IR Information

Second Quarter Financial Results Briefing for the 74th Fiscal Term Ending March 2014 - Q & A
Q & A
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Q 7

I understand that President Iwata now has direct control over the American markets, too. What have you learned, and what improvements will possibly be made for future growth? Please advise.

A 7


To be more specific, Nintendo Co., Ltd. used to have an International Business Division. Today, I am directly in charge of the international businesses at the company as well as being the CEO of Nintendo of America Inc. Mr. Kimishima, sitting next to me today, used to be the CEO of Nintendo of America, but since it was decided that he would return to Japan, I decided that I should assume his CEO position, at least for a while. As the CEO of the company, I visit there more often than before, and I meet with more people there. Naturally, I can now better understand the American markets.

In a variety of senses, we are now facing a big turn of the tide, particularly with respect to digitalizing our business. When it comes to systematically marketing packaged software including its distribution, I can say that Nintendo of America is the most advanced among all the distribution divisions/subsidiaries of the company. On the other hand, perfection may sometimes cause an issue when a drastic environmental change has taken place. For our distribution divisions/subsidiaries, in order to initiate a great change ourselves, it is critical to learn from our counterparts around the world and locally implement their best practices and turn the PDCA* cycle quickly. I feel that the process of learning from Japan and Europe and thereby changing in accordance with the changing times while, at the same time, making use of the existing advantages Nintendo of America possesses, has certainly become quicker in comparison to how it was before, when I was communicating indirectly with people at Nintendo of America. We would like to show some tangible results during the year-end sales season.

*PDCA stands for Plan-Do-Check-Act and is an iterative method in business for continuous improvement for processes.

Q 8

Over these past four or five years, the number of Nintendo employees has expanded from 4,000 to around 5,000, and it appears that this fiscal year’s R&D expenditures may be the biggest ever. Over the same period, sales have gone down by about half. Given these circumstances, I would like to hear some comments regarding cost-cutting or workforce reduction going forward.

A 8


If you believe that there is no possibility of Nintendo’s results improving, then you would be right about it being necessary to review the structure of the workforce and the company itself to match the scale of the business. However, I believe that there are upward and downward swings in the video game business, that Nintendo has the potential to be a larger-scale business, and that in order to achieve that potential, good developers, localization capability and the ability to sell overseas are necessary. We need a company with a lot of muscle, but a company that also has no excess fat – one that makes smart spending decisions. Restructuring the workforce is not the first option we consider even when cost cutting is required. I would like you to understand that this is because we do not see a dark future for Nintendo.

Q 9

As the former president of Nintendo, Mr. Yamauchi, passed away the other day, the stock market is watching what will become of his share of the company. Of course, it is ultimately up to the decision of the bereaved family, but I am interested in learning if the company has any proposals on this subject or is ready to talk to the family if they request cooperation.

A 9


First of all, please understand that the first 49 days* after his death have not yet passed and, accordingly, there is nothing concrete we can say as to what we might do. However, I received a similar question when we made the financial announcements yesterday at the Osaka Securities Exchange, and I answered by saying that, if the bereaved family approaches the company with a proposal regarding the inheritance, and if there is something we can do to cooperate, we are willing to do so. For the benefit of all of our shareholders, we are willing to cooperate if needed so as not to disturb our stock price as a result of his large stake in the company being released onto the market at once. Please understand, however, it would be only after the bereaved family contacted us to discuss this subject and, once again, if they do so, it will probably be only after the 49th day. I myself want the company to appropriately do what it has to do in order to not cause trouble for everyone, and I believe that the company has the fiscal ability to do so if needed.

*In Buddhism, the first 49 days after one’s death are regarded as an especially solemn mourning period.

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