English transcript
Some highlights I found interesting. Sorry for the massive text dump, but it was hard to decide how to trim it.
About software release scheduling and the droughts:
About the generational transitions, and collaborations:
About the 3DS overseas this holiday, and Mario is kiddy in Japan?
About smartphone and social gaming:
Some highlights I found interesting. Sorry for the massive text dump, but it was hard to decide how to trim it.
About software release scheduling and the droughts:
About the generational transitions, and collaborations:
About the 3DS overseas this holiday, and Mario is kiddy in Japan?
As for your next question, I can understand the sentiment that, while the Japanese market can look forward to Monster Hunter 3(Tri)G," the overseas markets do not have such a title and the two Mario software titles alone may not be able to appeal to a sufficiently wide consumer base. On the other hand, I feel that this sort of question is often asked only in Japan.
To give you some background information, I understand that Mario had a rather childish image in Japan. I recall that it was my second year as the president of Nintendo, when we did research on Japanese consumers which showed us the result that they have this childish image of Mario. Of course, we really appreciate the fact that our characters are loved by children. On the other hand, it does not make us happy if adult consumers say that Mario is childish. They felt that our products were too childish to be relevant, which was the issue we needed to work on. I believe that the situation surrounding this image has largely changed. Initially, our research in Japan suggested that 3D Mario was childish but that the original 2D Mario, who was drawn in the NES era as a group of pixels, was cool. The company tackled this issue in various ways at such occasions as the 20th anniversary campaigns for the Japanese launch of NES and by the reintroduction of the original Super Mario Bros." game for Game Boy Advance. Such efforts led to the smash hit of New Super Mario Bros." for the Nintendo DS. This title became the first huge-hit Mario game in a while in Japan since the original Super Mario Bros." game. From this sales result, we can say that Mario has become a franchise which can be accepted by both adults and children.
These graphs are from the slides used at the Financial Results Briefing on May 8, 2009.
However, there still is an age group which shows less support for our offers in Japan, and they are male junior-high, high-school and college students. So, when you look at the age-demographic charts of our consumers in Japan, it looks like the back of a two-humped camel. Namely, there is a significant number of users in the childrens age demographic but a dint in the high-school and college student age groups and then the number of our consumers increases once again in the adult demographic. Monster Hunter 3(Tri)G" must appeal with great affinity to that group of consumers, and I believe you can appreciate that. Now to your question of, Will Nintendo be ok without a title that is the equivalent of Monster Hunter in the overseas markets?", I should first confirm that there is not such a dent in the U.S. and Europe.
In other words, the phenomena that consumers show less interest in Mario during their junior-high, high-school and college years can be observed only in Japan. Of course, adding software which is inherently different from Mario games must add to the solid software lineup for the Nintendo 3DS in the upcoming year-end sales season, but since Mario action games and the Mario Kart series have been welcomed by most age demographics there without the similar dents as in Japan, I do not think that the overseas sales will not go well because of the absence of a software title like the Monster Hunter software. In Japan, regarding the age demographic (to which Nintendo has attracted less attention than other demographics), Nintendo software and Capcoms Monster Hunter 3(Tri)G" will supplement each other in order to generate strong appeal overall, while in overseas markets its our expectation that the two titles of Super Mario 3D Land" and Mario Kart 7" will be widely accepted in terms of age demographics. Needless to say, we are making efforts to prepare a wider software lineup, including software with a charm not typically provided by Nintendo, in order to satisfy the needs of many different consumers. Please understand, however, that if anyone has the notion that the absence of Monster Hunter will create a less enthusiastic market condition in the overseas markets than in Japan, it is different from my belief.
About smartphone and social gaming:
One impression we have as a result of reading articles on Nintendo recently is that these articles are confusing the effect of social games and the effect of smartphones and discussing them together although they are two different subjects which must be discussed separately. For example, the majority of social games, which have expanded in Japan, are not available on smartphones today. The fact is, the majority of such games are played on multi-functional cell phones that we Japanese often and uniquely call Galapagos Cell Phones" or, more recently, Feature Phones." It appears these two different devices are mixed together in their arguments.
Regarding the effect of so-called social games," it seems that so many people believe in the causal relationship between the decline in Nintendos business performance and the rapid expansion of social games just because these two events have happened simultaneously. On the contrary, we do not believe that they are a big factor in our slower performance today. Since I have repeatedly explained about this in this type of opportunity (*), I do not intend to repeat the same explanations but, as we continue our research even after making such an explanation, we have never found any research data which show any meaningful differences in the attitude towards or in the frequency of playing with the Nintendos handheld game systems as a result of playing with social games. Accordingly, we have to think that there are no causal relationships. Game businesses are largely affected by the availability of a hit title. At the upcoming year-end sales season, where we have multiple software titles which have the potential to become hits one after another, we believe that we can pull the trend to our side. We really want to show a year-end sales result that can more effectively communicate to a number of people that the growth of social games has no causal relation with Nintendos performance.
Next, about smartphones. Smartphones in Japan have entered into a cycle of rapid expansion this year. In the U.S. such a trend was found earlier. Among younger generations in particular, smartphones have become the contemporary must-have items, and it has become rather common for us to switch to smartphones at the time we need to exchange our existing cell phone for another. With smartphones, you can play games without purchasing a dedicated game system, and these games are offered either free of charge or at extremely low prices. In this regard, there is no doubt that the bar has been raised higher than before for us to encourage consumers to spend several thousands of yen for a video game in Japan.
However, approximately a decade ago, a number of people used to say exactly the same thing. Namely, they said that, with the ability of cell phones back then being able to run a variety of software applications, dedicated handheld game systems would not be purchased any more. The fact is, their forecast has not become a reality. This time, the basic structure is the same. Nintendo has been recognizing that video game systems are something that consumers are obliged to buy in order to play with the software they want to enjoy. Therefore, the most critical thing for us is to periodically propose software that can encourage people to have the mindset of, I really want to play it." The circumstance surrounding us has not changed in this regard. On the contrary, we now have a means to communicate our information rather effectively to our consumers directly. So, as I said today, we are currently considering how we can best take advantage of this media, and our attempt to put Nintendo eShop on the Web is one of such efforts.
As for the opinion that game dedicated handheld devices are not needed any more as long as you have a smartphone, I cannot say that no one holds such a belief; however, the results of our research have not shown any meaningful differences between the game play attitudes of consumers that do own smartphones from those who do not. Accordingly, as long as the Nintendo 3DS can offer gaming experiences that can not be realized on smartphones, and if they are attractive enough, we can ask our consumers to purchase the Nintendo 3DS. The important thing for us is to make these proposals by taking advantage of our position of being able to make unique offers based upon the integration of both hardware and software as we are making both.
So far, as I have made these explanations based upon Nintendos own research, I was concerned that you might not feel that they have strong credibility. Accordingly, I would like to introduce you to some different data (which was reported to us from Nintendo of America) today. In the United States, there is an organization called the Entertainment Software Association or ESA for short, which is similar to what CESA (Computer Entertainment Supplier's Association) is in Japan. They are the industry body for a group of entertainment software developers. Every year, ESA conducts a survey regarding interactive entertainment hardware and software. What you can see now is some of their research results of this past April, showing whether or not people are playing more video games in comparison to three years ago.
[Ed: I cut out Iwata's description of the survey results]
The survey result does not support the generally-conceived notions that, now that the digital age has come, people are buying less packaged software for dedicated video game systems and that they will be willing to buy less of them from now on. Overall, there is no doubt that the importance of digital business is increasing in the industry. However, the situation is not as simple as that the packaged software sales will decrease and digital distribution will increase or that the lifespans of dedicated game systems are coming to an end and general-purpose devices are the future. Our consumers are not showing such a trend. What the industry will look like 20 years from today may be a different story. But as far as the ongoing trend is concerned, I do not think that our understanding of the overall game industry and consumer attitudes is greatly different from the reality. I thought that the survey results I have just shown you could prove our point, so I used this opportunity to share them with you.
