IR Information

Corporate Management Policy Briefing/
Third Quarter Financial Results Briefing
for Fiscal Year Ending March 2013
Jan. 31, 2013

With Wii U, we have taken a rather resolute stance in pricing it below its manufacturing cost, so we are not planning to perform a markdown. I would like to make this point absolutely clear. We are putting our lessons from Nintendo 3DS to good use, as I have already publicly stated. However, given that it has now become clear that we have not yet fully communicated the value of our product, we will try to do so before the software lineup is enhanced and at the same time work to enrich the software lineup which could make consumers understand the appeal of Wii U.

Also, we are receiving many comments and requests from consumers about issues such as the time to start up the system and switch between software, and the duration of the initial system update. I acknowledge that we will need to further increase the appeal of the platform through the system updates we have planned for this spring as well as this summer.

As Yoshihiro Mori has already briefed you on our forecast for this fiscal year, you are aware that we cannot help posting operating losses for two consecutive fiscal years. We feel greatly accountable for this severe outlook.

Until now we have always shown you our specific earnings forecast for the next fiscal year at the time of our announcement of the full-year financial results. Under this circumstance, however, I am required to tell you about our prospects for when we will be able to retrieve "Nintendo-like" profits again, so I would like to say something here.

For the next fiscal year, with the premise of the current trend of currency exchange rates, the management aim to earn 100 billion yen or more of operating profit by reviving the momentum of our overseas operations.

It is true that, if the yen went back to such an extremely strong rate as several months ago, we could not make it due to our business structure. However, as we have launched two platforms, the Nintendo 3DS and the Wii U, and among them, we have already ceased selling the Nintendo 3DS hardware below cost and will be in the harvest time for it, it is our must-do for the next fiscal year to revive the momentum of our overseas business, expand the market by exploiting the potential of our products, and therefore retrieve "Nintendo-like" profits.

At present I cannot go too far to describe specific sales forecasts for all hardware and software, but in order to have you more convinced, please let me tell you as much as I can about how we will achieve our target.

First of all, here in Japan, the Nintendo 3DS has become the market-leading platform. The key titles which could drive the market have been unveiled, including,

"DRAGON QUEST VII Eden no Senshitachi," "Tomodachi Collection" (temp.), "MONSTER HUNTER 4" and "Pokémon X/Pokémon Y." In addition, a variety of titles will be released by Nintendo and other Japanese software developers. In that sense, I hope few people are concerned about the momentum of the Nintendo 3DS in the Japanese market.

The challenge for Nintendo 3DS exists in the overseas market, not the Japanese market. We need to think about the method and its possibility of making what we have done in Japan happen there.

Thinking back to the Nintendo DS system, it did not gain momentum in the overseas markets until its sales pace in Japan had accelerated. However, since now is a time when smart devices are widespread and overseas video game developers are less interested in developing software for handheld platforms, some may doubt if Nintendo can actually make it.

Before we released "Animal Crossing: New Leaf" in Japan last year, some said that, amid the expanding popularity of smart devices, few adult female consumers would play games on a dedicated gaming device as they did with Nintendo DS. With the big sales of this game, however, we think that it was proven that an indispensable, original title could overcome the popularity of smart devices and deflation of the value of software.

To export the momentum to the overseas markets, we plan to actively release our key titles for Nintendo 3DS which could potentially lead the markets this year.
"Pokémon X/Pokémon Y," to be launched in October worldwide, could be the most-anticipated one and "Animal Crossing: New Leaf," released in Japan last year, will be available in the first half of this year.

We have already announced that "Fire Emblem Awakening," "Pokémon Mystery Dungeon: Gates to Infinity," "Luigiís Mansion: Dark Moon," "Brain Age: Concentration Training" and "LEGO City Undercover: The Chase Begins" will be released in the first half of this year. For the overseas Nintendo 3DS markets, this year will be a good harvest time of what we have developed for these two years. We plan to intensively and actively sell approximately 10 key titles on our own in order to change the Nintendo 3DS system from a handheld device just to play the Mario series to the one to enjoy a variety of games. Naturally, we will keep the momentum of already-released titles with much sales potential by, for example, having them digitally distributed.

Recently, third-party software developers overseas have been inclined to focus on mega-hit titles for home consoles and have had less of their development studios develop software for handheld devices. Some developers, which make game content suitable for children, work on titles for Nintendo 3DS, but they are not as active as the time of Nintendo DS.

On the other hand, as the handheld devices occupy a large share of the video game market and software for handheld devices is important in the video game business in Japan, Japanese software developers are eagerly assigning their top teams to develop key titles for Nintendo 3DS.

We therefore plan to more actively support the Japanese software developers in distributing their key titles overseas this year.

Among those third-party titles both developed and published in Japan, there have been some games which Nintendo published in Europe, including the Professor Layton series. We will increase the number of such games for the U.S. market as well as in Europe. We are also willing to flexibly assist third-party developers in distributing their valuable games overseas.


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