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Corporate Management Policy Briefing/
Third Quarter Financial Results Briefing
for Fiscal Year Ending March 2012
Jan. 27, 2012
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Thank you for attending our Operational Briefing despite your busy schedules. I’m Satoru Iwata, president of Nintendo.

On the invitation we sent you before, Nobuo Nagai, Senior Managing Director and General Manager of the Manufacturing Division, was scheduled to attend this briefing today as one of our representative directors. I deeply regret to say, however, he passed away suddenly five days ago, on January 22, due to illness. I really appreciate your generous support to him and pray for him and his family in this time of loss.

As Yoshihiro Mori has already briefed you on the financial results, although the business environment has changed drastically, we feel greatly accountable for revising downward our forecasts for the full year for the third time in a row in our quarterly financial results.

The main purpose of this briefing is to express our determination to revitalize the financial performance and to show forecasts for it, but before I do that, for me to better explain the current situation, I would like to explain...



the global market situation in the year-end sales season.
When we held our last Financial Results Briefing, the sales of the Nintendo 3DS had not accelerated worldwide; however, since last November, because strong titles were launched and the year-end sales season developed favorably,


the proliferation speed of the Nintendo 3DS accelerated around the world.
Concretely, I would like to explain about the proliferation speed in each region.


This chart compares how various platforms boosted their total sales in the year from their respective launches in Japan, based on the data from Media Create.
In the beginning, the sales pace of the Nintendo 3DS (shown in red) was unsatisfactory, but it gained momentum after the price cut. In particular, in the year-end sales season, when popular titles such as “SUPER MARIO 3D LAND,” “Mario Kart 7,” “Monster Hunter 3 (Tri) G” (Japanese title) were released, the sales boosted as we had expected. I suppose most of you remember that there was news at the end of last year which reported that the total unit sales of the Nintendo 3DS reached four million faster than the Nintendo DS or the Wii. However, at that time, this pace was not the fastest in Japan’s video game history, since it was slower than that of the Game Boy Advance. But, the Nintendo 3DS did not lose its momentum even after the new year, and two weeks ago it broke the record of the fastest sales pace.


This is the data of the United States. This number only reflects sales in the U.S., and the sales in Canada or Latin America are not included. Since weekly data are not published by NPD, this chart is based on the data gathered by Nintendo. As you can see, the total unit sales reached four million in the year-end also in the U.S. No Monster Hunter title has been released for the Nintendo 3DS in the U.S., but we can see that the sales of the Nintendo 3DS grew rapidly in connection with the release of the two Mario titles.
However, the sales pace of the Nintendo DS was not very good in its first year in the U.S., so we cannot say “The Nintendo 3DS is selling steadily,” just by the fact that it is selling at a faster pace than the Nintendo DS. This is the sales transition of the Wii, and the total unit sales of the Nintendo 3DS exceeded those of the Wii at the end of last year.
We avoided the emergency situation that the Nintendo 3DS could not show its presence, and I believe that we laid the groundwork for its penetration.


This is the data of Europe. In Europe, the sales pace of the Nintendo DS in its first year was better than that of the U.S. due to the hit of “nintendogs,” but the sales pace of the Nintendo 3DS accelerated even faster than that after the release of the two Mario titles. And in December, the Nintendo 3DS took the top share of hardware unit sales in Europe, and the sales grew significantly.


In this way, the sales of the Nintendo 3DS grew largely in the year-end sales season when popular titles were released, and it could realize a faster sales pace than the Wii or the Nintendo DS.
Last summer, when the sales pace of the Nintendo 3DS was slow, there were extreme remarks saying, “With the penetration of smartphones, will there still be a market for handheld hardware?,” which was almost equal to “Handheld hardware is not necessary anymore.” I believe we proved that such opinions are incorrect.
However, on the other hand...


We were not able to reach the goal we set in October last year, and this is one of the reasons that we have revised our financial forecasts.
Because the population is larger, the scales of the U.S. and the European markets are bigger than that of Japan. The U.S. market is about 2.5 times the size of the Japanese market, and the European market is twice as large as the Japanese market. Since the sales growth pace of new products in Japan is often faster than in other regions, I am not saying that the sales proportion must reflect this ratio. But, based on the scale of the market, we were planning to accelerate the sales in the U.S. and in Europe more than in Japan at the end of last year.
However, because the start of the year-end sales season was slower both in the U.S. and in Europe in comparison to the last few years, and because we could not cover the lack of sales even after the sales gained momentum, the total sales did not reach our forecast. Considering that, in the end, the momentum at the end of the year was almost as we had expected, we have to look back on the fact that we could not boost sales a little earlier.


Now, I would like to talk briefly about the entire video game market, not just the Nintendo 3DS. First, the Japanese market.


This chart shows the sales transitions of home console hardware in Japan.

We saw some growth in sales of the Wii during the year-end sales season, but since families’ attention was focused on the Nintendo 3DS, the start of the year-end sales was slower and the peak turned out smaller than that of the previous year. Although Sony’s PS3 performed in a similar fashion to the previous year, no home console made sales of over 100,000 units per week at the end of last year, and no home console showed a large presence in the market.


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