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- Nintendo's May 8 Investor Briefing Summary & 2013/2014 Financial Results
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| Nintendo's May 8 Investor Briefing Summary & 2013/2014 Financial Results | |
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| Tweet Topic Started: May 18 2014, 01:40 AM (109 Views) | |
| Brendan | May 18 2014, 01:40 AM Post #1 |
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Pokémon Trainer
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Last week, Nintendo had an investor briefing where they discussed future plans for 2014 and beyond. In case you haven't been updated on it, here is a summary of this investor briefing, as well as a summary of the shareholder Q & A that took place during the briefing: Nintendo Reports Financial Losses Along With Wii U Sales Targets ![]() On May 7, Nintendo revealed its financial results for the 2013 / 2014 year, which unsurprisingly bring losses as projected by the company in its Q3 report. Losses are higher and sales are down on those estimates, however, pointing to a difficult Q4 for the company, while there are some eye-opening and low Wii U sales projections. Covering 1st April 2013 to 31st March 2014 — Nintendo had a net income loss of over 23.2 billion Yen, which amounts to around $229 million / Ł135 million / €164 million. The core business of making and selling products brings Nintendo to an operating loss of 46.4 billion Yen, which is roughly $457 million / Ł269 million / €328 million; this is a fair leap over the estimated 35 billion Yen operating loss projected in January. The financial report says the following regarding the figures: "The 'Wii U' hardware still has a negative impact on Nintendo’s profits owing mainly to its markdown in the United States and Europe, and unit sales of software, which has high profit margins, did not grow sufficiently, leading to a gross profit of 163.2 billion yen. Total selling, general and administrative expenses exceeded gross profit, resulting in an operating loss of 46.4 billion yen. Also, due to depreciation of the yen at the end of this period compared with the one at the end of the last fiscal year, exchange gains totalled 39.2 billion yen, leading to an ordinary income of 6.0 billion yen. On the other hand, mainly due to the balance of deferred tax assets reduced in relation to the losses carried over in the United States, there is a net loss of 23.2 billion yen." In terms of the coming year — 1st April 2014 to 31st March 2015 — Nintendo estimates a return to profit: a 3.2% increase is expected in net sales, with an operating profit of 40 billion Yen, around $394 million / Ł232 million / €283 million, and a net income profit of 20 billion Yen, roughly $197 million / Ł116 million / €141 million. The strategies outlined match those given earlier this year, such as boosting IP licensing, expanding the appeal of the Wii U GamePad, and revealing a new health-focused QOL platform in the financial year. Moving on to hardware and software sales, there was a positive tone around the 3DS results, reflecting the fact it remains the profit driver for the company, with sales of Pokémon X & Y standing out. The Wii U results are far less positive, as the console "as a whole showed slow growth" and struggled to make an impact. Also of note are the hardware sales projections for the coming year, which are worryingly low for the Wii U. Figures are below: Wii U Hardware Sales (financial year) — 2.72 million units Hardware Sales (life to date) — 6.17 million units Hardware Sales Projection (2014 to 2015) — 3.6 million units Software Sales (financial year) - 18.86 million units 3DS Hardware Sales (financial year) — 12.24 million units Hardware Sales (life to date) — 43.33 million units Hardware Sales Projection (2014 to 2015) — 12 million units Software Sales (financial year) — 67.89 million units Wii Hardware Sales (financial year) — 1.22 million units Hardware Sales (life to date) — 101.6 million units Hardware Sales Projection (2014 to 2015) — 0.5 million units Software Sales (financial year) — 26.16 million units DS Hardware Sales (financial year) — 0.133 million units Hardware Sales (life to date) — 153.99 million units Hardware Sales Projection (2014 to 2015) — none given Software Sales (financial year) — 10.29 million units Some notable figures are the projection of another solid year for the 3DS — 2.2 million 2DS units were sold in the last financial year — along with similar software numbers that are expected. Wii U software was outsold by its Wii contemporaries, and Nintendo's low projection of 3.6 million Wii U hardware sales is surprising, while just 20 million software sales are expected, a minor increase over the year we've just had. This is perhaps surprising in light of upcoming releases such as Mario Kart 8 and Super Smash Bros., in particular, and it's a concern that if these targets are met the system will have still sold less than ten million lifetime units when next year's report is issued. Updated Summary of Nintendo's Software Bestsellers ![]() When Nintendo releases its updated financial reports, it also publishes fresh figures for hardware and software. The software highlights tell their own tale, however, and perhaps help to explain why Nintendo opts for particular franchises and brands over some others that dedicated fans may demand; the Kyoto-based company is concerned with generating profits, after all. The updated bestseller numbers for Wii U and 3DS are interesting for various reasons. The home console's list includes a title that launched as DLC and then hit stores as a standalone disc, while the numbers for the initial bundled title demonstrate that, actually, plenty of consumers have opted for alternative hardware packages from the default Deluxe / Premium set. As for 3DS, its leading title is no surprise, though there are a few key releases edging towards the 10 million landmark. The lists from Nintendo's investor site are below, including the Wii and DS equivalents to give a sense of the brands and franchises that served those successful systems so well. It's worth noting that the 3DS and Wii U lists include download sales, all figures count hardware bundle copies, and these figures are accurate as of 31st March 2014: Wii U - New Super Mario Bros. U — 4.16 million units - Nintendo Land — 3.09 million units - Super Mario 3D World — 2.17 million units - New Super Luigi U — 1.76 million units - Wii Party U — 1.35 million units - The Legend of Zelda: The Wind Waker HD — 1.22 million units 3DS - Pokémon X & Y — 12.26 million units - Mario Kart 7 — 9.62 million units - Super Mario 3D Land — 9.27 million units - New Super Mario Bros. 2 — 7.82 million units - Animal Crossing: New Leaf — 7.66 million units - Luigi's Mansion: Dark Moon — 3.98 million units - Nintendogs + Cats — 3.50 million units - The Legend of Zelda: Ocarina of Time 3D — 3.35 million units - The Legend of Zelda: A Link Between Worlds — 2.51 million units - Paper Mario: Sticker Star — 2.21 million units - Mario & Luigi: Dream Team — 2.08 million units - Tomodachi Life — 1.85 million units Wii - Wii Sports — 82.54 million units (bundled with hardware outside Japan) - Mario Kart Wii — 35.53 million units - Wii Sports Resort — 32.58 million units - New Super Mario Bros. Wii — 28.65 million units - Wii Play — 28.02 million units - Wii Fit — 22.67 million units - Wii Fit Plus — 21.03 million units - Super Mario Galaxy — 12.22 million units - Super Smash Bros. Brawl — 12.14 million units DS - New Super Mario Bros. — 30.75 million units - Nintendogs — 23.96 million units - Mario Kart DS — 23.56 million units - Brain Training: How Old Is Your Brain? — 19.01 million units - More Brain Training: How Old Is Your Brain? — 14.88 million units - Pokémon Diamond & Pearl - Pokémon Black & White — 15.58 million units - Pokémon HeartGold & SoulSilver — 12.72 million units - Animal Crossing: Wild World — 11.73 million units - Super Mario 64 DS — 11.03 million units Nintendo's worldwide hardware sales ![]() With Nintendo no doubt plotting its route to profitability in the coming financial year, one area of consideration is likely to be boosting sales outside of Japan. Worldwide results are important, of course, but the Wii U and 3DS are showing patterns of dropping sales in the West as compared to Nintendo's homeland — this is particularly relevant for the 3DS, as Japan is its highest selling 'region', one country outselling The Americas and Europe / PAL on an individual basis. Taken from the latest financial updates, below are figures from the last three generations of systems, showing the gradual shift in momentum as Japan becomes increasingly vital to Nintendo's business: Game Boy Advance Hardware Sales Japan — 16.96 million units (20.8%) The Americas — 41.64 million units (51.1%) Other (Europe / PAL) — 22.91 million units (28.1%) Overall — 81.51 million units DS Hardware Sales Japan — 32.99 million units (21.4%) The Americas — 59.93 million units (38.9%) Other (Europe / PAL) — 61.07 million units (39.7%) Overall — 153.99 million units 3DS Hardware Sales Japan — 15.89 million units (36.7%) The Americas — 14.58 million units (33.6%) Other (Europe / PAL) — 12.85 million units (29.7%) Overall — 43.33 million units GameCube Hardware Sales Japan — 4.04 million units (18.6%) The Americas — 12.94 million units (59.5%) Other (Europe / PAL) — 4.77 million units (21.9%) Overall — 21.74 million units Wii Hardware Sales Japan — 12.75 million units (12.6%) The Americas — 48.46 million units (48%) Other (Europe / PAL) — 39.85 million units (39.4%) Overall — 101.06 million units Wii U Hardware Sales Japan — 1.81 million units (29.3%) The Americas — 2.81 million units (45.5%) Other (Europe / PAL) — 1.56 million units (25.2%) Overall — 6.17 million units While North America was dominant in the Game Boy Advance era, the phenomenal success of the DS brought Europe slightly beyond North America, with Japanese sales third for both of those generations. With the 3DS, however, there's been a significant swing so far to establish Japan as the leading market, a sign that despite the handheld's success it's perhaps losing more traction to smart devices — for example — in the West. The home console market has consistently had The Americas as nearly half the share over the past three generations, though in the case of the Wii U Europe and 'other' regions have fallen back from Wii highs and behind Japan. It's still early days for the latest system, but the last time Nintendo's home console sales were higher in its homeland than in Europe / PAL regions was with the Famicom / NES and Super Famicom / Super NES. Europe and PAL regions are a concern with both 3DS and Wii U, while the percentage of portable sales in The Americas has seen a drastic decline. If Nintendo is to boost its sales and return to expected levels, a greater impact in the West must surely be a priority. Nintendo Reveals 'Mario Kart TV' Web App in Financial Results Briefing ![]() Mario Kart 8 is already forging new ground on the Wii U, with Nintendo having confirmed not only the Mario Kart TV feature, but the ability to upload those highlights reels directly to YouTube from within the game. It also seems set to represent Nintendo's first move into producing an accompanying smart device website or app, according to a report in Nikkei. At a press conference following today's financial year report, Satoru Iwata reportedly stated that a web-based service is on the way that will allow users to track data such as rankings in Mario Kart 8. Now that the translated investor briefing has been released, there are more firm details and a screen of the service in action. ![]() This will be a web service to launch around the same time as Mario Kart 8, rather than a dedicated platform-specific app for iOS and Android; it's adopting a similar approach to the Miiverse web browser site, in that respect. It'll offer a variety of neat tools and features, as outlined by Satoru Iwata below: "This web service will enable more people to easily watch Nintendo’s official videos, view rankings, watch videos that their friends have shared and videos of tournaments in which they have participated. As I mentioned at the Corporate Management Policy Briefing in January, our policy is to establish consumer relationships based on accounts named Nintendo Network IDs, which are abbreviated as NNIDs. This “Mario Kart TV” (temp.) web service is available even for players without NNIDs, but by logging into the service with an NNID, they will be able to easily find their rankings, videos that their friends have shared, videos of tournaments in which they have participated, and it will be convenient to access this service through smart devices even when they are not at home. We will work on providing this type of service so that players can enjoy video games more and be in contact with them even when they are not in front of a video game system." The use of Nintendo Network IDs to customize the content shown should be a fun feature, and by opting for a web app that will mean access regardless of what device is in use. Satoru Iwata Announces 'Nintendo Figurine Platform' to Utilize NFC for Wii U and 3DS With the continuing success of the Skylanders and Disney Infinity brands, each successfully combining video games with collectible figurines, it's been a common refrain to suggest that Nintendo should follow suit with similar products. It made a relatively minor entry last year with Pokémon Rumble U on the Wii U eShop, the first and only game to utilise the NFC (near field communication) capabilities of the home console's GamePad. After stating plans to expand licensing of its characters and IPs earlier this year, Satoru Iwata has used his latest investor briefing to reveal an upcoming 'Nintendo Figurine Platform'. The primary selling point is that rather than release figurines specific to individual pieces of software, Nintendo intends to release these collectibles that will work across multiple games, as demonstrated in the diagram below: ![]() The objective will be for these figurines to both read and write data, opening up possibilities of customisation of characters. Plans on the Wii U-based products, which will be scanned using the GamePad NFC sensor, will be revealed more fully at E3. According to an automated translation details are likely to point to a release of this figurine platform for the Holiday season this year, which could be a valuable new product and selling point for the home console. Iwata-san did also address the fact that the company doesn't want to exclude 3DS owners from enjoying these figurines and related games. Pictured below is a planned NFC reader / writer that is targeting release in the "first half of next year"; it will utilize the portable's infra-red sensor: ![]() These sorts of products and ideas have certainly been in demand for a while, as they seem perfect for promoting Nintendo brands. Nintendo Looking To "Harvest" 3DS Success To Avoid An "Unacceptable" Fourth Year Of Losses ![]() In its recently-posted investor's briefing, Nintendo has revealed its plans for the near future and how it aims to turn around three years of consecutive operating losses. The company has much more in store as it attempts to move back into profit. Managing Director Tatsumi Kimishima directly addresses the losses experienced over the past few years, and stated that a fourth year of losses would be "unacceptable": "Please let me comment on the operating losses for three consecutive years. Two and three fiscal years ago, the extremely strong yen and transition between our video game platforms mainly put our revenue and expenses off balance. For the last fiscal year, under the improved foreign currency exchange situation, we made various efforts to retrieve “Nintendo-like” profits. We, however, could not achieve these results as the sales of our main hardware and software products ended up being well below our forecasts, and we incurred temporary one-off expenses from the purchase of technology that we did not expect at the beginning of the fiscal year. I feel deeply responsible for this and I need to fulfill my responsibility by recovering the momentum of our business. We would like to retrieve “Nintendo-like” profits as soon as possible. However, the success of a video game platform business depends greatly on its momentum, and it inevitably takes time to rebuild the business once the platform has lost its momentum. Posting an operating loss for the fourth fiscal year running is something unacceptable. We see this fiscal year as a time to prioritize restoration of the balance of revenue and expenses." Given the rather dismal position of the Wii U, it's perhaps unsurprising that Nintendo President Satoru Iwata is looking to the 3DS to turn things around for the firm. The popular handheld continues to post impressive results and Iwata feels that the strong installed base achieved thus far will provide the ideal platform for financial success: "The installed base of Nintendo 3DS has already surpassed 43 million units, which is large enough to develop this platform business. By leveraging upon its large installed base, we are aiming to make this fiscal year a significant harvest year. Nintendo 3DS already has a quality software lineup available now, many of these titles have been selling rather steadily even weeks or months after their respective release dates. Notable year-on-year sales growth has been observed especially in the Nintendo 3DS software sales overseas. The growth rate varies from country to country, but the software sales have grown by approximately 20 to 40 percent. By converting sales potential into actual sales, and by releasing strong titles periodically, we are aiming to sustain the momentum of the Nintendo 3DS business." To do this, Nintendo is making sure that the console is blessed with as much quality third-party software as possible: "Out of approximately 34.22 million units of third-party software sold through in 2013 (excluding the ones from the three video game hardware manufacturers and Pokémon games), the platform on which those games sold the most was Nintendo 3DS, which captured 38 percent of the total sales units. In addition to the titles shown here, I hear there are many more titles under development, including unannounced ones. They have already taken advantage of the quickly expanding Nintendo 3DS installed base abroad for some of these titles. Nintendo has worked closely with these publishers and an increasing number of third-party Nintendo 3DS titles have shown results in the U.S. and Europe, including the Professor Layton series, Inazuma Eleven series and “BRAVELY DEFAULT.” By accelerating this trend, we would like to further grow the Nintendo 3DS business." It's clear that the 3DS is a vital system in Nintendo's plans this year; with the Wii U failing to sell in the expected volumes, the Japanese veteran will be relying on its popular handheld more than ever. Download Sales On Nintendo Formats Have Trebled In The Last Two Years ![]() Nintendo has confirmed that digital revenue across its consoles has tripled in the past two years. Nintendo President Satoru Iwata revealed the statistic at the recent investor's briefing, explaining that during the financial period between April 2013 and March 2014, around 24 billion Yen ($235 million / Ł138 million) was generated from downloads on the 3DS and Wii U. Iwata believes that the rise was down to more Nintendo fans connecting their systems to the internet, and the ability to download major retail releases directly to the Wii U and 3DS. The graph below was used to illustrate the massive jump in digital earnings: ![]() Iwata's take on the news is positive, with the Nintendo boss pointing out that the increase has come at a time when the company's business hasn't been growing all that much: "When we consider that we have made this progress while Nintendo's overall business has not generally been expanding, I think further developing this business will be imperative for us to adapt to the changes in the business environment." The news also suggests that Nintendo's future — like that of much of the games industry — lies in digital downloads rather than physical releases. Nintendo Creating a New Console for Emerging Markets, Including China ![]() In an interview with Reuters, Nintendo president and CEO Satoru Iwata revealed the company is planning to introduce new hardware and software for unspecified "emerging markets" over the next two years to take advantage of a rising middle class in many parts of the world; China immediately comes to mind, but this could also include emerging economies like India and Brazil. Iwata said this new console will not be the 3DS or Wii U, but something entirely different: "It would be difficult to enter those markets if we didn't create something new... For the mass market you need to provide something that most of the middle class can afford." Iwata-san explained the new products will be aimed at "consumers with lower incomes and less gaming experience than those in developed countries;" as the Wii U continues to struggle, it's important for Nintendo to gain a foothold in these markets that will increase exponentially in buying power over the coming years. However, Nintendo will not follow Microsoft's lead after China recently lifted its game console ban, as Microsoft announced last month it will release the Xbox One through a Chinese affiliate in the Shanghai Free-Trade Zone this September. Iwata-san elaborated: "We think the Chinese market has a lot of potential, but I don't think the lifting of the ban has solved all of the difficulties in entering it. We need to study it more... For us, Microsoft's approach wouldn't work." Releasing hardware and games in China will be an arduous process, although it's not Nintendo's first foray into the country: since 2002, Nintendo has released select games in a limited capacity through iQue, a joint venture with a Chinese entrepreneur. Nintendo's Plan for "Redefining the Definition of Video Game Platforms" Around Two Years Away ![]() Following the financial results, Nintendo has issued the officially translated Q & A with shareholders in which company President Satoru Iwata addressed a series of tough questions, some of which concerned the company's plans over the next 2-3 years to bring back handsome profits. It's clear, for example, that the company is being forced to think beyond this current financial year when outlining its strategies to return to its previous success. Touching upon ideas emphasized in January, Satoru Iwata moved to dampen expectations of dramatic hardware reveals in the near future, explaining that the company's bold plans to revolutionise gaming platforms is still a little while away, while repeating that the QOL (Quality of Life) platform will be unveiled in the current financial year ahead of its release next fiscal year: "Also, regarding what I mentioned at the Corporate Management Policy Briefing in January about our efforts to go into a new business area, namely our platform business that seeks to enrich people’s QOL (Quality of Life) in enjoyable ways, I would like to talk more specifically about the kind of business we have in mind within this year, and the current time frame we are working on puts the actual deployment of the initiative in the next fiscal year, with contributions to our profitability to follow in the following fiscal year. Moreover, I feel that we will be able to further stimulate our platform business by taking advantage of smart devices, and I think that we will be able to provide detailed information on this as well as some concrete results between the current and the next fiscal years. Also, the idea I mentioned about redefining the definition of video game platforms will also require approximately two years. This is how we would like to talk more about our mid-term measures and lead them to actual results. However, we will not be able to create a good environment for the company unless projects are undertaken simultaneously, so this is the kind of time-frame that we have in mind." As has been previously stated, Nintendo is certainly aiming to provide greater connectivity and unity between its platforms, with plans for the Nintendo Network ID's increased role already partially in action with Wii U and 3DS. What Iwata-san has made clear is that one login will be key to play across multiple systems of various types — we'll all become more connected through the NNID: "I also mentioned in January (at the Corporate Management Policy Briefing) that we would change the definition of our platforms from being device-based to NNID-account-based. When our platforms are account-based, we can expand the number of applicable devices. In order to have rich and high-quality game experiences, we always want our users to play with our dedicated game systems that are specifically designed to provide such unique experiences, while at the same time, we may be able to select some portions of these games and make them available on other devices. Also, by encouraging users to interact with the physical figurines that I mentioned today, we may be able to create brand-new entertainment. In these ways, another critical point for us to carefully consider, or another key point for us, is how we can and should incorporate our entertainment offerings into the more fragmented time and opportunities of different consumers." The issue of Nintendo's next hardware was naturally raised, especially in light of the Wii U's current struggles. It's been made clear that Nintendo is not short of ideas for its next product, but that it's still prioritizing satisfying the current generation of gamers: "Once we launch a new platform, we naturally start to prepare for the next one. As it takes several years to develop a single platform, if you ask us whether we are preparing for our next system, then the correct response will be that we are always developing new hardware. On the other hand, the most difficult question for us to answer in public in concrete terms is when we are going to launch our new hardware and what kind of hardware we are going to launch, and I am afraid that I cannot talk about this in more detail. However, I can certainly assure you that we are not at a dead end of any kind in which we are out of ideas for developing new hardware. I of course believe that launching new hardware will not produce good results unless we first make sure that those who have already purchased our platforms are satisfied. We will continue to work hard to ensure that consumers who already own our platforms are satisfied, and make sure that people will continue to see great value in our software, but I would like to say that we are preparing for our next hardware system, and in fact, we already have a clear idea to some extent about the direction our next hardware is going to take." It'll certainly be an interesting 2-3 years in the world of Nintendo, with its steps into NFC figurines, a QOL platform and the likely reveal of new hardware at the end of that period — remember the Wii U was first shown over a year before its release. Satoru Iwata Explains "Conservative" Wii U Sales Projection of Just 3.6 Million Units ![]() When Nintendo released its financial results recently, the projection for Wii U sales was worryingly low. While the 3DS is expected to sell around 12 million units over this fiscal year, Nintendo's estimate for its home console is just 3.6 million units — should that be accurate, the Wii U will have failed to reach ten million sales in around two and a half years at market. With major releases such as Mario Kart 8 and Super Smash Bros. on the way, and with the Nintendo Figurine Platform set to make its début in late 2014, it's a number that doesn't inspire confidence. After multiple years of bold projections that weren't met, it was striking that Nintendo had swung towards safe numbers so drastically. Naturally, shareholders at the investor Q & A queried this and, to a lesser extent, the 3DS figure that would result in its sales of the portable dropping a little from the previous year. Satoru Iwata highlighted that, after multiple years of missed targets, the company had laid out the minimum expected results for the home console: "We set the sales unit forecast of 3.60 million units of Wii U hardware as the target that we should at least reach by making the releases of two key titles for this fiscal year from the very popular, evergreen franchises that have been under development since before the launch of Wii U hardware, “Mario Kart 8” and “Super Smash Bros. for Wii U,” the pillars of our entire marketing strategy for this year. These two titles can be enjoyed alone or with others, and we believe they will encourage those who do not own Wii U hardware to purchase it. ...In setting our financial targets for this fiscal year, we have taken into account the fact that in the last fiscal year, we established a target of 100.0 billion yen in operating profit and set sales forecasts to achieve Nintendo-like profits, but we failed to show the results despite having worked hard to meet these goals, and Nintendo has now failed to meet its own financial forecasts for a few terms in a row, and in this sense, by trying to set rather conservative goals we are perhaps using conservative estimates about our unit sales. This does not mean that Nintendo 3DS sales will definitely fall this fiscal year when compared with the previous fiscal year. We have set our estimates for this fiscal year by considering the amount that we are confident we can reach, so it is my hope that we will also do our best with regard to Nintendo 3DS, too, and exceed its sales estimate. In order to show that Nintendo 3DS sales have not yet peaked out and are not to simply decline in the future, we want to exceed last fiscal year’s figures. As for Wii U, we estimated 9.00 million units of hardware in sales in the last fiscal year, but many of you must be aware of the actual results, and the Wii U market has experienced a sharp downturn. In order to recreate momentum and sell 5.00 million or 10.00 million units of hardware annually, there are indeed challenges that we must overcome. And in the face of these challenges, announcing more optimistic figures before we actually release the Mario Kart and Super Smash Bros. titles to consumers, would not be compatible with our original stance to provide rather conservative figures, so once again we set our estimates by considering how much we could realistically hope to achieve with our software lineup. The fate of a video game system is often influenced greatly by the introduction of a single title. As many of you probably remember, before the release of the Pokémon game, Game Boy had been showing slow growth, and many people wondered whether it was the end of Game Boy. But the Pokémon game singlehandedly changed the landscape of the system, which then started to show the strongest sales in the lifecycle of the system. As I explained back in January, it is true that we cannot draw up a good business plan for Wii U by assuming that Wii U will sell more than Wii did. Therefore, we will need to think very carefully about the balance of revenue and expenses and try to operate by controlling overall costs. On the other hand, we do not believe that this year’s estimate of 3.60 million units of Wii U hardware will be the peak of its lifecycle, and we would like to work hard to make sure that we give sufficient momentum to the system so that we can expect good results in and after the next fiscal year, too. However, as for this fiscal year, as I explained before, the figures you see have been determined by rather conservative estimates." Perhaps it's understandable that Nintendo is managing expectations, even if the degree of the "conservative" approach can be argued as too severe. Despite the narrow focus on these two titles Iwata-san has re-iterated that the company will "talk about other Wii U titles at E3", while "internal software development teams directed by Shigeru Miyamoto are committed to developing several titles that focus on offering unique experiences only made possible with the Wii U GamePad" Satoru Iwata Believes Nintendo Can Establish a "New Core Business" to Join Video Games ![]() When Satoru Iwata announced that Nintendo would be revealing a Quality of Life (QOL) platform in the coming year, some Nintendo fans expressed concern that the company would be diverting resources and attention away from its core gaming systems. While that'll be an ongoing topic, the company President has outlined to investors the reasoning behind the company's moves into other business and platform areas. Although Iwata-san acknowledged that some "tend to believe that Nintendo is a video game company and even think that Nintendo should not or must not do anything other than making video games", he emphasized that the company has only been in that market for around a quarter of its history, and that it needs to utilize its strengths and experience to boost its financial well-being: "Regarding the profitability of any video game business, there is no basic demand for games, so it greatly depends on changes in the business environment. Just as it was difficult to forecast the performance of Nintendo DS or Wii before their respective launches, which both proved to greatly exceed our expectations, at other times, our products do not meet our expectations, as is the case with Wii U. This is inevitable in the entertainment business. Currently, Nintendo has both the home console and handheld platforms, and we would see great results if both of these platforms performed very well; however, our business would become mediocre if one of them faltered, and if both of them were to falter, it would very negatively affect our business. We have decided to establish new business platforms not for being pessimistic about the future of the video game business, but to prepare for a challenging situation. Without other pillars, the faltering of the video gaming business would directly have a negative influence on our financial results and the market would respond with harsh criticism. Considering the situation, I would say that Nintendo should consider establishing other pillars that leverage its strengths. As I said earlier today, people, including ourselves, have considered Nintendo to be a video game company for the last 30 years. However, I believe that the intrinsic nature of entertainment is much broader than how we see it today. We believe that we may be able to establish some sort of new core business if we consider our role as an entertainment company in a broader sense. Again, we are not pessimistic about the future of the video game business, nor have we given up on earning profit from the existing video game business. Rather, it is an expression of our determination to become a more stable company, constantly achieving better financial results regardless of the fluctuations in our video game business." With efforts diversifying, it was also explained that in addition to unifying hardware and software teams in the building pictured above — a process to be completed shortly after E3 — the company has established a “Business Development Department”. Due to the fact Nintendo "must create a new business structure and execute a variety of new endeavors", it has "gathered experts from a variety of different fields for this department" in order to drive forward its varied plans, products and strategies. |
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