IR Information

Second Quarter Financial Results Briefing
for Fiscal Year Ending March 2013
Oct. 25, 2012
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It has been generally said that the sales of packaged software have an adversarial relationship with digital download sales. We are trying a type of digital product distribution, which is not the disintermediation type, by having download versions sold by retailers as well as us directly selling them through the Nintendo eShop. We have a chance to establish a win-win relationship with retailers because sales by retailers could expand the exposure of download versions. Although it is hard to have an accurate forecast of demand for entertainment software, an increasing number of retailers have decreased their inventory risk and opportunity loss at the same time by selling download versions in the form of POSA cards.
Download sales began with first-party software titles, but download versions of third-party software titles are available now. We hope the number of third-party software titles available, both packaged and download, will gradually increase.
In addition, download sales of games already released as packaged software has already commenced overseas and will start here in Japan in November.
For Wii U, download versions of packaged software will be available from the launch of the platform.

One Nintendo 3DS game that will enable us to significantly raise a wide variety of consumers’ awareness of the download sales of packaged software will be released on November 8 in Japan. That is


* This video was deleted due to expiration of contract.

"Animal Crossing" (temp.).
This is a game you can enjoy every day over a long period of time, which means that its download version in particular could be suitable. We decided to actively advertise it in the mass media for the first time. Please let me show you the TV commercial*.

Information about download versions has been displayed as text on the TV screen in some commercials before, but this time, as you just heard, the narrator says, "Download version available, always with you, never lost." We hope this commercial will have a significant positive impact on the awareness of download versions.
Furthermore, we will take advantage of the download version in


"Animal Crossing Pack" (Japanese product).
This is a special set containing the Nintendo 3DS XL hardware featuring the download version of "Animal Crossing" (temp.) inside the device. We have had so many pre-orders that some retailers have already stopped accepting them. We are currently arranging for additional production.
By making consumers who do not know much about download versions understand their advantages in this way, we will aim to increase the awareness and popularity of them.


During the second quarter of this fiscal term, we have successfully eliminated the situation that we sell the Nintendo 3DS hardware below cost, which was the main reason our corporate profits fell in the last term. However, as we are in the phase of concentrating our development resources on software for the Nintendo 3DS system, which is still in an earlier stage of penetration than that of Nintendo DS, and as we have not yet launched the Wii U system, it is difficult to increase the total sales of software, which is generally profitable. In addition to the yen’s continuous appreciation, the Wii U hardware will have a negative impact on Nintendo’s profits early after the launch because rather than determining a price based on its manufacturing cost, we selected one that consumers would consider to be reasonable. In this first half of the term before the launch of the Wii U, we were not able to make a profit on software for the system while we had to book a loss on the hardware, which is currently in production and will be sold below cost. Our loss has therefore widened during the second quarter in spite of bringing the Nintendo 3DS hardware back to profitability. Although we expect our financial performance to be revitalized, under these circumstances, unfortunately we cannot say that we will achieve "Nintendo-like" profits within this fiscal year.

We will make best efforts to retrieve "Nintendo-like" profits by:

boosting sales of the Nintendo 3DS system as a sound successor to Nintendo DS both in Japan and overseas during the year-end sales season,
launching the Wii U system successfully in each part of the world in the year-end and maintaining the sales momentum next year, and,
transforming our business structure in line with the times, including the expansion of our digital business to increase our business efficiency and profitability.


Thank you for listening.


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