Presentation - 2012 E3 Analyst Q & A Session

2012 E3 Analyst Q & A Session - June 6, 2012

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6	Concerning the current stock price, is there any scenario that you may want to go private? If that is the case, can you explain what that scenario would look like?
6	Iwata: First of all, I can say that I myself have never considered making the company private. However, I also don’t think that the current market value is in a negligible state. We would like to have people specifically understand our future scenario and show them evidence that we can realize it as soon as possible in order to turn the situation around. Please understand that we are looking at a number of different options, including our capital strategy, but we can’t specify them here.

Concerning the current stock price, is there any scenario that you may want to go private? If that is the case, can you explain what that scenario would look like?

Iwata:

First of all, I can say that I myself have never considered making the company private. However, I also don’t think that the current market value is in a negligible state. We would like to have people specifically understand our future scenario and show them evidence that we can realize it as soon as possible in order to turn the situation around. Please understand that we are looking at a number of different options, including our capital strategy, but we can’t specify them here.

7-1	Back in the Game Developers Conference last year, you made a big point of saying to developers, “It’s about the quality of their content that matters.” As a result, though, I think you were pitching to the free-to-play model. Is there any scenario where Nintendo would consider free to play for first-party content on the Wii U or the Nintendo 3DS? Is it a case of not wanting to do so because it would cannibalize your existing packaged software business?
7-1	Iwata: Currently, we are not actively looking at free to play for our first-party content and I don’t think that’s a direction that we should go in right now. But that doesn’t mean for the future that there may not come a time where we have specific content that might be suited to that model. If there are some people who feel that Mario is something that should be available as a free-to-play type model, I would have to clearly say that I disagree. But in the future if we come up with a very interesting idea of a novel game with totally different value and structure that would potentially be very well suited to free to play, we might go in that direction. What I wanted to deliver at the Game Developers Conference last year to the game developer community was a thought-provoking message, “The monetary value of the product in digital form could be depreciated at an extremely high speed if you are not cautious. Paying attention to such value and trying to keep it at high level is very important. Otherwise, it would make the game development business itself quite difficult.” I did not intend to say that all the free-to-play games or lower-priced digital content should not exist. Unfortunately, there have been a lot of misunderstandings of what my true message was. So I am reflecting on the way I conveyed it, and I realize that it was not as good as it should have been. On this note, the video for that speech remains available on our website.*The video was removed in March 2015. So I would invite you all to look at it, and I think there you will get an understanding that the focus of my speech was not about the imbalance between quality and quantity. Instead, my intent was to say, “There is an idea of emphasizing the monetary value of the game, and there is another idea of not doing so.” Unfortunately, my speech was reported as if I had said, “Inexpensive games have low quality.” Since this misinterpretation occurred, I regrettably have to say I should have organized my speech more appropriately.

7-1

Back in the Game Developers Conference last year, you made a big point of saying to developers, “It’s about the quality of their content that matters.” As a result, though, I think you were pitching to the free-to-play model. Is there any scenario where Nintendo would consider free to play for first-party content on the Wii U or the Nintendo 3DS? Is it a case of not wanting to do so because it would cannibalize your existing packaged software business?

7-1

Iwata:

Currently, we are not actively looking at free to play for our first-party content and I don’t think that’s a direction that we should go in right now. But that doesn’t mean for the future that there may not come a time where we have specific content that might be suited to that model. If there are some people who feel that Mario is something that should be available as a free-to-play type model, I would have to clearly say that I disagree. But in the future if we come up with a very interesting idea of a novel game with totally different value and structure that would potentially be very well suited to free to play, we might go in that direction.

What I wanted to deliver at the Game Developers Conference last year to the game developer community was a thought-provoking message, “The monetary value of the product in digital form could be depreciated at an extremely high speed if you are not cautious. Paying attention to such value and trying to keep it at high level is very important. Otherwise, it would make the game development business itself quite difficult.” I did not intend to say that all the free-to-play games or lower-priced digital content should not exist. Unfortunately, there have been a lot of misunderstandings of what my true message was. So I am reflecting on the way I conveyed it, and I realize that it was not as good as it should have been. On this note, the video for that speech remains available on our website.*The video was removed in March 2015. So I would invite you all to look at it, and I think there you will get an understanding that the focus of my speech was not about the imbalance between quality and quantity. Instead, my intent was to say, “There is an idea of emphasizing the monetary value of the game, and there is another idea of not doing so.” Unfortunately, my speech was reported as if I had said, “Inexpensive games have low quality.” Since this misinterpretation occurred, I regrettably have to say I should have organized my speech more appropriately.

7-2	I have children who are conditioned to playing free-to-play games on iPod Touch and the like, and they’re your core audience who may not have purchased games, or their parents may not purchase games, considering their children are playing for free. Why not do free-to-play games?
7-2	Iwata: We would like those who highly recognize the value of the products we have created to play them. What I am trying to say is that we are not considering introducing a free-to-play game if the game itself is not suitable in that fashion. I have no intention to deny every possibility of free-to-play.

7-2

I have children who are conditioned to playing free-to-play games on iPod Touch and the like, and they’re your core audience who may not have purchased games, or their parents may not purchase games, considering their children are playing for free. Why not do free-to-play games?

7-2

Iwata:

We would like those who highly recognize the value of the products we have created to play them. What I am trying to say is that we are not considering introducing a free-to-play game if the game itself is not suitable in that fashion. I have no intention to deny every possibility of free-to-play.

Presentation | Q & A

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