Posted by: seanmalstrom | November 5, 2015

Nintendo Investor Question and Answer 76th Fiscal Term

So many people emailed the English translation to me! I suppose that means you’re ready.

For those who don’t know, Nintendo does these ‘Question and Answer’ sessions with investors. Sometimes really stupid questions are asked. It can be very fun. But due to the magic of the Internet, Malstrom was secretly in the audience holding up a microphone and scribbling notes on a pad.

And now, reader, you and I will have a chat about Nintendo’s strategy.

Above: Malstrom is in front of you.

Let us begin.

If you quote any or all of this Q&A, please display the URL of this website or put a link to this website.

What is this!? It looks like Nintendo has gotten tired of journalists quoting or using content from the Q/As without giving people a link to the actual source. A fun question is: “Why would journalists not display the URL or link to it?” It is because they are lazy. It is to quote parts of it to create an impression that you were actually present for the event. “But Malstrom, do you not make the impression that you were actually at the event?” I do, but I do so in obvious parody. “But what about the time when…” Enough! If the Reader will be quiet, we can get this going.

Regarding monetization, we are considering to distribute paid content such as clothes for Mii, etc. For the smart device applications that we will be releasing after Miitomo, we are considering monetization methods optimal for each application, including charging a fixed amount at point of purchase.

They don’t know about monetization. They are playing it by game per game. There is no ‘vast strategy’ for monetization at Nintendo at the moment.

Although we have introduced Miitomo as a “communication application,” we believe that it is a unique and Nintendo-like application in terms of the fact that it will encourage people who usually do not proactively share messages and information with others to enjoy a new type of communication by utilizing Nintendo’s IP called Mii.

It’s not even a freaking game! Everyone’s expectations for Nintendo is to make smartphone games, blow away all competition, make mad profits, and diversify their focus away from dedicated hardware. What is going on is that Nintendo is directing the apps to direct the user to Nintendo’s proprietary markets (e.g. dedicated hardware). If Nintendo makes some profit off these apps, that’s cool to Nintendo.

Other than this first application called Miitomo, we are planning other applications that will work with Nintendo’s dedicated video game systems. For our applications that will be enjoyed only on smart devices, we are creating ideas so that even those smart device users who do not usually play with applications can enjoy them.

Nintendo smartphone apps = Wii’s Channels. Same strategy. Get people to go to the Nintendo hardware.

And now a word from Shigeru Miyamoto.

While it is important for us to earn profits from our smart device business alone, our primary objective is to encourage smart device users to be interested in and to play with our dedicated video game systems, and we are focused on this goal.

It’s the  Wii Channels! It is the ‘Everyone Votes Channel’ and other type of channels that appeared on the Wii. Their job was to encourage users to get interested in the normal Wii games. Nintendo’s smartphone strategy is the same as the Wii channels. Miyamoto specifically even says this! What more is there to say? Let us continue.

Nintendo is not a company that deals in daily necessities. Because we are engaged in the entertainment business where no one can forecast what will be the next big thing and where we have to create the demand ourselves, our job is to always evaluate the situation from time to time and increase the possibility of creating the next big thing. Just when Nintendo started to earn stable revenue with the hit of GAME & WATCH, our sales doubled with the Donkey Kong arcade game. And when we were able to earn rather stable profits from the arcade game business, because our Famicom (known as Nintendo Entertainment System overseas) business started to get on track, we ceased our arcade business and started focusing on the home entertainment business.

What Miyamoto is saying is that Nintendo did not expect video game revenue to make up any sizable part of its company revenue. You never know when the next big thing will occur in entertainment. A game console only became feasible because constant arcade hits were a reality.

What Miyamoto is NOT saying was that Nintendo’s growth in video games was not only due to ‘hit games’ but also due to a huge growing trend. Video games were growing by insane measures. Atari, during its time, was the fastest growing company in the entire history of the United States. Nintendo grew so rapidly in video games because it also rode the video game growth trend.

Strangely, smartphones have become somewhat flat in their growth and are approaching stagnancy. Even if Nintendo created the best game ever for smartphones, it cannot possibly have the growth of Wii Era or NES Era due to there being no growth trend to ride.

Since the Famicom age, it had often been the case that the software developers who were able to thoroughly comprehend the unique techniques to develop software on unique hardware environments were able to create quality software. Now that anyone with a certain level of knowledge can create applications and especially those for smart devices, we would like to deploy a development environment that eliminates waste as much as possible and is applicable to a variety of devices.

Integrated hardware and software is now a ‘waste’? What Miyamoto is really saying is that integrated hardware and software used to be an asset, now it is a liability. Windows 10, for example, is Microsoft putting software on any type of hardware. Nintendo seems to be doing the same.

Here is Takeda:

I understand that, thanks to the evolution of computer technology, aiming to realize a virtualized software development environment that does not depend on specific hardware is becoming the technological norm today.

If this were true, then why are people shelling out hundreds and hundreds of dollars for retro game systems and cartridges? These same games are available on collection disks and digital download. “Nostalgia!” Are you sure? Think long and hard.

I think Nintendo is missing a trend here.  If entertainment relied on virtualized software development environments, then why did the iPod become big and not the MP3 players? Hardware matters.

Simultaneously, regarding input and output technologies, I believe that it is also in line with the current technological trend that Nintendo should challenge itself with the creation of a unique user interface.

No output technologies? No Nintendo holograms? Damn.

I hope the hardware system doesn’t revolve around the ‘unique user interface’. Even in the NES Era, this was not the case. It was with the N64 and Gamecube that the standard controller dominated everything. During the NES, people played with all sorts of controllers. This would be going in the step of the ‘Famicom Era’ and away from the N64 ruin.

Miyamoto:

For example, this is one of the objectives of deploying our IP on smart devices but it includes our attempt to increase the awareness of Nintendo by delivering our messages to people whom we have not been able to communicate with when deploying our IP on dedicated game systems.

So….. Nintendo’s financial outlook no longer revolves around hardware or games but…. IPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIP.

Did you hear me, reader?

IPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIP.

What I do like about this is that it brings Nintendo closer to the Yamauchi saying of: “NES is just a box people buy to get to Mario.” Nintendo is talking of their hardware as ‘boxes’ people buy to get to their IPs.

IPs?

IPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIP!!!!

IPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPIPI!!!!

IPIPIPIPIPIPIPIPIPIPIPIP!!!!!

 

IP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

IP! IP! IP!

From an investor:

You explained that Nintendo is working on deploying Nintendo’s character IP widely and expanding the gaming population. In terms of new IP, Splatoon is doing very well, but I would like to know the current issues on creating new IP for the expansion of the gaming population.

 

Splatoon is doing SO WELL, the Wii U is outselling the PS4 and Xbox One. Splatoon is doing SO WELL, people will write of its launch decades from now like the original Mario, Zelda, and Metroid. Splatoon is doing SO WELL, Splatoon Mania has erupted around the globe! Splatoon TV shows are being made RIGHT NOW because demand is through the room! At Halloween, everyone dressed up as an Inkling. In fact….

“Malstrom.”

What! I am interrupted in my own post! What is it, reader?

“Splatoon has done none of those things.”

What! But I just read the investor say how well Splatoon is doing.

Is Splatoon doing well or is it because people just want to see something new? Not even the Game Industry does original IPs anymore. I can’t see how Splatoon can be seen as a ‘success’ in any way. And to be honest, I can’t see any Wii U game as being ‘successful’ except for, maybe, Mario Kart U. A game console is only as successful as its games. The Gamecube was a failure because its games were a failure (aside from stand out hits like Smash Brothers Melee). Wii was a success because its games were a success (Wii Sports, Wii Fit, NSMB Wii, Mario Kart Wii). Wii U is a failure because its games are a failure. It is as simple as that.

Kimishima:

However, just creating new IP one after another will not yield a good result.

Yeah, we were SO FLOODED with all these new IPs from Nintendo last generation that we gamers ran outside in circles going crazy! It is so good Nintendo put in place this practice of not ‘creating new IP one after another’.

Reader, oh Glorious Reader, tell me, how the hell does Kimishima know that creating new IP one after another will not yield a good result? In other words, how the hell would Nintendo know? Nintendo has no experience creating IP after IP, one after another. So how the hell would Nintendo know this is a ‘bad practice’?

There are two times when Nintendo ‘created IP after IP, one after another’.

NES Era: We saw the rise of Mushroom Kingdom, Legend of Zelda, Metroid, Kirby, and Punch-Out. But we also had failed IPs such as Kid Icarus, Star Tropics, and Mach Racer.

WII Era: I forget the failing ones, but I know they were there. The successful ones were the Miis, Brain Age, Nintendogs, Wii Sports, and Wii Fit (trainer girl!).

From where I’m standing, it looks like Nintendo gains more by putting out more new IPs. Imagine if there were more new IPs than Splatoon. A Nintendo console might actually become EXCITING again.

And that seems to be the end of the question and answer session. The people who translated the early Japanese text made it sound like there would be HUGE BOMBSHELLS going off in Kimishima’s first Q/A session. The ones that piqued my radar are listed in this post. If you turn to the left, there are cookies and punch by the door. Do be a dear and pick some up.


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