IR Information

The 72nd Annual General Meeting of Shareholders
Q & A

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Q 1   I have a feeling that no other companies have succeeded in properly taking advantage of the functions of the Wii or the Wii U. What does Nintendo think of bringing up creators in the video game industry as a whole? How do you cultivate brand-new developers who can come up with interesting games independent of the performance of the hardware?
A 1

Satoru Iwata (President, Chairperson of the shareholders' meeting):

  Please let me confirm that your question is about bringing up video game creators in the entire industry, not just young people in Nintendo. (After he confirms the questioner’s approval): For the Wii, as you mentioned, it has been certainly pointed out that software developed inside Nintendo uses the hardware’s functions better than that developed by third parties. As there are third-party games using them in a very good manner, it would be rude of us to claim that this is the general trend. Creators have their home ground: Some are good at coming up with ways to play using a new structure and others are experts at creating games with breathtaking visuals or heavy storylines. It might have been that the latter didn’t go so well with the pros and cons of the features of the Wii.

  On the other hand, we don’t think Nintendo alone is able to develop every type of software to satisfy all consumers. Therefore, we have been working to improve the development environment to let as many creators design games that take advantage of the features of a certain hardware as possible. One is to establish a trusting relationship with third-party developers and provide them with information on a new platform so that they can start creating games simultaneously with those in Nintendo. As we have been able to build such a relationship with more third parties than before, it was less frequently said for the Nintendo 3DS that the Nintendo games available at the launch of the new platform were more sophisticated than those of third parties. We are working to further improve the situation for the Wii U.

  With regard to cultivating creators in the entire industry, we make efforts to hold the “Nintendo Game Seminar.” It is temporarily on hold until the next fiscal year owing to the Great East Japan Earthquake, though. The seminar participants, who are university students, go to our office in Kanda (in Tokyo) for about nine months, experience video game development with our junior employees and the completed games, which were for the Nintendo DS in the past, are made available to the public by download. Some participants joined our company after completing the seminar and have been already performing well in creating products. Also, I hear that others are working for other video game developing companies. In this context, the seminar contributes to the cultivation of creators in the whole video game industry.

  In addition, we are changing our way of cooperating with other companies. One recent example is that we will develop a new game from the “Smash Bros.” franchise together with NAMCO BANDAI Games and NAMCO BANDAI Studios. We would like to develop fascinating software in line with the theme of the series by combining their specialties and our ability to brush things up. We can avoid a case where all the Nintendo staff members are devoted to one big project and we have no power to develop other games, which is another benefit of co-development with people in other companies. We hope that each development team will improve its collective strength through such experiences.

  One thing I would like to add is that, when we work with people in other companies, we have no intention to take the trouble to “cultivate” them. I think it is more important to understand how we can both grow, or to find a good balance which can enhance each party’s strengths and eliminate weaknesses.

Q 2  For the launches of the Wii U and other products, I am anticipating increased costs for their online services and others. How will you compensate for these costs? For example, do you have an idea of receiving a monthly fee from dues-paying members or increasing the price of packaged software?
A 2


 We plan to expand various network services for the Wii U. The first thing to do is connect the Wii U to a common large network platform called the Nintendo Network. Next, the Nintendo 3DS, which is now partially linked with the Nintendo Network, will be more deeply connected. Also, when we create a new platform in the future, we will have it connected to the Nintendo Network.

 We have a wide variety of consumers, from the ones who enthusiastically play video games to those playing more casually, who are not always interested in them but try to play a game only when it has become a public topic or play it just during certain periods, like a year-end season and summer vacation. We therefore believe that services which ask our consumers to obtain paid memberships are not always the best. We cannot promise here that Nintendo will always provide you with online services free of charge no matter how deep the experiences are that it may provide, but at least we are not thinking of asking our consumers to pay money to just casually get access to our ordinary online services.

 On the other hand, some of you attending here must naturally wonder if the company can afford to say such a thing when it is attempting to improve profitability. However, our aim is that network services will eventually contribute to our overall profits even if they are available for free. More specifically, network services will let you communicate with other people, visualize what they are interested in and tell you something you did not know. Haven’t you ever had an experience that one of your friends introduced you to a song or a movie and that you regret not watching the movies by a certain director or listening to the songs by a certain artist in your life until then? If we are not aware of them, they are virtually nonexistent to us. Exactly the same thing can be said about video games. In developing a network service called “Miiverse” available for the Wii U, we are pursuing how to amplify and transmit consumers’ empathy about a game. For example, when you see another user enjoying the same game you also play say, “I enjoyed another game like this and that too,” you might be interested in a game which otherwise would not be on your wish list at all. In other words, even if we will not directly get paid by such online services, they will help build the circumstance where consumers are more constantly playing games on our platforms, which will increase the sales potential of new games, or a consumer who has played two games a year would be inclined to try three or four games a year. In short, we expect that online services will contribute to our profits in the form of increasing the number of games to be sold for one platform. From an economic standpoint, with that as an objective, the company is considering the necessary and appropriate services.

 Therefore, our answer to your question is that, while we are not considering asking our consumers to pay periodic subscription fees, we are going to make it so that more software can be sold through the services and that we are making preparations with the belief that results worthy of our investments can be achieved eventually.

Q 3  I got terribly lost coming here today. Every time I come here, I feel that you should take into consideration where many of the shareholders attending are coming from and that you may want to consider offering us some conveniences like a courtesy bus from JR Kyoto Station. As I feel this is rather an inconvenient place to visit by subway or by bus, I’d like you to consider more about this sort of thing than enriching the contents of the gifts you give to the attending shareholders.
A 3


 I understand your comment is that we should be aware that our headquarters is located in an inconvenient place and that therefore we should prioritize smoother arrivals of our shareholders by, for example, providing a shuttle bus over the gifts for the attending shareholders. We will consider your opinion in preparation for the future shareholders’ meetings. Thank you.

Q 4  I would like to ask about Nintendo’s social communities for the Wii U and other future platforms. As many Nintendo games are oriented to families, moral issues associated with the network services in general may be more challenging, or, I anticipate such issues as small kids being exposed to negative comments and what are in fact fun games being introduced by others as uninteresting ones. How will you handle these issues?
A 4


 First, please let me elaborate on the social communities for the Wii U in your question. For the Wii U, we are developing a system where consumers exchange their impressions, opinions and senses of accomplishment about games they play with each other through the network functions I mentioned before. We announced it with the service name of “Miiverse” just before E3 this year.

 On the other hand, it is true that there are people who behave very badly in the world of computer networks, even though they constitute a very small percentage of the network population. In a community where anonymity is protected, there are those who think that no one will be able to identify who they are no matter how rude they are, and these people sometimes engage in socially-prohibited comments or behaviors that could make other people feel hurt or uncomfortable. That is one point we need to consider. When I answered the previous question on the costs associated with network service operations, I was actually intending to include our determination in this field. Taking this opportunity, let me elaborate on this point further. Above all, how much energy we will pour into the actual operations of such services is going to be very important. More specifically, we have never thought that we would simply build up an environment where we could let our consumers exchange any and all comments freely. We have never intended to operate the service in that way. Everybody knows that there will always be a certain number of people who do not behave themselves in such a community. We have several plans and formats, including the elimination of comments from such people, and other ways to prevent children from being exposed to them. I am afraid I cannot tell you more about our protective measures because the fact is that if we disclose any details here, some might start thinking how to circumvent them to annoy Nintendo. Anyway, we will work steadily on this matter by spending sufficient energy and, if necessary, financial costs.

In addition, there have recently been negative campaigns on the Internet in which false opinions are deliberately posted to ruin the reputation of a product. Such vicious rumors are a big problem and could be considered business interference. On the other hand, however, it is very difficult to tell consumers’ real complaints from those that are posted as part of a negative campaign. If we were to delete anything negative about our games, it could constitute a suppression of free speech and you would not able to believe in even a good reputation. Luckily, those who are engaged just to be engaged in negative campaigns are in fact just a fraction of all users. Therefore, in a community in which a number of users with fair opinions exist, opinions posted just for the purpose of a negative campaign will be gradually overwhelmed by the majority of posts of fair impressions. Also, if a number of game players put a remark to indicate “I think this comment is inappropriate,” the subject comments will be seen as unreliable and thereby decreases their influence on other consumers. In that sense, in the world of the Internet, we cannot afford to always act on “the ethical doctrine that human nature is fundamentally good.” At the same time, however, we would like to believe in the possibility of “the wisdom of crowds,” which could create a very interesting and fascinating world, and make efforts for the services to realize it in one way or another.

Q 5  I have a question about the board members. Currently there are no females on the board. I do not remember all of the past board members, so it might just be the case now; however, I wonder whether there are some problems in educating and cultivating people at Nintendo.
A 5


 In my understanding, your point is that because there are no female board members at Nintendo, whether there is something hindering the efforts of the female employees. Is that correct?

 Well, first of all, Nintendo has many female employees, and among these people, many are actively working as administrators and managers. On the other hand, when we decide our board members, we choose the ones that can form the best possible management team to run Nintendo’s business for the fiscal year ahead. So it is just a coincidence that there are no female members on the current board; but this does not imply that we would not to select females for our board or that there is an atmosphere that female employees could never become board members.

 Besides, Nintendo’s platforms have almost the same number of female users as male users, which is extremely rare in the gaming industry. In cases of other companies’ platforms, the user proportion between males and females is about 70:30, or something like 75%:25%. Although gaming was originally favored predominantly by males and it has long been said that games are for children and young male adults, the number of female users increased tremendously while the Nintendo DS and the Wii were expanding the gaming populations. However, if we fail to reflect females’ points of views sufficiently in all aspects in our business, including not only product development, creation and sales but also in the management that leads the company, I believe we will not be able to realize the products that will be well accepted by women in the market. Therefore, although we currently have no female board members, we would highly appreciate it if you could understand that there is nothing hindering female employees’ efforts.

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