As usual when Nintendo releases a financial update, a shareholder’s briefing soon follows, giving the world a much clearer picture of just where Iwata is steering the business…
Nintendo’s restructuring
As you might already know from some newspaper reports, we will reorganize our development divisions next month for the first time in nine years. Two divisions which have independently developed handheld devices and home consoles will be united to form the Integrated Research & Development Division, which will be headed by Genyo Takeda, Senior Managing Director.
Last year we also started a project to integrate the architecture for our future platforms. What we mean by integrating platforms is not integrating handhelds devices and home consoles to make only one machine. What we are aiming at, is to integrate the architecture to form a common basis for software development so that we can make software assets more transferrable, and operating systems and their build-in applications more portable, regardless of form factor or performance of each platform. They will also work to avoid software lineup shortages or software development delays which tend to happen just after the launch of new hardware.Some time ago it was technologically impossible to have the same architecture for handheld devices and home consoles and what we did was therefore reasonable. Although it has not been long since we began to integrate the architecture and this will have no short-term result, we believe that it will provide a great benefit to our platform business in the long run. I am covering this topic as today is our Corporate Management Policy Briefing.
No Wii U price cut, upcoming updates
With Wii U, we have taken a rather resolute stance in pricing it below its manufacturing cost, so we are not planning to perform a markdown. I would like to make this point absolutely clear. We are putting our lessons from Nintendo 3DS to good use, as I have already publicly stated. However, given that it has now become clear that we have not yet fully communicated the value of our product, we will try to do so before the software lineup is enhanced and at the same time work to enrich the software lineup which could make consumers understand the appeal of Wii U.
Also, we are receiving many comments and requests from consumers about issues such as the time to start up the system and switch between software, and the duration of the initial system update. I acknowledge that we will need to further increase the appeal of the platform through the system updates we have planned for this spring as well as this summer.
Wii Street U and services
As you can see, through this application, Wii U enables you to experience linking your living room to various places in the world.
Needless to say, the primary use of Wii U is to enjoy video games. We believe that, however, these kinds of services will help people widely understand the unique value of Wii U and increase the number of people who are interested in Wii U in a family and eventually lead to a bright future of this console.
By the way, this service has been developed by a small team mostly using web technologies based on HTML5, not the so-called native codes only for Wii U applications. Both Miiverse and Nintendo TVii have been created as web applications utilizing browsing engines. The Wii U console is powerful enough to smoothly run such applications as developed in this way without writing any specific programs. We have been able to deploy various services for this console with less in-house development resources in a more timely manner than our previous platforms.
Now is the time the development of video games for dedicated platforms requires a vast investment. Thinking of diversion of web services, creation of prototypes and development of independent label games, it has become more important to expand the range of software developers. At GDC (Game Developers Conference) to be held in March, we will show you some of our efforts to expand the range of software developers. They will include the development environment used for “Wii Street U” and some VOD services, where you can develop the Wii U software using web technologies like HTML5 and JavaScript and Unity, a cross-platform video game engine used by many users.
Wii U Internet Connection Rates
The Wii U is a game console you can enjoy most with the Internet connection and the current Internet-Connection ratio is 74%, which means that almost three of four consoles have been online already. This is clearly higher than the previous hardware system we released. We will continue to inform our consumers about the advantages of using the Wii U consoles online to further increase this ratio.
Third Party relationships for Wii U & 3DS
We announced a collaboration title of the “Shin Megami-Tensei (Japanese Title)” series and “Fire Emblem” series which ATLUS and we are cooperatively developing. As the developing cost of games for home consoles has been high, it has been very difficult for third-party developers to take a risk by developing games only for one home video game console. We therefore have had various discussions with software developers for the projects.
Our in-house development team will create Nintendo-like unique games on our own and various games with the help of second-party development companies. However, this is not enough to have a large variety of games, and we have to do something to strengthen our lineup. Our efforts include the cooperative development of our IP games like the new “Super Smash Bros. (temp.)” which we are developing with Namco Bandai and collaboration titles like the one with ATLUS I mentioned before, “LEGO CITY: Undercover” which we are developing with Warner Bros. Entertainment and TT Games, and Ubisoft’s “JUST DANCE” series which was a smash hit in the overseas markets and we localized for the Japanese market. We are willing to actively cooperate with software developers to produce something new beyond the traditional licensing business. We believe that this is possible because Nintendo is not only a platform holder but has a powerful in-house software development team.
Recently, third-party software developers overseas have been inclined to focus on mega-hit titles for home consoles and have had less of their development studios develop software for handheld devices. Some developers, which make game content suitable for children, work on titles for Nintendo 3DS, but they are not as active as the time of Nintendo DS.
On the other hand, as the handheld devices occupy a large share of the video game market and software for handheld devices is important in the video game business in Japan, Japanese software developers are eagerly assigning their top teams to develop key titles for Nintendo 3DS.
We therefore plan to more actively support the Japanese software developers in distributing their key titles overseas this year.
Among those third-party titles both developed and published in Japan, there have been some games which Nintendo published in Europe, including the Professor Layton series. We will increase the number of such games for the U.S. market as well as in Europe. We are also willing to flexibly assist third-party developers in distributing their valuable games overseas.
3DS connection rates & Streetpass
The Internet-connection ratio for the Nintendo 3DS has reached a level that no handheld gaming device has ever experienced. In Japan and the U.S. where the ratio is specifically high, the number of Nintendo 3DS units which have been connected to the network has surpassed 80 percent. I referred to “approximately 60 percent” in one of my presentations here last year, and that ratio has significantly increased in one year.
When it comes to StreetPass, users in the automobile-dominated U.S. do not use it as much as Japanese users do. In contrast, it has gradually become popular in the metropolitan areas of European countries. This year we plan to add some StreetPass-related features to the Nintendo 3DS in order to encourage more people to go out with their Nintendo 3DS, and make StreetPass and SpotPass more popular overseas.
3DS Overseas challenge, 10 new first party titles this year
The challenge for Nintendo 3DS exists in the overseas market, not the Japanese market. We need to think about the method and its possibility of making what we have done in Japan happen there.
Thinking back to the Nintendo DS system, it did not gain momentum in the overseas markets until its sales pace in Japan had accelerated. However, since now is a time when smart devices are widespread and overseas video game developers are less interested in developing software for handheld platforms, some may doubt if Nintendo can actually make it.
Before we released “Animal Crossing: New Leaf” in Japan last year, some said that, amid the expanding popularity of smart devices, few adult female consumers would play games on a dedicated gaming device as they did with Nintendo DS. With the big sales of this game, however, we think that it was proven that an indispensable, original title could overcome the popularity of smart devices and deflation of the value of software.
To export the momentum to the overseas markets, we plan to actively release our key titles for Nintendo 3DS which could potentially lead the markets this year.
“Pokémon X/Pokémon Y,” to be launched in October worldwide, could be the most-anticipated one and “Animal Crossing: New Leaf,” released in Japan last year, will be available in the first half of this year.
We have already announced that “Fire Emblem Awakening,” “Pokémon Mystery Dungeon: Gates to Infinity,” “Luigi’s Mansion: Dark Moon,” “Brain Age: Concentration Training” and “LEGO City Undercover: The Chase Begins” will be released in the first half of this year. For the overseas Nintendo 3DS markets, this year will be a good harvest time of what we have developed for these two years. We plan to intensively and actively sell approximately 10 key titles on our own in order to change the Nintendo 3DS system from a handheld device just to play the Mario series to the one to enjoy a variety of games. Naturally, we will keep the momentum of already-released titles with much sales potential by, for example, having them digitally distributed.
