IR Information

Second Quarter Financial Results Briefing
for Fiscal Year Ended March 2014
Oct. 31, 2013

This is a graph which compares this year's sales transitions of first-party software for Nintendo 3DS to last year's in the U.S. market. We have already sold more units than the total of last year even before the full-fledged year-end sales season.
You can see the sales pace this year has been dramatically changed from last year due to the continual releases of key titles since March this year, including the recent sharp growth after the release of “Pokémon X/Pokémon Y.”

This is a graph for the European market which compares this year's sales transitions of first-party software for Nintendo 3DS to last year's.
In Europe, the sales pace of game titles is likely to be slower just after the release, but it tends to be more stable than the U.S.
We will have sold more units than we did throughout the whole of last year as soon as next week.

I would now like to move on to our prospects for the upcoming sales season under these circumstances.

In the Japanese market, it seems that we will be able to face the upcoming year-end sales season in good shape with respect to Nintendo 3DS, and I am sure that you have no concerns either.

Nintendo 3DS achieved sales of approximately five and a half million units in the calendar year of 2012, and considering its current momentum, we can reasonably hope to be able to achieve over five million units in sales in 2013 again.

By the way, even Game Boy Advance or Wii, which people described as “massive hits” in the past, or any system from other manufacturers, never achieved annual sales of more than five million units in Japan in history. In the history of Japanese video games, this mark was surpassed by only two platforms, Nintendo 3DS and Nintendo DS. To achieve sales of over five million units in the Japanese market, you can see that one requires true momentum.

The single most important challenge for Nintendo 3DS is how we are going to achieve results in the overseas markets towards the end of the year.
Although we simultaneously released Nintendo 3DS XL and “New Super Mario Bros. 2” last summer, we were not able to sustain that momentum until the year-end sales season was in full swing and turn Nintendo 3DS into a leading force in the overseas markets.
This year, as I just explained to you, we are going to head into November, the month when the year-end sales season truly begins, with great momentum that has been created by the release of “Pokémon X/Pokémon Y” on October 12. In addition, existing titles such as “Luigi's Mansion: Dark Moon,” “Donkey Kong Country Returns 3D,” “Animal Crossing: New Leaf” and “Mario & Luigi: Dream Team” still maintain sufficient momentum, while the latest installment in the “The Legend of Zelda” series is set to be released for Nintendo 3DS in November. With such a strong lineup of key games in place for the year-end sales season, we aim to achieve great results towards the end of this calendar year.

A product that is expected to play a significant role in achieving this goal is Nintendo 2DS, which we have just launched in the U.S. and Europe on October 12 along with the Pokémon title.

Given the highly appreciated yen at the time when the original Nintendo 3DS and Nintendo 3DS XL were launched as well as the high manufacturing costs of the Nintendo 3DS hardware which incorporated various features, we were not able to provide a competitive price point for an entry-level gaming system. Nintendo's entry-level handheld gaming systems have traditionally been offered for under 150 dollars or euros, and some people may have felt that the price of Nintendo 3DS was perhaps slightly high. In order to reach out to a larger audience in this coming year-end season, we felt that we needed a new model that we could offer for under 150 dollars, which we just launched at the same time as the Pokémon software. We are yet to create sufficient awareness among prospective purchasers of this new product. It appears that there are some among those who saw the picture on our official website that mistakenly believe that the product is perhaps too large and heavy to carry, and we therefore strive to achieve higher awareness without causing misunderstandings. Fortunately, Nintendo 2DS has been well received by those who purchased it, and according to a Club Nintendo survey taken by Nintendo 2DS consumers, we learned that there are many people who would not have purchased a product in the Nintendo 3DS family without the existence of Nintendo 2DS. We have a strong feeling that Nintendo 2DS is going to be a force in further propelling the popularity of Nintendo 3DS in the overseas markets.

With respect to Wii U, on the other hand, I remarked at the Financial Results Briefing held back in April that we would carefully work on its market penetration, but its sales have not yet picked up significantly since the summer launches of some key first-party titles. There have been large intervals between the releases of key first-party titles, and given that there is little seasonable demand at the moment, we are not in a position where we can change the fate of the system with just one title.

Fortunately, the year-end sales season is an opportunity in which various members of the family are likely to take an interest in Nintendo's home consoles, so we will try to change the situation surrounding Wii U through our efforts for this year-end sales season.

The key title that is going to drive this year's year-end sales season is “Super Mario 3D World,” the latest installment in the Super Mario series that is set to be released in November.
I feel that the trailers we have released so far already provide consumers with a taste of the quality of the game, but this is indeed a compelling product that provides both single and multi-player gameplay to a wide range of consumers from novice to experienced players of Mario action games.

With this title as a central pillar,

we plan to release towards the end of the year “Wii Party U,” which is an ideal title to play with a large group of people around the New Year holiday season in a unique manner with the Wii U GamePad, and “Mario & Sonic at the Sochi 2014 Olympic Winter Games™,” named after the Olympic Games scheduled to take place at the beginning of 2014 in Sochi, Russia.

On the other hand, except for its backward compatibility with existing Wii software and accessories, we have so far failed to make propositions worthy of Wii U's position as a successor to the Wii system. While it took more time than expected since the launch of Wii U, we are now ready to offer “Wii Sports” and “Wii Fit” for Wii U, two of the defining games for Wii, starting today.*

* The distribution dates in the U.S. and Europe differ from that of Japan.

First, I would like to talk about “Wii Sports Club,” which is a recreation of “Wii Sports” for the Wii U system. “Wii Sports” has been enjoyed by many people around the world as one of the games that defined Wii. Although we were yet to launch the “Wii Remote Plus” controller that incorporated a gyro sensor at the time we released “Wii Sports,” this new game is made to work specifically with Wii Remote Plus, and I am sure that it will become even easier to feel a better virtual reality experience. In addition, we will provide online gameplay that enables one to play with others in distant locations as well as a new element in which players can engage in competitions where teams corresponding to certain prefectures in Japan, or states in the U.S., compete against each other online. Even without having to get together with a group, there will be numerous elements that can be enjoyed by a single player.
This time, we have decided to offer the game digitally as opposed to providing a packaged game. While “Wii Sports” was available as a standalone game in the Japanese market, it was bundled with the Wii system for an extended period of time in the overseas markets, and as a result we have opted to provide the game in a so-called free-to-play format. Consumers will be able to download the game free of charge, and the first 24 hours after activation will be a free trial, after which players can choose either a “Day Pass” for all sports that costs 200 yen per day or a “Club Pass” that costs 1000 yen per sport. We expect those who already discovered their favorite sport and wish to play it on a frequent basis to opt for the “Club Pass,” and those who only wish to play the game when they get together with others to opt for the “Day Pass.”

In the beginning we will release two sports, tennis and bowling, but we will release other sports one after another. These sports will be released automatically through the SpotPass feature without requiring consumers to perform any tasks.
When a new sport is added, it and all the existing sports will be available free of charge for the first 24 hours, so I hope that many of you will get the chance to try them.


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