Fiscal Year Ended March 2014
Oct. 31, 2013

Turning to “Wii Fit U,” as many people enjoyed playing “Wii Fit” and “Wii Fit Plus” on Wii, there are already about 37 million “Wii Balance Boards” across the world, and we decided to offer Wii Balance Board owners a one-month pre-release trial campaign for Wii Fit U. This campaign enables those who own both a Wii U system and a Wii Balance Board to download the “Wii Fit U” software free of charge and experience every feature of the game for one month.
I myself came up with the original concept of the campaign, and some investors and analysts may be wondering why we would ever distribute a game that is guaranteed to sell well free of charge. However, under the current circumstances in which Wii U has lost its launch-period momentum we find ourselves in a situation where it is difficult to turn the attention of those who do not actively engage with games to Wii U, we felt that it would be difficult to hope that advertising and releasing our games in a standard fashion would be sufficient to create enough buzz in society. Fortunately, according to our research, the proportion of consumers who are still enjoying “Wii Fit” or “Wii Fit Plus” on a constant basis is not low. Our survey in Japan shows, for example, that more than 500,000 people are still using their Wii Balance Boards on a daily basis, and we find similar trends in other regions, too. As our first step, we felt that it would be best to have these users upgrade to Wii U in order to maximize the overall sales of this title in the long run. As it was the case with both “Wii Sports” and “Wii Fit,” this title is not the kind of game whose success hinges on its initial sales. It is true that its initial sales and profits will suffer as a result of this campaign, but “Wii Sports” and “Wii Fit” achieved great popularity and large sales over an extended period of time because they managed to create adequate buzz in society from people who broke a healthy sweat and experienced sore muscles as a result of working out in front of their TV. By using the pre-release trial version as a catalyst, we will strive to create and disseminate buzz, and ultimately turn it into an enduring bestseller.

What is shown here is an accessory used in conjunction with “Wii Fit U” which we call the “Fit Meter.” When we release the “Wii Fit U” software, we will bundle one “Fit Meter” with each copy of the game. This is not just a pedometer, but is an activity meter that uses an accelerometer to automatically calculate the calories consumed in any given day. Unlike a regular activity meter, it also incorporates a feature that detects changes in altitude in response to changes in atmospheric pressure, so even when the steps are the same, it can tell whether one is walking on a flat or sloped surface and detect the difference in calories consumed.
With “Wii Fit U,” one can set a target for the amount of calories to be consumed in one day, and measure how many calories they actually consumed through their daily activities using this “Fit Meter.” Should you fail to achieve your daily target, you can work out with “Wii Fit U” to fill the gap. We have new propositions to support your exercise throughout the day, even when you are outside your home.
In the one-month pre-release trial campaign for Wii Fit U that I just described, once you purchase a “Fit Meter,” available from today, and synchronize it with your console, you can continue to enjoy all the features of the game even after the one-month trial version expires. We are hoping that consumers who take advantage of the campaign will also enjoy the new experiences provided by “Fit Meter.”

I remarked a while ago that it is difficult to change our prospects with just one title. Our objective for Wii U for the upcoming year-end sales season will be to dramatically change the environment surrounding Wii U with multiple key titles that can appeal to a wide range of consumers.

In Japan, we just launched today what we call the Premium Family Set that provides great value for money by offering, in addition to the contents of the regular Wii U Premium Set, bundled accessories as well as two popular games that come pre-installed on the system.

Until the release of the “Pokémon X/Pokémon Y” software in mid-October, we concentrated our marketing activities on Nintendo 3DS, and we were unable to promote the Wii U hardware in the market adequately. However, those of you who are living in Japan must have realized that we have been actively marketing Wii U in the last two weeks. We are already seeing promising signs from pre-orders that have been placed, and we will attempt to dramatically change the environment surrounding Wii U from this week through the end of the year.

We will also launch a new bundle that contains both “New Super Mario Bros. U” and “New Super Luigi U” from November in the overseas markets.
We have already performed a price revision to Wii U in response to the release of “The Legend of Zelda: The Wind Waker HD” in late September in the U.S. and early October in Europe. By offering this new bundle along with “Wii Sports Club,” “Wii Fit U,” “Wii Party U” and other titles such as “Mario & Sonic at the Sochi 2014 Olympic Winter Games™” that I just mentioned, we will make every effort to dramatically change the sales trajectory of the system.

In our recent presentations, I have repeatedly stated that a significant expansion of our digital business is required to adapt to the changes in the business conditions and to create new business opportunities.

This graph shows the transitions of download sales until the last fiscal year. The sales slowed in the fiscal years ended in March 2011 and 2012. As I told you at the Financial Results Briefing in April, however, the sales in the last fiscal year more than doubled those of the previous year and were our highest ever. The download sales in the first half of this fiscal year reached 11.4 billion yen, which is more than double the figure in the first half of the previous year and surpassed that of the second half. Digital download sales of packaged software represented about the half of the download sales, but the other types of digital sales have also risen steadily.

  • We have provided various methods of micropayment for enriched download-only games and services for Nintendo 3DS and Wii U, whose Internet-connection ratios are significantly higher than our previous platforms.
  • And we have provided a means for our consumers to periodically source information about games through Nintendo eShop, as shown by the fact that it is now the most popular way to watch Nintendo Direct videos.
  • In addition, we have expanded our range of payment methods, including POSA cards on retailers' shelves.

As a result of the efforts we have made over the last two years, we are confident that our digital business has finally entered a phase of expansion.

POSA cards are “Point Of Sales Activation” cards. As they are activated only when they go through POS registers at retailers, the retailers can have them on their shelves without physical inventory risk. At the same time, publishers can continue to expose their digital products at retailers to increase product awareness as they have done with packaged software. Furthermore, consumers can buy them in a familiar payment method whenever they want and without having to worry too much about the game being sold out. We have tried to have retailers put download-only software on their shelves as well as the download version of packaged software. Also, some POSA cards are sold as prepaid cards with which you can use for transactions in Nintendo eShop.

Among them, the “Photos” series POSA cards you can see here are “playable” POSA cards. With them, you can take AR (Augmented Reality) photos of yourself with Mario characters after downloading a free application for the AR photo function of Nintendo 3DS. POSA cards have become popular in Japan, and have already sold no less than 1.3 million units. We will continue to make the e-money card itself something enjoyable for our consumers.

As stated before, Wii U has NFC (Near Field Communication) functionality and we are considering using JR East's “Suica,” which is the most popular public transport e-money card in Japan, to make payments on this platform.

One of the high points in our digital business for this fiscal year is the new add-on content for “StreetPass Mii Plaza,” which is a built-in application for Nintendo 3DS and has been enjoyed by many consumers.
This application originally had two games, “Puzzle Swap” and “Find Mii,” which consumers enjoyed by using “StreetPass.” In addition,


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