Satoru Iwata (President):

  First, my impression on iPad is that it felt like an introduction of a larger iPod touch, but nothing surprising.

  As to your question of, "What will Nintendo do moving forward?", "Aren't you interested in taking in new technologies?" or "Is Nintendo using only matured technologies?", it may be because the expression "Lateral Thinking of Matured Technologies" means different things to different people, but, the fact is, we cannot execute video game businesses without state-of-the-art technologies. We could not conduct our business if we did not know about state-of-the-art technologies. Incorporating them has been done as a matter of course but we have been doing so by taking a variety of different possibilities into our consideration. There must be several examples of Nintendo being the first to make actual use of certain technologies.

  Having said that, however, because we believe that hardware technologies must remain in the background in order for the consumers to enjoy our interactive entertainment, we have not been emphasizing our technologies very much. It is possible that, because we are not explicitly advocating the technologies, people may have interpreted that Nintendo is a company which does not have strong interests in highly sophisticated technologies. However, it boils down to the question of balance. Whenever a new technology emerges, it is always accompanied by issues such as unaffordable high costs, problems still requiring solutions, and challenges to use it efficiently and easily. When Nintendo reviews technologies, it is done from different perspectives, such as, "When will this technology be able to cater to our need to surprise consumers in a meaningful way at all?" and "How will we be able to integrate the technology in terms of the total cost balance so that the resulting hardware can be sold at or below a certain affordable price point?" When people saw the actual products from Nintendo, which were the results of these considerations, they might have come up to the understanding that Nintendo may not be interested in highly-sophisticated technologies. The fact is, we are not indifferent to the new technologies at all. As a matter of fact, as an engineer, I prefer highly-sophisticated technologies so much that I cannot help but learn about them whenever new technologies are introduced. I'm sure Genyo Takeda, who is in charge of hardware development, must share this sentiment. However, new technologies alone cannot make a product that can be appreciated by the consumers. Again, we have been making much of the "balance", which may be the reason why people might see Nintendo that way today. However, someday in the future, people may start saying, "I didn't know this but, at that time, Nintendo actually had incorporated new technologies into that hardware." Who knows?

  Next, regarding your question of whether Nintendo is interested in the entertainment formats other than video games (such as music, videos, e-book, and SNS), I believe that Nintendo's business field shall expand as the definition of video game expands. Nintendo has actually been expanding the definition of video games. We have been adopting a variety of different themes, some of which were said to be unthinkable as video games. During the course, these unthinkable themes have gradually been conceived as video game themes. One of the strengths of Nintendo lies in interactivity, namely when our consumer makes some input, they can receive some response which can positively surprise them. And, more specifically, we have the advantage to realize a situation where consumers can easily and comfortably use our products without consulting the instruction manuals at all. It is possible that, as a result of our natural course of expanding the definition of video games, we may have some contact with music, videos and SNS. However, we will not do so simply because others are doing fine in that business field as we will not effectively utilize our strength that way. We would like everyone to understand that Nintendo's strength is in interactive entertainment and that it aims to focus on that.

Iwata:

  As a matter of fact, we are always researching new hardware. As soon as a new hardware is launched, our internal hardware departments, the home console and handheld hardware teams, start researching for the next hardware. However, I have no concrete announcement to make regarding the next hardware today.

  Regarding the specific media report to which you referred, let me share with you some background information in order to solve any misunderstandings. The reporter during the interview asked me, "Isn't it true that the next generation DS will realize highly-sophisticated graphics and incorporate motion-sensing technologies?" And, I responded by saying that, "These things may naturally become necessary, but do you think these features alone can sell a product?" I guess there were restrictions for the total coverage the reporter can write, and my latter half of the comment, "but do you think these features alone can sell a product?" was not included in the article, which may have changed the meaning of the article a bit. What was written in the article was not wrong because I did say, "These things may naturally become necessary". Total context is not easily grasped, is it? When my messages are delivered indirectly in this manner, misunderstandings may take place, so this article reminded me that I have to be very careful about how I say things. We are aware that, as technologies advance, what can be done naturally changes. We are not trying to avoid high functionalities at all. It's the issue of balance, once again, because we know higher performances and functionalities alone are not good enough reasons for potential consumers to want to buy the resulting new product.

  The same thing can be applied to what they call "Wii HD." Though I don't know where this story came from because I have never said anything like it, if I am asked about this, I will probably wonder about the ability of high-definition or highly-sophisticated graphics to be able to sell Wii and ask the reporter, "Will such a feature alone can make a product that can sell?" and add that "we will need something new."

  If it weren't for competition and competitors, I might be willing to share with you some of the ideas about which I have been thinking. However, I have to think in terms of competitive reasons and refrain from saying anything in detail today.

Iwata:

  When a new game system is launched, the percentage of enthusiastic players is high among initial purchasers. This is not confined to video games, but whenever a new product is introduced, they are sold first to consumers who are most enthusiastic about the field and, therefore, are proactively accessing relevant information. Then, the product gradually expands to other people with lesser and lesser enthusiasm by spreading its value. The product may eventually reach many people to whom the value is conveyed. Sometimes, this process of how one product is spread into the market through marketing are explained by using such terms as innovator, early adopter, early majority and late majority. The same thing can be said about people's participation with online activities. If we do not do anything, the Internet connection ratio will probably decrease as time passes by. Some people may argue that the net connection ratio must go up because the net connection as a whole is spreading in our society. However, many of those who are late in willing to buy a video game system in general did not have a reason to connect their game system to the Internet in the first place. When we think about the functions to be incorporated into a hardware, we first think about the ones that the consumers will be willing to use. When we launch a hardware, we have to face the reality that our consumers are not that willing to use some of the integrated technologies.

  To begin with, we have come to understand that many of our consumers did not understand the perks of when Wii is connected to the Internet. So, when you purchase a Wii console today, there is a preinstalled video that shows what you can do when you connect your Wii to the Internet. We have done the same thing on Nintendo DSi after we had launched it. When they are shipped, Wii and Nintendo DSi include the Wii Channel and preinstalled Nintendo DSi software, respectively, that show videos that explain what players can do when these systems are connected to the Internet. We thought that we should make this explanation visually, so we incorporated the video. Once the device is connected to the Internet, the video is of no use any more, so it is set up so that it can be deleted. We are also engaging in other activities to promote net connection, such as by collaborating with NTT East and NTT West to set up telephone support service for those who do not understand how to connect their Wii to the Internet.

  Furthermore, we have also come to realize that even though we have a number of new downloadable Wii Channels, many people have no knowledge about them at all and that, even when they are aware of these Wii Channels, it is a very high hurdle for them to clear to actually visit the Wii Shopping Channel and download the Wii Channel(s) they want. Therefore, we are pre-installing small (sized) Wii Channels (that can be "seeds" for actual ones) – a demo if you will – for the Wii consoles we started shipping from the end of last year. When you click on one of these Wii Channels, for example, you will receive an explanation about what the Wii-no-ma Channel can offer you. When you select, "I'd like to download it", you will be directed to "Wii-no-ma download page" of Wii Shopping Channel. We are doing this in order to make it as easy as possible for the consumers to be able to select and download the Wii Channels that they want.

  Through these efforts, against the natural current, the Internet connection ratio of Wii has gradually been increasing. However, the current net connection ratio has not reached the point that we wanted it to be. Of course, there are people who have comprehended our messages and are enjoying Wii with the Internet 100% or even 120%, but there are many people who do not know what they can do when their Wii consoles are connected to the Internet. Right now, we are implementing these explanations only on the Wii hardware that we are shipping today. We are reviewing the possibility of doing similar things on Wii software in the future for consumers who have not connected their Wii to the Internet so that a message may appear to show what can be done when Wii is connected with the net or how to download Wii Channel(s). It might be possible to lower the hurdle even further when we can dispatch such messages with the software, and we are reviewing such possibilities today.

  Today, the value of Wii and Nintendo DSi that are felt and appreciated by many owners who have connected their systems to the Internet have not been shared at all by the owners of Wii and Nintendo DSi without the net connections. The fact is, as I showed you the leaflets for the first timers today, there are even so many potential consumers who do not understand such first steps as how to start playing with Nintendo DS and where the Nintendo DS game card should be inserted, or how Wii can be played by utilizing Wii Remote, what kind of software are available and which components are included in the Wii hardware package. It is not an easy job to expand the net connection ratio as there are still many consumers to whom we need to convey these steps. However, if we can take it one step at a time, I feel that Nintendo, more than other devices, will be able to contribute to narrowing down the "digital divide" among people, including those who appear to be farthest away from the Internet world. Some may see what we are doing about the Internet and think that we have been doing rather primitive things. However, if we can thoroughly do the fundamentals and can invite consumers to the world of the Internet that any other devices cannot do, we will be able to create an enormous value. We'd like to remain tenacious in continuing our efforts.