Posted by: seanmalstrom | May 8, 2014

May 8, 2014 Nintendo Conference Briefing

As always, Malstrom was in secret attendance at the briefing. Here is what Iwata had to say.

 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.

Iwata is blaming the losses on lack of sales and the purchase of technology (which is the Quality of Life that is in response to the poor video game sales).

What isn’t being blamed is the currency exchange. To be fair, the yen’s currency exchange has really sucked for the past few years.

Iwata continues…

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.

I interpret this to be ‘more efficiency’. Combination of the handheld and home console software teams?

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. 

Iwata’s word choice cracks me up. ‘Harvest year’. Does Nintendo see the video game platform like a farmer viewing his crops? Harvest year certainly means ‘time to maximize profits before platform declines’.

On the other hand, as for Wii U, we were unable to recover the momentum sufficiently even in the last year-end sales season. 

This was hard for even Iwata to admit. ‘Even in the last-year end sales season’. Super Mario in 3d World failed to do its job of pushing momentum. Nintendo spent much money on development of the game and even marketing. Meanwhile, NSMB U, which had terrible to no marketing and was a rush launch game with little spent on it, has a very high attach rate to the Wii U. Without NSMB U, the Wii U would be in even worse shape.

Mario Kart 8 will definitely help the Wii U.

At the Corporate Management Policy Briefing this January, I explained that the company would prioritize making and proposing Wii U software titles that can only be made possible with the Wii U GamePad. We are planning to disclose our progress on this at E3 (Electronic Entertainment Expo) in Los Angeles in June.

Oh dear. This E3 will be ‘Gamepad games’.

These are the download-only titles for Nintendo 3DS and Wii U. Since we have been offering Unity and Nintendo Web Framework, the number of indie developers has been increasing especially outside Japan.

This is good.

With regard to “Taking Advantage of Smart Devices,” we are planning to release the first version of an application that specifically shows how Nintendo can utilize smart devices within this year.

This will cause a media explosion. “Nintendo releases software for smartphones.” I’m even beginning to see Nintendo news appear on Apple sites because they believe it is ‘inevitable’ that Nintendo makes games for smartphones and tablets. As always, the computer tech business and the video game business are very different and follow different rules.

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.

I’m getting concerned about how Nintendo is going about their account systems. If Nintendo is viewing the account system as just to be in contact with people when they aren’t in front of a video game system, they are missing the point. I want to hear about digital ownership. Digital sales will explode for Nintendo once we are able to keep the games we buy digitally. Licenses should be attached to the account. If I bought Super Metroid for Wii U, I should still be able to play Super Metroid on the next game system. If Nintendo does that, they can keep prices high even for the old games. I would pay $10-15 for Super Mario Brothers just so I don’t have to buy it ever again.

We are calling the figurines by their development codename, NFP, which comes from “NFC Featured Platform” and “Nintendo Figurine Platform.”

What is especially unique about NFP is that it is not classed as an accessory product of a certain software title but as a platform itself.

Lame. This will have a market with kids and young women, but people will not want to fill their living space up with ‘figurines’.

 

Nintendo has been developing an NFC reader/writer for the Nintendo 3DS family, as you can see on this slide, and we are planning to launch it in the first half of the next calendar year. This will make Nintendo 3DS compatible with the NFC reader/writer via infrared communication, and as a result, you will be able to read and write NFC data with the Nintendo 3DS device in the palm of your hand. 

Oh, Iwata.

It’s clear Nintendo thought Wii U would be successful (they don’t release hardware unless they think it will sell) and that the NFC would be the ‘extra momentum push’ triggered in the middle of the lifecycle to create ‘new excitement’. But due to how poor the Wii U hardware is, the entire NFC platform idea is jeopardized. Hence, Nintendo releasing a ‘reader’ for NFC to work with 3DS.

Nintendo’s state of mind for the Wii U when it launched would be an excellent comedy skit.

And that’s that. I eagerly await the Investor Q/A where the investors will grill Iwata. Maybe Iwata will bring Miyamoto along to charm the investors. We shall see!


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