IR Information

The 73rd Annual General Meeting of Shareholders
Q & A

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Q 1 I enjoyed Nintendo Direct yesterday, so I would like to “directly” ask a question to Mr. Iwata and Mr. Miyamoto. I am afraid that personally the new hardware systems announced at E3 were not a big surprise. Some games certainly had breathtaking graphics, but their gameplay seemed as if they were an extension of existing games. Wii U is no exception to me. I think it is unfortunate that there have been no unique games only it could provide yet. It is true that “Off TV Play” is very convenient when we play Virtual Console games, but Wii U itself has not surprised me as much as Wii, which created a new form of entertainment that revolutionized conventional wisdom. Also, I saw the first-party software lineup for Wii U to be released until 2014, which was announced in “Nintendo Direct@E3 2013,” as continuations of existing games and found nothing in it that seemed possible only on Wii U. This is also true for third-party games. I am concerned that no one in the video game industry will be able to create anything new in the near future because developers have reached their creative limits. Nintendo is supposed to create products that can be enjoyed by many people regardless of age, gender or gaming experience, in accordance with its philosophy of “gaming population expansion.” However, most of the games in the current lineup are for those who have some interest in games. Some Japanese software developers focus on creating innovative games, but this appears to be possible only when they are small companies. Is Nintendo faced with a dilemma of attempting to improve its business performance while creating innovative games for a new consumer base?
A 1

Satoru Iwata (President, Chairperson of the shareholders' meeting):

Thank you for your comments which include your encouraging messages to us. Please let me explain a few things from your message for those who do not usually play games. For example, “Off TV Play” means that, as the controller for Wii U is equipped with its own screen, users can play games on Wii U without looking at the TV screen. This is one of the unique features of Wii U and we often hear positive comments about how useful it is.
I understand, however, that what you would like to say is that “Off TV Play” eliminates location restrictions, but it doesn’t change the way users play. In other words, you have not experienced the wow factor that you did with “nintendogs” or “Brain Age” for Nintendo DS or “Wii Sports” or “Wii Fit” for Wii.

Generational changes of video game systems happen every few years and what they are capable of improves each time. Video game systems, which can be classified as computers that produce real-time graphics, recently have become powerful enough to be able to depict more photorealistic scenes and animate a lot of things more accurately on the screen. You pointed out that people are becoming less and less impressed by such evolutions in graphics. As a matter of fact, this is being discussed in the video game industry and some are concerned that this increased burden on developers is not necessarily linked to consumer satisfaction.

Some shareholders here reacted when you said “directly” in your question. I think they are familiar with our efforts to directly give information on new games to consumers on the Internet through our regular Nintendo Direct presentations. We started this approach in October 2011 and recently many people view these broadcasts. E3 is the video game industry’s biggest trade show, which is held in Los Angeles in the U.S. each June. At the start of the E3 show this year, we announced our Wii U software lineup until 2014 mainly through Nintendo Direct, rather than holding a large-scale presentation as we did in previous years. However, we did not announce all of the games to be released during this period. Most of those who are interested in E3 are video game fans that are eager for information on so-called traditional games and we had a lot of information to be disclosed to such people. Therefore, we first tried to inform consumers of the software lineup to relieve those who might think that they should have waited to buy Wii U until more games were released or those who might be concerned whether the software lineup will be really be enriched in the future. On the other hand, when it comes to brand-new types of games, we have to announce them not too far in advance of the actual release dates in order to have a strong impact in the market and minimize the chance of others introducing similar or competing products. We are working on new types of games, but we would like to announce them much closer to their actual release timings for this reason.

We would like as many people as possible to pick up, experience and enjoy our video games. It is important to let people who originally had no interest in games, find themselves enjoying Wii U in their living room every day. We must also satisfy avid video game fans. When it comes to Wii, as “Wii Sports” spread throughout the world at a sensational speed, some misunderstood that all Wii could do is enable them to play games by moving the Wii Remote. With Wii U, therefore, we planned to satisfy existing video game fans first and provide new surprises later. But, just as you pointed out, it is becoming increasingly difficult for the consumers to be impressed by improvements in graphics alone, so we would like to seek different ways to make an impression on consumers.

As you requested, I would like Mr. Miyamoto to say something about “Pikmin 3,” which we will release next month. I think the quality of this game is something that only Wii U can achieve. Last night we broadcast a Nintendo Direct featuring “Pikmin 3.” Mr. Hitoshi Matsumoto, a member of the comedy duo “Downtown” who is a big fan of the Pikmin series and asked Mr. Miyamoto many questions about “Pikmin 3” when they appeared on a TV talk show, played “Pikmin 3” with Mr. Miyamoto for the Nintendo Direct broadcast. You can find the video on YouTube or our official website. I hope you will take the time to watch it.

Shigeru Miyamoto (Senior Managing Director, General Manager of Entertainment Analysis and Development Division):

I have worked hard to develop “Pikmin 3.” I strongly feel that this game is suitable for a broad range of people, from casual to core game players. The dilemma the questioner pointed out is true for the whole video game industry. I think, however, this kind of thing exists in every industry. For example, the business of TV stations is based on TV commercials, but with the emergence of Internet advertising, TV stations no longer have a monopoly on commercials. Similarly, the video game industry now has smartphones, which have almost the same power as dedicated gaming systems, except for the user interface, and all of which are connected to the Internet. However, I don’t think it is a new thing. Not to change the subject, but I was a fan of a morning TV series, “Gegege no Nyobo (*),” and I was interested in how the history of manga (Japanese comics), from picture-story shows to TV animations, was introduced. People who have survived such a rapidly changing environment are very responsive to changes in the media and are very quick to adapt. As Nintendo has done business in the video game industry for a considerable amount of time, we have been able to have a broad perspective on the tide of video games to some extent, which led to our creation of Nintendo DS and Wii. We will do our best to continue this stance. As the questioner suggested, it is true that we cannot help giving certain priority to well-known titles to aim at a certain level of profits because retailers tend to eagerly purchase the games for which they can forecast the sales. However, we are always making efforts to create other brand-new titles.

When it comes to the scale of software development, Wii U with HD graphics requires about twice the human resources than before. Please allow me to explain that we may have underestimated the scale of this change and as a result, the overall software development took more time than originally anticipated just as we tried to polish the software at the completion phase of development. However, we are almost out of this phase, and we are also trying to create something unique utilizing an easier development approach called “Nintendo Web Framework.”

Also, it is sometimes said that Nintendo has recently had no new franchises. At E3 this year, some said that Nintendo is always showing the same series of games, but this is because we mainly featured the characters from our franchises in our exhibition booth. There were six featured areas of our franchises in our booth, including Zelda, Mario and Donkey Kong, and the visitors were able to take commemorative photos with these characters. Considering that visitors will not enjoy less well-known franchises in such areas, we did it in this way, which resulted in such a criticism, I think. On the other hand, I think it is one of our advantages to have such franchises. When some young in-house developers come up with an idea of a new franchise, I say that creating a new character does not necessarily mean creating a new franchise. In my view, a new way of playing or new use of media is necessary for a “new product” and creating a character is not the first thing to do. In this sense, “nintendogs,” “Brain Age” and “Wii Fit” are all new franchises. Few people see it this way because these games have no symbolic “character” like the existence of Mario, but they are actually contributing to our sales. I would like to continue developing video games with the view of entertaining a wide variety of people including the existing video game fans. Thank you so much for your support.

(*) A TV drama featuring a Japanese comic artist, Mr. Shigeru Mizuki, broadcast in 2010.

Q 2 Nintendo attempted to add new control schemes to existing franchises to create new and attractive experiences with Nintendo DS and Wii, but I personally feel that the title that benefited most from this attempt was “Mario Kart Wii,” and with other software, I often found it difficult to see how these unique control schemes contributed to creating attractive experiences. I believe that Nintendo is going to add new controls to new Nintendo 3DS and Wii U software too, but how do you propose to incorporate these new controls when you create new iterations of your established franchises?
A 2


Since Nintendo DS and Wii, we have been trying to reach out to a wider audience by recreating the control schemes in which people play games. In terms of combining new controls with more traditional games, “Mario Kart Wii” features what is called the “Wii Wheel.” You can place your Wii Remote in the Wii Wheel and this enables you to play the game by simply turning the wheel as if you were driving a car. As a result, we managed to appeal to a wider range of consumers including those who could not play racing games with traditional controls. However, I take it that you were unable to see how other titles benefited from these new features and you would like to know what we think of the future of Nintendo 3DS and Wii U.

Whenever we launch a new hardware system, we also consider various new input methods. We have, for example, the touch screen we first introduced on Nintendo DS, or the camera feature (introduced on Nintendo DSi and Nintendo 3DS). The Wii Remote incorporates an accelerometer, and (from Wii Remote Plus) we also have a gyro sensor built into the controller. This enabled us to measure the trajectory of the controller as well as the angle at which it is held. As you can see from this, we have always been considering how more intuitive input schemes could change games. Apart from “Mario Kart Wii” that you specifically mentioned, some say that first person shooter games, for example, became more intuitive by combining the ability to point at the screen with the Wii Remote and the Nunchuk as opposed to controlling two analog sticks at the same time. And with other software, there are also certain elements that, in our opinion, changed significantly as a result of introducing a new control scheme. To give another example, the dual screens on Nintendo DS have enabled us to show two different things at the same time, and this has had a tremendous impact as it created new game mechanics and made games easier to understand. One can say that we have been trying to lower the barriers to playing games in order to appeal to a wider range of consumers.

On the other hand, I believe that you were speaking as someone who has been playing games for a long time and you felt that the benefits of introducing a new control method were in fact not significant. We feel that any form of entertainment that fails to attract new consumers on a continuous basis will eventually go into a decline, so we will continue to make efforts to make it easier for new consumers to enjoy our products. However, we would also like to think even more carefully about making our franchises new and refreshing even for those who have been enjoying them for a long time. Thank you for your candid opinion.

Q 3 I have been waiting for the return of Virtual Boy ever since the launch of the Virtual Console service for Nintendo 3DS. Do you have any concrete plans? I would like you to look into the possibility since I feel that there is a fairly large number of people in my generation and later generations who have not played Virtual Boy.
A 3


I cannot talk about any unannounced products on occasions like this, but Virtual Boy is a game console Nintendo launched in the past that allows players to experience a 3D world in black and red only by just looking into it. It was not a commercial success, but some say that it was an attractive and extremely unique product by the standards at that time. I believe your comment is that we should take advantage of our software assets from Virtual Boy and I would like to take note of that advice for the future.

Q 4 Four games have been added to “StreetPass Mii Plaza” for Nintendo 3DS as paid add-on content, and I find them so enjoyable that I had been playing them until the very moment the shareholders’ meeting started today. My particular favorites are “StreetPass Squad” and “StreetPass Mansion,” both of which were developed by external developers, and I sense that the development process was similar to that of “Wii Motion: Play.” I would like you to consider doing more work of this taste in the future.
A 4


As you just mentioned, Nintendo 3DS incorporates a feature called “StreetPass Mii Plaza.” By closing your Nintendo 3DS system while the power and the wireless feature are on, it automatically searches for other Nintendo 3DS systems in its environment. Whenever you pass by another user, your virtual characters known as “Mii” will transfer to each other’s system. Previously we had a puzzle-piece collecting game and a very simple RPG game called “Find Mii” on offer, but after two years on the market, we knew that those who had experienced every aspect of these two games wanted something new. In a way, we have until now been trying to create an environment in users can experience the StreetPass feature, so our objective was to create something that was simple and easy to understand. But we feel that the next step for us to take is to create games that are deeper, and we have actually been working on them for quite some time. You also mentioned “Wii Motion: Play,” a product we released when we first developed Wii Remote Plus. This controller was bundled with the software, and we offered it at a competitive price point. At the time, we had various software developers vie with each other to design products that took advantage of Wii Remote Plus: it was a competition of games. And we put what they created into one package. At the time, Wii was not ready for the kind of model in which one sold add-on content separately (after a software title’s initial release). To add to this, digital distribution was not as active so we decided not to adopt this model at the time.

But we now have the environment where we can do such things, and as we considered what we could do with Nintendo 3DS, we felt that it might be interesting to expand StreetPass Mii Plaza by adopting a similar (competition-style) model that we took in the past, and I’m happy to say that the new StreetPass games are the product of our year-long preparations. As you pointed out, we only started distributing those new games a week ago, but already more than two hundred thousand consumers had purchased at least one out of those four games by last Sunday. We employed no mass-media advertising so we think we are off to a good start. I think that products like these ones will provide new business opportunities for Nintendo in the future. I take it that you are very satisfied with our new games, and we feel that if our consumers determine that the price of a particular game that we offer matches the content that it offers, then there will be more people who try our new propositions. We would certainly like to consider new possibilities for our future endeavors. Thank you for your question.

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