IR Information

Financial Results Briefing
for the 68th Fiscal Term Ended March 2008
Apr. 25, 2008 Satoru Iwata, President
BACK | 1 2 3 4 5 6 7 | NEXT

Also, as you can see here, there are not just the so-called game publishers who have been marketing and selling the software under their brand names, but there are also a number of smaller-sized and new developers now working on WiiWare software.

I'd like to show you one example. This is a WiiWare software called "World of Goo", which is currently being developed by a company called 2D Boy.
What you are seeing now may be self-explanatory but this is a sort of puzzle game which makes use of physical calculations. You will use the pointer function of Wii Remote to control and guide the grid-like character to the goal pipe.
I was given an opportunity to look at this game this week and understood that this game contains a lot of gimmicks and tweaks. Internally at Nintendo, a lot of positive talks about this can be heard today.
Initially, two developers started this development project, and most recently, one developer has been added to the team, which brings the total development members to three. Nowadays, it is very hard for a small-sized development team like them to work on a software for home console game machine. We are hopeful that WiiWare can explore a new path for this kind of brand new products and we would, of course, like to aggressively support WiiWare.

As we have discussed before, Nintendo has operated based upon our basic strategy to "Expand the gaming populations" and have been able to significantly expand the total video game market in the last two years. At the beginning, no one thought that "Training your brain" and caring for puppies could become a game, but now, few people disagree even when we say that measuring your weight everyday can be a game.

A big change that can be called a "Paradigm shift" has been taking place around the world.
Paradigm is something that can be regarded as a dominant thought in a given time. When a paradigm shift takes place, what used to be regarded as a commonsense in one industry no longer works.

I showed this slide a year ago at our annual financial announcement briefing, but, in the past, there were dominant opinions in this market that video games are entertainment mainly enjoyed by children and young male adults and that females and senior citizens would hardly play. Also in the past, we often heard from people inside and outside this industry that they thought Nintendo was for kids. Further, it had been taken for granted in this industry that great majority of software has a short life-span and that software with longevity is hard to make. However, today, these ideas cannot be applied to the business of DS and Wii.

Also, Nintendo has yielded some results by taking somewhat different marketing approaches from the traditional ones that marketers must make much of the pre-launch PR activities in order to maximize a game's awareness at launch because software has very short life-span on the market. Such beliefs as "After the initial launch, the only way to sell software is at a discount", "Software for portable machines sell less than software for consoles" and "Major revenue for software business is the home console platform so that portable games cannot play the major role in software business" have already become obsolete due to the big change in the market caused by game population expansion.
Even when we have observed this great change in the market, a number of people in this video game industry appear to believe in the so-called "platform cycle" theory that is based upon the hardware and software sales transitions for past hardware platforms.

We doubt if the past platform cycle can be applied today and in the future as before.
It is true that technology constantly makes advancements, so that one single hardware cannot enjoy an eternal life-span. However, only when we are dealing with the same fixed customers as before in the same market with few changes, can we base our prediction for the current platform's life-span upon past platform's histories of how and when they have expanded, shrunk and taken over by the next generation. The facts here are that, we are dealing with wider audiences, the market is further expanding, and our business environment has been rapidly evolving by the minute.

This graph shows the yearly shipment of GameBoy Advance portable machine since launch, which has sold a life-to-date total of 80million units.
GameBoy Advance was sold in the traditional video game market, before the market expansion took place. GameBoy Advance started off with a great start from its first year and showed rapid decrease in its 5th year on the market. This GameBoy Advance's sales trend might be the background for "Portable Hardware's 4-year life-span" theory.
On the other hand, DS has been showing a completely different trend. Our brand new Gaming Population Expansion concept was first supported in the Japanese market, and then expanded into Europe and the Americas. The initial sales appear to be rather slow in comparison with those for GameBoy. However, because the market itself has expanded, the sales trend looks like it is climbing higher, and it looks like it is going to near the end of its life-span rather slowly.

Let's take a look at the software data.
In its first and second years, DS software could not reach the level achieved by GameBoy Advance. However, expansion of the gaming market has activated the big change. We can observe that something extraordinary is happening for DS.
When I look at these charts, I have to wonder if it would be at all appropriate to predict the future just based upon the past platform cycles. For Wii too, I believe in the great potential that Wii can create a brand new trend that cannot be applied to any past platform cycles.

Finally, I would like to talk about our mid-term goal.

At the timing of our financial announcement a year ago, I explained our belief that we are trying to expand the hardware sales to revitalize the software business. I expressed our mid-term prospect that we would like to create a market where we can sell 300million units of software between DS and Wii platform in one year.
To tell you the truth, at that time, I thought it would take a few years to achieve this goal. However, because our proposal has been accepted by our customers at much faster speed than our expectations, and because the paradigm shift has been taking place around the world, the goal has already been achieved in one year, even though we had called it our mid-term goal. As for our next target, rather than talking about how many more software per year, I believe that we should look into a different criterion, and that is, a number of our video game machine customers within one household.

BACK | 1 2 3 4 5 6 7 | NEXT

Page Top