Posted by: seanmalstrom | March 3, 2015

Nintendo Investor Q/A for March 2015

Nintendo held the Investor Question and Answer session for March 2015. Secretly, Malstrom was there. Here is the report:

In contrast to these two franchises, in which each figure is compatible with one software title, amiibo is compatible with multiple software titles. While under development, it was internally referred to as “NFP (Nintendo Figurine Platform).” In other words, we were spreading the message inside the company that amiibo would be a “platform.”

Does this ‘platform’ stretch beyond this generation? Or does Amiibo lose its value when Generation 9 rolls out? Iwata does not say. He merely goes on.

This product category is called “Toys to Life” in the overseas markets, and it has established a large market in the United States. Although the size of the market in Europe is smaller than the U.S., there is still a certain level of awareness. On the other hand, while “Toys to Life” products had been introduced also in the Japanese market, they were yet to show results in this country.

This is easy to explain. Disney is an American company. Toys for Bob, the creators of Skylanders, is an American company as well. The ‘toys to life’ has its origins in America. This would explain why it would sell best in America. I think Americans have a stronger toy culture than Japan and Europe. By toys, I mean figurines and action figures. Every American kid has grown up with them. In fact, kid pop-culture is defined by the figures. Many cartoons were just glorified commercials for the figures. Think Transformers or Teenage Mutant Ninja Turtles. When we play with toy figures, as kids, we think of them coming to life. This is why Paul Reiche III probably connected figurines coming to life in the video game with Skylanders.

And, the new download software example I explained in my presentation earlier is where amiibo can be used in place of, in a sense, a ROM cartridge to play some portions of certain NES and Super NES games.

Oh my goodness, Iwata makes the direct comparison of amiibos and ROM cartridges. (I always get an eerie feeling when I read Iwata saying stuff like this. I’ve made that comparison here on this page. Either there is great coincidence of thinking similar things or someone at Nintendo reads this page. [I know someone at Nintendo views this site. I have nicknamed that person the ‘Unfortunate-Person-At-Nintendo-Condemned-To-Read-That-Malstrom-Page’. I imagine the person told to read this site is being punished for some reason. The day before E3, I always put up kittens for Nintendo [[because Iwata doesn’t like it when company email is used to send pictures of kittens so I do it for Nintendo]]. One day, Nintendo actually sent an email that said ‘thank you for the kitten pics’ hahahahahaha.])

The most hardcore customers are quickest with their voices on the various message forums or online reviews. However, the non-customers are quiet. What are they thinking? This is one big reason for this page is to put those non-customer views out there into the open. Do I represent all non-customers? No. But it is a voice. I still have not bought a Wii U or 3DS. Look how the 3DS and Wii U are not doing profit numbers. There is a connection there. Why? I’m not exactly sure. But my reaction to Gen 8 Nintendo is similar to Gen 5 and 6 Nintendo. I feel like the company is leaving me behind. “But we have the 2d Mario and 2d Donkey Kong.” This is true. But something feels off. I would get those games if I got the system, but I do not feel this system is for me.

Anyway, about Amiibos, I don’t see why some don’t come with a VC game. Why doesn’t Kirby unlock a Kirby VC game? It’s not like he doesn’t have enough Kirby games. Heck, Kirby has so many games I cannot keep track of them all. Why not the Gameboy original?

Amiibos still seem off. I think it is because they are doing the wrong job. Nintendo is using them mostly for DLC. Is this what they should be used for? Wouldn’t they be more exciting if they were used for PERFORMANCE in the game? For example, imagine a Magic Mushroom Amiibo. Any game you use it in, your character would get bigger, stronger, and have more hit points. Using the Magic Mushroom Amiibo in Metroid Wii U could have Samus get larger with more hit points. You couldn’t use it often. It is a CHEAT.

“But Malstrom, no one would ever pay for a cheat.” Yeah, like we didn’t pay for Nintendo Power for its maps and hints, like we didn’t play Nintendo Hot Line to talk to counselors about how to beat certain games, and how we didn’t pay for Game Genies and all. Of course, games today are easy peasy with the challenge being in ‘separate levels’.

I think it would be cool to have a Hammer Mario amiibo and throw it into random games. Link having problems? Here is Hammer Mario Link throwing hammers at Ganon. Samus having problems? Here is Hammer Mario Samus throwing hammers at Ridley.

“This is game breaking.” So what?  We enjoy breaking the game. After all, there has been cheat codes and warp zones since forever. I think Amiibos should do crazy things like that too instead of be just DLC trophies. I would like Amiibos to do something with the gameplay and to add gameplay elements. After all, we play games, not costumes or themes or AI characters.

Amiibo concepts need to be thought out and expanded more in their job. This is the issue. Not the marketing.

In addition, our development team has been testing various forms of amiibo other than plastic figures. We hope we can propose amiibo products in various forms in the future.

Oh my. Plush Amiibos? Those might be cool.

Hey Nintendo, since I know someone from there is reading this, can you please make an Amiibo that doesn’t make me look like a man-child for keeping it in the house? Your little plastic figurines scare all the pretty girls away if I kept them displayed in any form. Amiibos should make me look cool, not UNCOOL.

However, with recent technological advances, technologies for both systems are becoming more similar. Also, just because they are home consoles does not mean today that they can consume as much electricity as they possibly can. In fact, we have already been proactively working to reduce the consumption of electricity since the Wii era. Furthermore, the Wii U GamePad has a large screen, a battery pack, control inputs and wireless modules inside, so in technological terms, it required very similar know-how to that required for developing a handheld device. Based on such experiences, we had been working toward consolidating the two divisions for a while and started the process two years ago. Of course, it takes time for two divisions to completely assimilate, and we now are confident that it has progressed very well.

Since Nintendo is an INTEGRATED HARDWARE AND SOFTWARE COMPANY, does this mean we can buy a video game once and play it on BOTH home console and handheld? Is this where Nintendo is going?

The Entertainment Analysis & Development Division mainly develops software internally and the Software Planning & Development Division develops it mainly with external second-party development companies, and internally in some cases.

Cool.

The last one is the System Development Division, where I am now in charge. It creates fundamental parts of software development such as the network, system software, OS, SDK (Software Development Kit) and libraries. As I am the only board member who has a background as a programmer, I am in charge of this division. In future, I would like to find a suitable person to take on this role in order for me to fully concentrate on my presidential tasks.

In other words, Iwata is THE PERSON to blame for lack of an account system at the moment. He is the boss of that division.

We have to create products that are easy to understand, do not cause consumers to feel stressed at any stage of the experience and that consumers are attracted to at a glance.

Stressed? Well, there goes NES challenging gameplay. However, no one finds Super Mario Brothers 3 to be ‘stressful’. I do find SMB 1 later worlds to be very stressful as well as SMB 2. But SMB 3 is perfect. Even younger people are playing the game for the first time and loving it. Super Mario World is good, but it is too easy.

You know solves stress? Warp zones. Also, in SMB 3, when you started over, you didn’t have to start completely over if you cleared the fortresses. The fortresses were a type of ‘halfway mark’ of progress in that world.

The MOBA genre is extremely stressful. Heroes of the Storm relieves much of the stress. How did Blizzard do it? Shorter game sessions. This is something we all could learn from. I think Super Mario Brothers 3’s stages are the perfect length. Super Mario World is TOO LONG which is why there are halfway marks. Don’t get me started on 3d Mario and the likes where their stages go on forever.

Twilight Princess was TOO LONG in its tutorial and beginning parts. Nintendo needs more bite-sized chunks instead of trying to ram their giant turkey of a game down our throats. THAT is what is stressful.

I’m just a gamer with a real job. Retro gaming holds appeal because it is bite sized. Arcade gaming was bite sized because it had to be, and it translated well to our lives. To me, Final Fantasy 6 is an epic game experience. Yet, in today’s industry, that game is considered ‘casual’ or even ‘mobile’ which is bullshit. The game is 30+ hours. That is epic territory for any game. Bite sized sessions is where it needs to be at. A game session should last at the most of 25 minutes. Anything more is TOO MUCH.

The reason why we play games for 10 hours straight is not because we want the game to have 10 hour sessions. No, we play the game all night for…. say it with me readers… for ONE MORE TURN. The turns do not consist of 10 hours. The turns are very bite sized. We just can’t stop eating! It is too addictive. That is how we get to 10 hours in a session. We have small bite sizes add up over and over. This is what we need.

More quality bite-size > More bloated single sized experiences.

On another front, we have witnessed one single software title completely change the entire picture of our business many times. I believe one of the most impressive stories was the time when people thought the Game Boy platform was virtually over. However, a software title called “Pokémon” turned things around for the platform and ended up creating the biggest annual sales for Game Boy in the latter half of the platform’s eventual lifecycle.

While this is true, it is not just a new ‘game’ that does it. It is a new IP or gameplay experience. In other words, another Kirby game is not going to sell the hardware to spectacular levels. Neither will a 2d or 3d Mario.

However, i think a meaty Zelda game with strong RPG world experiences could ignite a platform. Wii U has great local multiplayer, but it needs better single player games. Many games like NSMB U seem more like it is tailored for multiplayer.

Mr. Iwata, you continually stated that Gaming Population Expansion was Nintendo’s corporate strategy. However, it seems as though you have not mentioned it recently. If you have set a new strategic goal for the company, I would like you to tell us about it. I understand that when you started to discuss Gaming Population Expansion about 10 years ago, it was to ensure that people didn’t stop playing video games. What challenges is the company currently facing?

I did not ask that question, reader. I swear!

I aimed to talk about Gaming Population Expansion persistently, both internally at Nintendo and externally, until people thoroughly understood it. I would show the slides with the Gaming Population Expansion message on them whenever I made a presentation. I verbally used this term so often that even I myself was concerned whether the audience would be fed up with it. I did so because, as the leader of an organization, I believe that my message cannot soak deeply into people’s minds if I do not repeatedly convey the same message to the point that the audience are fed up with it. At some point in the past, I decided that I would dare to repeat the same message without worrying about people saying, “he’s been saying the same thing again and again” or “he must have forgotten that he has said that before.” Only after I had repeatedly talked about Gaming Population Expansion, people both inside and outside the company finally started to be aware of it even when I did not talk about it.

OK…

On the other hand, for the last few years I have been wondering whether people inside the company have a clear image as to exactly how we could expand the gaming population. We could not show a significant difference to our consumers as long as we were repeating similar things that we had done with Nintendo DS and Wii. We released “Wii Sports Club” and “Wii Fit U” for the Wii U system, but they did not have the same strong impact that the original Wii versions had. Those who have tried these Wii U games know that we have actually realized a variety of new things, but at a glance, they look just similar to their predecessors. I realized that we would have to redefine our definition of video games in order to cope with this situation.

Iwata is interpreting this as ‘lack of surprise’. I interpret it as, “I bought this game before, why should I buy it again?” In many ways, we have bought Mario and Zelda before. Why should I keep buying them?

Did you realize, dear reader, that none of Nintendo’s sequels sell better than their predecessors? There are a few exceptions mostly because there are so many sequels. The change to 3d had some sequels sell better than their predecessors: Zelda: Ocarina of Time and Metroid Prime. Then, after that, the sequels to those games kept selling less and less.

I think Nintendo should risk new IPs. This does not mean entirely new. Donkey Kong was big, but Mario Brothers did very well in the arcade. Super Mario Brothers blew everyone’s socks off. But Super Mario Brothers introduced the MUSHROOM KINGDOM as well as our favorite enemies. Nintendo hasn’t created any interesting fantasy universes since Mushroom Kingdom, Hyrule, and Planet Zebes. Worse, Nintendo has become anti-universe! They love throwing their characters everywhere, but the context gets warped. Mario Galaxies don’t really feel like the Mushroom Kingdom. Train Zelda of Spirit Tracks doesn’t feel like Hyrule. And you don’t want to know what Other M feels like. We want the worlds back. And we want new worlds.

Wii Fit and Wii Sports offered no new worlds but new controls. I think they would need a new interface before they can be big again. (NES sports games used a brand new control scheme too with the D-Pad. Prior to that, gaming was done only on joysticks. Duck Hunt is also dependent on its control scheme of the light gun.)

Specifically, the real issue seemed to be that people inside the company appeared to be obsessed with the belief that Nintendo is a company that makes video games and should make nothing else. This is one of the reasons we revised our definition of entertainment and why I announced that Nintendo’s goal for the next 10 years is to “improve people’s QOL in enjoyable ways.”

OK…

Nintendo celebrated its 125th anniversary last year. We were originally a traditional Japanese Hanafuda playing card company. We then started making western-style playing cards too. Many of us, me included, must have played Nintendo’s playing cards and Hanafuda in our childhood. Nintendo later became a toy company. It then started to use electric and electronic technologies for its toys and, by adapting the newly emerging technologies, it created Game & Watch and then the company became associated with the video game technologies too. Since the company created and launched Family Computer System or Famicom (sold as Nintendo Entertainment System or NES overseas), this video game hardware platform changed Nintendo dramatically. We launched Famicom in Japan in 1983, so it has been only 32 years since this change. By the way, September 13 of this year will mark the 30th anniversary of “Super Mario Bros.” During the past 30 years, Mario has been recognized by many people all over the world as the character representative of the world of video games and the “Super Mario Bros.” franchise as the representative game software. We believe that we should be proud of this fact.

For Japan’s sake, Nintendo should re-explore the Love Hotels. More babies are needed.

But what I think Iwata means is not ‘entertainment’ but ‘digital entertainment’. QOL will be digital entertainment.

Video game history is the beginning of PC history. Steve Jobs was the employee at Atari before he and Woz started Apple. Woz was a huge fan of video games which is why the Apple II was in colore (so it could play games). Strangely, everytime I tell the story of Steve Jobs at Atari, computer enthusiasts look at me in awe. They had never heard of this! They are unaware that the mass computer revolution began with video games and THEN spread out to PCs and all.

Look at the smartphones. Gameboy came out WELL BEFORE smartphones did.

The point is that video games are the front dog pushing the sled of the digital revolution for the masses. In that context, other ‘dogs’ will be behind video games. The reason why Nintendo should explore non-gaming is not because Nintendo is not just a video game company but because video games are the SPEARHEAD.

When you play a video game, we should try to create a situation that you can do so without reading the instruction manual. I am sorry to say this for the people who are working very hard to make instruction manuals for our games, but my impression is that only around 5 percent of consumers bother to read the instruction manual when they start playing a video game.

hahahhahahahaha

One reason why people do not bother to read the instruction manual is because they offer no gameplay advantage or game experience advantage. THEY USED TO. Tips and maps used to be in the manual. Game lore used to be in the manual. It is a medium that could be used. Even digital manuals can utilize it. Why is it not being done? Iwata is talking about using smartphones and other mediums to synergize (oh that word) with video games. The written word did this with instruction manuals. Maybe there is another way to instruct the player other than manuals, but the point is the same.

Our strategy for the next 10 years is to change the definition of entertainment and expand the area that Nintendo can do business in, and with this strategy, I believe we can capitalize on our strengths.

This is a long winded answer with Iwata not answering the question. Iwata did, in fact, lecture on expanding GAMERS. Proof of it was that Iwata thought the stigma against gamers would lessen when more of general society became gamers. Wii and DS were successful because of this. However, Nintendo has abandoned this. No one is saying Nintendo shouldn’t expand beyond gaming, but why is Nintendo not expanding gaming itself? Why are all the games nothing but sequels to what came before? The answer is that Nintendo devs do not want to make games for people like Malstrom. People like Malstrom do not like 3d Mario or Aonuma Zelda. Therefore, no games for them! It is like the Soup Nazi. “No soup for you! Come back in sixteen years!”

QOL doesn’t explain why Nintendo abandoned expanding gaming. Expanding gaming can be done at the same time as QOL.

For your information, the primary reason why we chose “health” as our first QOL project is due to the fact that a large number of people are interested in their health.

Really? No way! I would have never believed it!!!

Too bad people have different definitions of what ‘health’ is. Even the Federal Government can’t get it right.

In the next 10 years, the company will continue its efforts to expand the gaming population as our natural mission but, at the same time, for us to take the next step forward, it is of the utmost importance to us that we must not narrowly think about what we should do in order to expand the gaming population.

But that is where Nintendo like profits came from in the first place, yes? They certainly didn’t come from the Gamecube, N64, Virtual Boy, or Wii U and 3DS.

A company is a group of people, so it is impossible to completely eliminate these kinds of opinions in challenging circumstances, so I repeatedly make this kind of remark internally.

No way! Really? I thought a company was a group of flamingos. I am very pleased to report that Nintendo is a group of people and NOT FLAMINGOS!

Above: People and not flamingos! People! And all this time, I thought it was flamingos. Kudos to Iwata for clearing that up.

The development side must consider why a certain game is not selling well even though the game is fun to play, and the Metascore and User Score are high. I believe that if they were to blame it all on the marketing side, we would make no progress at all.

There is that eerie feeling again. I’ve been vocal in saying Nintendo just blames any game failure on marketing and that the game, itself, is always amazing and good. You see, everyone wants to play 3d Mario. It is just those gosh darn marketing guys always screwing it up! But when a game does sell well, are the marketers ever credited? Nooooo. The game developers get the acclaim. It is quite a cozy set up Nintendo devs have. If a game sells well, they get the credit. When a game sells poorly, the marketers get the blame. Miyamoto blames the Virtual Boy’s poor sales on the marketing team! Really!

Rather, our developers must ask themselves whether the game’s appeal can be communicated to consumers at a glance, it can be explained to others in a way that is easy to understand and whether it is easy to invite other people to play the game, because if the product includes aspects that sell themselves, it has the potential to become a smash hit. For example, “Minecraft” is a game that a very large number of people around the world are playing and it uses user-generated content to keep people interested, and one after another, players are inviting others to join them.

Oh my goodness… This is the first time I’ve seen anyone at Nintendo mention ‘Minecraft’. How could Nintendo ignore such a game?

Iwata is getting Minecraft wrong. It is not user generated content that keeps people interested. That is just a plus. Minecraft is a very different type of game from other gamers. Ask kids. They tell me, “Minecraft lets me do whatever I want.” It is the definitive open world game. When I first played it, it felt like playing Metroid or Zelda or Mario on the NES in that it felt like a new world to explore. Minecraft is very different in that it is a very GREEN game with a nice clear BLUE SKY in a sea of dark, gray shooters. I remember another time when a blocky game with a big blue sky broke out among the gaming scene.

Nintendo should really examine Minecraft. It is the new Tetris after all. User generated content really is missing the point of how such a game got so big. People like playing vanilla Minecraft. Why? It is those GAMEPLAY questions that need to be answered.

We also think that one of the major reasons why the handheld game device business has been doing comparatively well in Japan is that consumers teach and learn from one another while playing wireless multiplayer Local Play. We have started to do various things such as holding our own events and supporting fan community events in attempt to bring the fascination of wireless multiplayer Local Play to the U.S., which is predominantly an automobile society, and to European cities, which are not as automobile dependent as the U.S., and many people use trains and other means of public transportation. After repeating such events, we have gradually started to see a positive effect.

I can’t speak for Japan, but this is why I LOVED the DS and why I own 3 DS systems. I do not own a 3DS, but I do own THREE DS systems. Why? For multiplayer.

3DS doesn’t really offer any great local multiplayer experiences. Smash brothers is meh if you don’t like it. DS had Bomberman, not sure if 3DS does or not. 3DS seems very lonely on the American side. Hell, DS even had Contra.

I would like local wireless games be done more on Nintendo handhelds. I used to hold DS parties where we would all play a game wirelessly. I still do it with my nephews. We would even play wireless games locally IN DIFFERENT MOVING VEHICLES. Those who did this know exactly what I’m talking about.

You know what, Nintendo? 3d doesn’t work well with multiplayer except for games like Monster Hunter. Where is my bomberman? Damn Konami for killing my Hudson.

I don’t own 3DS so I cannot say but the DS was awesome because I own one bomberman DS cart which can play on EIGHT DS systems who don’t have the cart. You cannot beat that.

We cannot put unlimited amounts of energy and power into one product, so our challenge is how to embark on new endeavors efficiently with limited investment, while having consumers notice the difference.

Balance and security needs to be maintained for online multiplayer games. I do think a way to do this is through level editors. Blizzard’s history is an interesting one (and they WERE a SNES third party game company). Warcraft 2 and Starcraft’s map editors kept the multiplayer and even single player sharp and tied communities together. More important, the players had the freedom to play their way. This isn’t so much about user generated content as it is about player communities. The players matter. Quality players are attracted to quality games.

There is a trend in TV shows where the writer is more important only at first. Then, the show becomes dependent on the actors. The actors are the reason why people keep watching the show after that. This might apply to games as well. The developers are very important at first. Then, over time, the gamers take over. The gamers begin to matter more to the game experience than the developers did. This was certainly true in games like Warcraft 2 and Starcraft. No one can argue that the gamers do not matter in World of Warcraft (because in multiplayer games, gamers are a huge part of the game experience).

A better online system would be a start. Give us the freedom to make custom games and not be tied to an algorithm treadmill.

However, the tough issue for this platform is that the platform holders are not so interested in maintaining the high value of the content and instead feel that the cheaper the content, the better or even that the content should be free. On this point, I can empathize with Mr. Kawakami, the chairman of DWANGO Co., Ltd., as he often uses the expression to describe the situation of the content for smart devices with “the eggs are on sale at the supermarket.”

Interesting.

In the music and video industries, they made more profits by selling content before, but, because of the digitalization trend, it has become much more difficult to make profits by just selling the content. For example, artists whose CDs sold over one million copies in the past can sell less than one-tenth of them now. It is said that whether they can maintain the revenue or not now is up to the number of people who attend their concerts and other events. Consumers spend money on one-time events like concerts, but once they have regarded as a norm that they can digitally obtain content free of charge, we cannot easily change their minds regarding content value. As for video content, once services offering a library of tens of thousands of videos for only a few hundred yen per month become mainstream, DVDs will not sell as they did in the past. I have heard a Hollywood movie producer say that profit structures for movies have changed, and it is difficult to expect profits from selling DVDs.

Very interesting.

Observing these transitions, we can say that the digitalization trend presents not only a promising chance but also a huge crisis for us, so it can be said that we are faced with both an opportunity and a dilemma at the same time.

Hmm…

Therefore, the demand for entertainment is not small. Rather, in our view, people are richer than in the past as they search for the ways to spend their leisure time more fruitfully. In a broader sense, they are having fun in their spare time in various ways in order to improve their QOL, I think. The ways to have fun have expanded. At the same time, since distribution costs are becoming very close to zero due to digitalization, the number of consumers who do not focus on the value of the content is increasing, based on their idea that content can also be free. How we deal with this situation where there is the pressure to decrease the value of any digital content will be the key point for us.

There has been a similar situation. When the NES came out, most Commodore 64 users would pirate their games. Come on, you know you did it. Disks were easy to copy. There is a reason why ‘copy protection’ was put on the manuals or wheel discs in games. The NES emerged and could not be copied. Why did it succeed? It is an answer worth exploring in another post.

If we find the right answer, Nintendo will prosper as a company that creates content. If we make a big mistake, on the other hand, our business structure will collapse.

This is quotable. This is Iwata’s ‘we will rise to heaven or sink to hell’ that Yamauchi said before the DS came out.


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