IR Information

Corporate Management Policy Briefing / Semi-Annual Financial Results Briefing
for the 75th Fiscal Term Ending March 2015
Q & A
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Q 1

I would like to know what kind of fun new things amiibo can do. If possible, I hope to hear from Mr. Miyamoto, too.

A 1

Satoru Iwata (President):

We have a pre-installed NFC (Near Field Communication) reader and writer in the Wii U GamePad as a standard function. When we launched Wii U, we were not able to demonstrate to our consumers sufficient ways this NFC reader/writer functionality would be used in the future. We released “Pokémon Rumble U,” which became one clear way to use the technology, but other than this, we had not yet shown the world how this unique functionality could be used in a more extensive way. This year, we started a new service in Japan so that Japanese Wii U owners can now purchase digital software and applications available in Nintendo eShop by holding their Suica-compatible transport e-money cards over the NFC reader/writer. And now that amiibo, which is our first foray into the toys-to-life category, will launch around the world at the end of this year, we have finally come to the point where we will significantly take advantage of the NFC functionality. In the base of the amiibo figure, is an NFC chip that recognizes the type of amiibo that is being placed on the GamePad. The NFC chip also includes an area that can be accessed by the game software so that certain data can be written into the chip from the game. Both this reading and writing can be done instantaneously. As soon as you place amiibo on the NFC, something happens. When we demonstrated amiibo to the overseas media recently, they were very surprised at the rapid speed at which it could read and write data. However, this process should be instantaneous because when we go through the train ticket gates using e-money cards, if the data cannot be read instantly, it means the gates are probably jammed. So, we should think about the reading/writing of amiibo data as being similar to our experience at the ticket gates. When we can link the world inside a video game with a physical object in the real world (like a figure), a number of unique approaches can be taken. The simplest way is by tapping amiibo on the GamePad NFC reader/writer just for something to “appear” in the game, but we have already announced how amiibo will be used in a number of different ways in “Super Smash Bros.” for Wii U and Nintendo 3DS. You can use your amiibo character as your rival and your partner in the games. When you are playing “Super Smash Bros.” for Wii U or Nintendo 3DS by yourself, your amiibo character can become your opponent, and by battling against this rival in the game, you are also training your amiibo to learn new moves and level up, which is important because your amiibo can be your ally when you compete against your friends. amiibo are used to multiply the fun of gameplay by expanding the way games can be played. We are thinking about making many more games compatible with amiibo from next year. We do not think amiibo always needs to take the form of a figure, either. We believe that amiibo could take a variety of different forms. Mr. Miyamoto has been considering multiple ways to use the GamePad, and using the NFC reader/writer function more aggressively is one area he has instructed his teams to focus on. Some of our products in 2015 might be a result of this new focus. I will let Mr. Miyamoto elaborate on this.

* “Super Smash Bros. for Wii U” will be released on Dec. 6, 2014 in Japan and “Super Smash Bros. for Nintendo 3DS”was released on Sept. 13, 2014 in Japan. When first released, amiibo will not be compatible with “Super Smash Bros. for Nintendo 3DS,” but will become compatible at a later date.

Shigeru Miyamoto (Senior Managing Director):

As Mr. Iwata said, Wii U has so many attractive features, and we have not been able to communicate all of its charms yet. We are still making efforts to demonstrate the potential of Wii U even today. When we started our planning for Wii U, we were focusing on the unique ways to make use of the TV screen and the smaller screen on the GamePad. We also wanted to demonstrate that Wii U could be started even without turning on your TV set so that the console experience of Wii U is closer to that of Nintendo 3DS or Nintendo DS. The quick boot-up of Wii U has been realized (through a Wii U system update), and we are currently developing a number of Wii U games we announced at E3 2014 that take advantage of the second screen on the GamePad. We will be releasing a number of these Wii U games next year. On the other hand, we have to admit that we might have focused too much on the unique uses of the two screens. We should have put more effort into using the NFC functionality much earlier, but we are now moving forward with projects that make use of NFC in a variety of unique ways. Nintendo is known as a video game company, but in fact, it is also a toy company. Toys must make consumers feel a “sense of wonder.” In that sense, with video game software, we can think about many different ways to emulate that feeling by creating virtual experiences for the users. When it comes to video game hardware, the hardware-development companies tend to take the similar and rather unified course of aiming to beef up the machines’ functionalities. In our efforts to differentiate our hardware from others, I believe it is important that users experience that feeling that they have played with a new toy. To that end, the fact that we can reproduce in our entertainment the experiences that people today can only have at a few limited places (mainly for business purposes outside the home) such as train ticket gates, namely, some results are shown instantaneously on the screen as soon as you pass something over somewhere, is very attractive. In the past, Nintendo creatively used the accessory called “Nintendo e-Reader” (a card reader for Game Boy Advance). Today, with NFC functionality, the unique entertainment we were trying to create at that time will be more easily realized for our consumers. Although I know that many people wanted to purchase Nintendo character figures in the past, all we did to make figures was grant licenses to other companies. Now that we also have decided to make high-quality figures ourselves, we keep making more characters that we think would please our fans. With quality workmanship and attention to even the tiniest of details, amiibo have their own distinct appeal just as a figure. In addition, unique functionality has been installed in amiibo that can be used in games. amiibo can take forms other than figures, too. I just talked about cards (“Nintendo e-Reader”), and the amiibo product range will also include cards in the future. For example, when amiibo become cards, we can create a game which can be played only by passing several cards over the NFC reader/writer, and the results will be stored in the amiibo card. I cannot discuss any of the details today, but amiibo has the potential to propose new ways to play card games. We will also launch smaller and even more affordable amiibo figures in the future, so we hope that with this variety of price points, consumers will be able to enjoy a number of amiibo. By using amiibo in different forms, we are internally discussing the possibility of using amiibo with, for example, an “Animal Crossing” game and other games in some unique ways. I hope you look forward to our future announcements. We plan to use amiibo to create new ways to play. Since the already-released “Mario Kart 8” is also compatible with amiibo, you can see what unique features can be realized.


It is not the case that one amiibo can be used exclusively with only one compatible game. In fact, the world of amiibo is broader than that. We want consumers to be curious about what will happen when they hold the same amiibo over the NFC reader/writer when playing many different games because we believe that this particular feeling of trying out amiibo in new ways is the “sense of wonder” we were just talking about. Ever since we first came up with the idea of amiibo, we have been repeatedly saying to our internal developers that we are creating a new entertainment category by tapping into that feeling. And our tendency to think about new ways to take advantage of amiibo has been spreading. Thank you very much.

Q 2

With regard to expanding into new markets, some other companies have started to sell their hardware in China since around the end of September. Could you please comment to the extent possible on your current state of progress, your views regarding the markets and how you plan to proceed?

A 2


To begin with, I have said this repeatedly about China, but when we have made comments outside China, the process of translating my statements into English and then into the Chinese languages alters the nuance of these statements and my words have been misunderstood. So, I’m not going to talk about our plans for China in specific terms today, because we feel it would be better to announce them in China. We are considering all kinds of things, and it is worth noting that the video game business can be conducted in China officially, thanks to the establishment of the special economic zone in Shanghai, so we are currently researching what would be best for us.

Furthermore, with regard to new markets, our approach used to be one of localizing products that had been successful in Japan, the U.S. or Europe. We achieved a certain level of results by slightly reducing costs when localizing products for release, and by having a “perhaps people in new markets would also buy this” approach. However, it is not easy to reduce the cost price of video game systems, and one of the limitations of doing things this way is that it would only result in games being bought by wealthy consumers in new markets, or by extremely enthusiastic game fans who would devote a very large percentage of their income to buying games. We understand that our investors are interested in how we will expand into new markets because they feel that Nintendo should appeal to a broad range of consumers and that with Nintendo DS and Wii, the company has been able to dramatically expand the user population, from very avid game fans through to casual users. However, I do not think that our old approach would be successful in new markets.

About two years ago, I read a book called “Reverse Innovation,” written by a person called Vijay Govindarajan, which made me realize that simply carrying on our old approach without change would not result in big business, nor would it signify that we had truly blazed a trail in the new markets. Recently, I said that we were thinking about how Nintendo could make practical use of smart devices in its video game platforms. For example, Nintendo could use smart devices to make connections with consumers and direct them to our video game systems. We believe that our new approach for new markets will be based on how we can bring new things to these markets while making connections with new consumers through smart devices, rather than merely localizing the same things that we offer in developed nations. There are various opinions on when and where we should actually start our new approach and what kinds of products should be involved, but there is no benefit to be gained from leaving too much time between a statement from me and actual development, so this is all that I would like to say on the subject today. Thank you.

Q 3

I would like to ask about the QOL business. I understand that this business will start within 2015, when you start to sell QOL sensors and that later you will offer some sort of counseling services, but I cannot imagine what sort of business model you will use. Please explain whether this business will play an important role in regaining Nintendo-like profits.

A 3


First, the launch schedule for the QOL business has not changed from what I explained at the last Corporate Management Policy Briefing. The business will kick off in the fiscal year ending March 2016, and we expect it to contribute to our financial performance in the fiscal year ending in March 2017. In the slide I showed you today, I specifically wrote the year “2016” instead of “2015” because this is the year the QOL business will be able to contribute to our financial performance. This is the timeframe we are considering for the QOL business.

Regarding the business model, we would like to elaborate when the time is ripe to explain the specific services, fees and the business model. Nintendo’s past business models have been mainly purchase-based models, but for this type of business, we understand that a subscription-based model, where companies and consumers keep long-term relationships, is more suitable. Specific details such as the initial price and ongoing fees will be elaborated on around the time we are ready to show you the actual products as well as the nature of the actual services. On a basic level, it will become a slightly different model from the past purchase-based business models.

And, as for what degree it will contribute to our financial performance, I believe it has very high potential. “Five ‘Non’ Sensing” is so interesting that it has the potential for Nintendo to create a significantly large market that no one has ever set foot in, which is the reason why we are making this new move. On the other hand, when we start any new business, we do not think it makes sense to tell you about the scale of the business before details of the business model and the pricing structure are disclosed, even though I may already have an image of it in my mind, so I will refrain from sharing any numbers today. When Nintendo began to talk about “Gaming Population Expansion” in the past, no one would have believed us if we had shown “Brain Age” and “Wii Fit,” and said that they would create a new market of this or that size before they actually started to sell. Therefore, this time, we would appreciate it if you could consider what has happened repeatedly in our history where our offerings created a very large market in the end when generally people’s initial impression was “What will Nintendo do with such a product?”

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