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Semi-Annual Financial Results Briefing for Fiscal Year Ending March 2012
Q & A - Oct. 28, 2011
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Q 1

  Please let us know in more detail about how you are going to reflect the bitter lesson you learned with the launch of the Nintendo 3DS in the upcoming launch of the Wii U. Specifically, will you set a strategic price for the hardware by considering to sell it in the red to some extent from the beginning? Will you have a solid lineup of first-party titles at the launch? Also, are you planning to utilize the network capabilities of the Wii U in a meaningful way from day one?

A 1

Satoru Iwata (President):

I have no definitive information on whether we will sell the Wii U in the red or on the suggested retail price for the hardware at this stage.

  We have a number of materials for our reflections on what could have caused the weak sales of the Nintendo 3DS after the initial launch period, and we would like to do our utmost so that it will not happen again regarding the Wii U. Please let me refrain from mentioning what Nintendo regrets with the specifics of the Nintendo 3DS because I do not think the news reports on those matters will help to invigorate the market in the upcoming sales season. I hope you understand that we are trying to take appropriate measures to handle the various issues we are aware of concerning the launch of the Wii U.

Q 2

  I am interested in your future policy on controlling the quality of content while you are accelerating your digital business. As you mentioned earlier in your presentation, you are focusing on various ways to improve your business other than through video games, including video distribution, that I am looking forward to. As the range of content available increases, however, there could be great variation in the quality of the content or there could be some overlapping content. To avoid these problems, will you control the content by yourself to a certain extent, or will you leave it up to the discretion of content distributors? I would like to ask about your plan to control the quality of content.



We see digital content from two different views, as a platform holder and a software publisher. As a platform holder, each publisher or content owner should be responsible for the quality of its own content. For example, evaluating the quality of each video provided by Netflix or Hulu is not realistic for us. We believe that they are more specialized in such a field than Nintendo. We will supply content distributors with a platform, and we will provide consumers opportunities to access various content. And among the content-distribution services, it is natural that the ones where consumers can most easily find the content they want will become the most popular and the others will gradually fade out. Therefore, we should entrust the quality control of content to each distributor or content holder.

  As a software publisher, on the other hand, we are naturally so particular about the quality of the software published under the Nintendo name that we are making our best efforts not to offer disappointing software to consumers. As there is no accounting for tastes, it is not realistic to promise that all of our products will completely satisfy everyone, but we strictly control our products anyway so that none of them fall far short of consumers’ expectations.

   At the same time, we have the player reviews at the Nintendo eShop that I referred to in my presentation. One of the unavoidable challenges with video game reviews on the Internet is that you cannot easily tell ones posted by people who actually played the game from other ones which were written by people who did not play the game. In contrast, player reviews combined with a platform, like the system at the Nintendo eShop where only those who have played the subject software for one hour or more are eligible to cast one vote and some titles receive tens of thousands of reviews (per title), so they are likely to reflect an overall consensus of the actual players of the game. We would like to make these reviews more visible to consumers and, as I mentioned in my presentation, we would like to also make Nintendo eShop accessible on the Internet through various web-browsing devices, not exclusive to the Nintendo 3DS. By heightening the retrieval performance and recognition of this sound review system, in a different way, we hope to respond to your opinion that the quality of content must be strictly controlled.

Q 3

 Through the Nintendo Direct presentation, I found the social aspect and the network capabilities of “Mario Kart 7” very interesting. However, as the chance to connect to the network is StreetPass, which is not a 3G function, we will scarcely have such a chance without a Nintendo 3DS user being nearby. What kind of promotions will you carry out to increase such chances? As we can see from Nintendo of America's use of Twitter, they seem to be more active regarding these matters than Nintendo in Japan. What kind of promotions do you have in mind for Japan and how will they be different from promotions abroad?

A 3


Since Japan is a highly-populated small country and Tag Mode for Nintendo DS caused quite a stir several times here, many people have had a chance to experience StreetPass. You can let up to 12 software titles use StreetPass simultaneously with the Nintendo 3DS, unlike Tag Mode of the Nintendo DS, where it had to be in sleep mode with a compatible software title activated, and therefore you can enjoy StreetPass with a variety of software titles. In our recent Nintendo Direct presentation, I introduced a downloadable software title “Hu-Stone” (Japanese title) by POISOFT, a development company with only four staff members, and they said that even small developers now have a chance to take advantage of StreetPass. StreetPass is already taking place even for the software without established franchises in Japan, which is what we have been eager for. As the Nintendo 3DS will have a more substantial installed base after the upcoming sales season, the chances for StreetPass will increase at an accelerated pace. On the other hand, we know there are some concerns that StreetPass communications could be rare in the U.S., which has vast national territories and is dependent on automobiles, because less people use public transportation services, like trains or buses, than in Japan. Since we understand that people usually become greatly interested in StreetPass once they have experienced it, we need to somehow let as many people as possible try it. So we have to actively hold promotional events where people can gather and experience StreetPass. When we published “Dragon Quest IX: Sentinels of the Starry Skies” for Nintendo DS overseas, some events were voluntarily held by fans and others were organized by Nintendo, and people who got together there were very impressed when they experienced the Tag Mode communications for the first time. There will be more opportunities for StreetPass with the increasing installed base of the Nintendo 3DS, and a fairly significant number of people will probably experience StreetPass in shopping malls in the year-end sales season. Just one encounter will make people more frequently go out with their Nintendo 3DS systems, and we hope it will create a virtuous cycle.

  It is true that, unlike a 3G function, StreetPass is limited in that it cannot happen without someone being nearby. However, the limitation and the charm of StreetPass are inextricably linked, and I think that users feel some excitement by realizing the fact that they have shared the same time and place with another person. Therefore, we do not see it (the fact that you must be in close contact with others) as a disadvantage when StreetPass is compared to 3G (which can be done anywhere). Rather, we would like to promote this unique advantage and excitement that StreetPass provides to users.

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