Nintendo Q3 2014 earnings - investor briefing roundup - GamePad focus, NFC titles at E3, Mario Kart 8 in May, non-wearables/quality of life platform next year - Nintendo Everything

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Nintendo Q3 2014 earnings – investor briefing roundup – GamePad focus, NFC titles at E3, Mario Kart 8 in May, non-wearables/quality of life platform next year

Posted on January 29, 2014 by (@NE_Brian) in 3DS, General Nintendo, News, Podcast Stories, Wii, Wii U

Nintendo’s latest investor briefing is about to begin. And, per usual, analyst David Gibson is tweeting live from the event. We’re rounding up all of the bits shared at the conference below.

– 11.61m Pokemon XY sold in 9months, 3.52m for Animal Crossing: New Leaf, 2.57m for Luigi’s Mansion: Dark Moon, 2.18m for Zelda: A Link Between Worlds
– 1.94m for Super Mario 3D World, 1.74m for New Super Mario Bros. U, 1.51m for New Super Luigi U, 1.24m for Wii Party U, and 1.15m for Zelda: Wind Waker HD
– Mario Kart Wii still sells 1m in the 9 month period, sales reach 35.26m life-to-date
– Iwata’s focus today: won’t change how hardware and software combined is the strategy, won’t put games on other platforms, but company has learned lessons from past
– Nintendo will continue R&D on hardware in the future
– Need to identify new opportunity and create new market
– President Iwata apologizes for the big cut in its full-year guidance, bows for three seconds
– Iwata isn’t pessimistic about the game console outlook
– No change to game console being the center of its strategy
– Iwata insists the company will not be abandoning its hardware business
– Iwata says Wii U’s weakness is the GamePad, recognition is low
– Price cut isn’t an option for Wii U
– People think GamePad is an accessory for Wii
– Iwata concedes adapting to change is necessary, but he highlights the company has gone through drastic changes in its 125-year history, starting from Hanafuda cards to now game consoles
– Nintendo needs to put a balance between what it’s going to continue doing and the drastic change it needs to undergo
– GamePad needs titles to take advantage of the controller
– GamePad is Nintendo’s highest priority
– Nintendo will NFC titles at E3
– Plan highspeed startup
– Iwata says he needs to revamp its marketing for this year’s holiday season
– Iwata says the company has overcome technological hurdles to making virtual consoles
– GamePad profile to be increased
– Mario Kart 8 to be released in May
– Iwata says he’ll make sure this won’t be just a one-off boost in momentum
– Fast start up of GamePad designed so can play without TV quickly
– Iwata wants to change the definition of the platform, previously it’s been devices-based, 3DS and Wii U are not compatible and users separate
– Nintendo Network ID is important, also used for future handheld and console, will now include smart device, but won’t put Nintendo games on smartphones
– Nintendo will “actively” use smart devices to “make connections with customers”
– Will use smart devices as a catalyst to encourage customers to use its Nintendo platforms
– Won’t optimize software for smart devices, thinking of launching service sometime this year, an on demand service
– Service is ID based and not device based, account relationship with customer, more users play game the lower the price
– If play with friends then perhaps lower price
– Will experiment with this model on Wii U, changing attitude to licensing IP and will seek partner to expand exposure
– Nintendo may not be releasing its popular franchise on other platforms, but Iwata says the company will license Nintendo game character rights to new partners
– In emerging markets plan to push into in 2015, want to establish user relationship, understand prices need to be lower
– Mr. Iwata now going into how Nintendo is going to expand into new fields. He looks back the past 10 years of his tenure, saying he’s had some success in expanding the gamer population by bringing Wii and DS to people who may not have played games in the past before.
– Iwata defines entertainment as improving quality of life (QOL) in the next 10yrs is to improve this, first area is health, want to find blue ocean
– QOL could do wearable devices but wants to leapfrog that to non wearable devices by Nintendo, want to propose healthy structure for day2day
– Thinks there will be synergies between games platform and QOL platform
– Iwata focusing on quality of life through entertainment for the next decade; key world is health, Nintendo is trying out something completely new: non-wearables to monitor your health.
– QOL platform will roll out in April 2015, integrated with games, business plan details in 2014, business impact in fiscal year March 2016
– For those of you wondering what non-wearables are, Nintendo will unveil the details of its new business during 2014 and launch it for the fiscal year through March 2016. Mr. Iwata’s speech is now over. And now the Q&A session is starting.
– Smart device service application is not designed to make money, but as communication to users, act as a channel to users
– Smart device service just advertising is not enough, it needs to be fun and engaging, connect with what people are talking good about
– Iwata says he’s not aiming for short term revenue boost but the smartphone service app is aimed at building a bridge with customers and bringing more information on Nintendo. But he admits it’s hard for people to use the apps on a regular basis if it’s just for marketing purpose.
– Nintendo is increasing its investment to overcome weakness but not intention to continue current investment into next fiscal year
– Marketing will rise as proportion roof revenue but type will change and especially for smart devices
– Iwata says the big boost in capital spending plan is for Nintendo to tackle areas that it’s not good with. So where is Nintendo’s soft spot? That’s a secret, Mr. Iwata says with a grin.
– 3DS will be driver for next fiscal year, Wii U will not provide big profit but software titles will drive restoration
– License character IP= will now be more flexible, won’t license everything, consider competitiveness or if undermine then not do
– Already in discussion for licensing arrangements, no budget set, make profit in not so distant future
– Miyamoto saying WiiU impacted by lack of key franchises, think is resolved, games are not boring, strong reviews for 3D World
– It is single player that is weak and communication about games, reviews have been very strong
– Think franchises can be upgraded in more stable manner working with external developers
– Answering another analyst’s question on how the company plans to return to profitability, Mr. Iwata says the DS will be the main driver for profit for the next fiscal year and the firm will focus on more efficient marketing. Expectations also high for two popular games lined up: Mario Kart and Super Smash Bros.
– To another question that was a bit too long to recap here, Mr. Iwata says he’s never considered quitting. “My conviction and passion have not been shaken,” he says, though adding he took the pay cut because he did feel he does need to take responsibility.
– Admits Nintendo land was not sell explanatory, admits WiiU had vacuum as year, it’s not about volume but quality that’s important
– Iwata’s admits WiiU had vacuum last year
– 3DS dominates in Japan so 3rd party want to develop for, overseas console dominates with developers focused on console and not portable
– But thinks with 3DS having 10m installed base developers are more interested, WiiU rebound will see 3rd party follow
– On the response of software makers, Mr. Iwata says there is still strong support from makers of content that is popular with Nintendo’s main customer base of children and families, but enthusiasm is lower among other software makers. For now, Nintendo will focus on increasing its user platform so that more software makers can come on board, Mr. Iwata says.
– Iwata – next time propose hardware will utilize what has been done on Wii U, cannot have console and portable separate systems, they are brother/sister
– Nomura analyst now asking why Nintendo revamped its organizational structure to merge consoles and portable devices. Mr. Iwata says there was a huge technological gap in developing consoles and portable games in the past since portable devices run on batteries, but technological advances have narrowed the architectural difference between the two. He adds he doesn’t know yet whether the two hardware will be merged in the future, but the two will become more like “brothers.”
– On licensing: says won’t do further San Rio model, prefer to not follow another’s model, might be able to get sticker or wallpaper on smartphone
– Would consider cancel stock, when say non-wearable means something not just have in living room, but want to remain mysterious now on this
– Mr. Iwata says he won’t deny the possibility of carrying out M&As by using the shares the company will buy back, saying its business is facing a transition point. But he says there’s no specific deal that is moving forward that he can talk about for today.
– For those of you wondering what “non-wearables” for health means, here’s the one clue he’s giving out for today: it’s not necessarily something you will use in the living room.
– Iwata: is sharing philosophy with another company and aligning with them, cannot do alone.
– On the possibility of tie-ups, Mr. Iwata says Nintendo can’t do everything on its own and will be “flexible” in considering its options. But he says there’s something that Nintendo will stick to: the creation of products that are unique and not comparable to anything else. “We’d like to work with other companies where necessary while maintaining our unique identity,” he says.
– Wii U sales while weak in USA or UK they were strong in France and currently studying why that was the case
– Iwata: saying entertainment needs to give surprise, this is bigger with hardware and software together, Nintendo integrated has more options
– Integrated can amplify surprise for consumers, hence more of an advantage, not want to give profit target yet
– Responding to a reporter’s question as to why sales were weak overseas while relatively strong in Japan, Mr. Iwata says the company’s marketing got divided between pushing for 3DS and Wii U console and in the end both never “exploded.” “This was the worst year-end shopping season since I became president. We need to rebuild as soon as possible,” he says.
– another discussion of why Nintendo is keeping both the console and software. “By combining the hardware and software, we can amplify our strength,” Mr. Iwata insists.
– Internally call free to play as free to start, just because can make money doesn’t mean have to put games on smart phones
– Want to present entertainment in a different way on smart phones, session over and most leave.

Source 1, Source 2

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  • Clumsyman

    Wow great to see IMO, the superior MK still selling great. 😀

  • JCman7

    Great plans Nintendo! Nintendo always bounces back, they have great ideas. Looking forward to what they have in store for us.

  • SomeFluffer64

    So the Virtual Console will improve?

  • Disapointed

    So Nintendo has “learned” the leassons from the past, identified that the Wii U Gamepad is the problem, and that mobile gaming on smartphones is growing, BUT they won’t change anything. Yeah, sure, it looks like they really “learned” the lesson. And regarding the non-wearable health monitoring devices, hell yeah!! I’ve been waiting so many years to have one of those!!! – sarcasm.

    • superphillip32

      I think the health part is not meant for us, though I bet some of us could stand to lose a few pounds… heh Seriously though, It’s Nintendo expanding itself beyond gaming. Nintendo only does games currently, and they don’t have other avenues like Sony and Microsoft. What’s wrong with them expanding to something as perhaps a safety net?

    • darkgamer001

      The problem is, that like so many other people on the Internet, this comment implies that Nintendo should revolve around you and your wishes ONLY.

      Whatever the non-wearable health devices are, don’t have to appeal to YOU personally, but if they’ve identified a market for them and an opportunity to make money, why not?

      Reminds me a bit of when the 2DS was announced and how people flipped because it didn’t target them….

    • Duster

      I definitely don’t blame you for being skeptical, seeing as Iwata has “learned his lesson” many times before. But that being said, I’m surprisingly optimistic given the sorts of answers he’s giving this time. They’re clear and concise, not his usual “Don’t worry, we are looking into new methods” answers. It seems like he’s really getting a decent business model down. Like he’s finally waking up from the dream that was the Wii’s insta-success. Even his willingness to be “flexible” about support from other companies feels legitimate.

      As for the Quality of Life schtick… don’t focus too much on it. It’s the next logical step from the success of Brain Age/Wii Fit/etc. Nintendo’s learning that nobody wants to buy a $300 gaming system, half of the price reliant on a tablet controller, just so they can have a daily fitness routine. A) This is not for the gaming community, so who cares if you want it? and B) This is a great move for Nintendo’s hardcore department. There’s finally a separation, yet integration, between their casual “Wii Fit moms” market and their hardcore “Reveal a new Metroid/Zelda game already” market.

      Maybe you’re right, and this is all another facade and nothing will change. But maybe, just maybe, Nintendo’s really woken up for the first time in a while. Here’s hoping, as a loyal Nintendo fan forever.

      • itsthomas

        I’m thinking this new non wearable.. Will be very similar to the arcades of yesteryear 🙂 If the people won’t let Nintendo into their living room, have them go into Nintendo’s instead.
        Tho Again I could be totally wrong, but we’ll see! They have the market already, everyone knows wii fit and sports.

  • D2K

    I’m feeling all of this. This is what I’ve been asking from Iwata all this time. Honest answers to honest questions. No more smoke, no more BS, no more delusional thinking. He understands what went wrong. he understand what needs to be done (for the most part) and he is actively engaging restoration of the Wii U.

    Saturo Iwata reminds me a lot of Brett Favre. Those of you who have watched football know that while Favre is one of the best QBs of all time, he has done the impossible in BOTH regards. When he won he did it bigger and better than any QB in history. When he lost, he did THAT better than any QB in history! 🙂 Juts like Favre, Iwata wins big and loses big. One constant Nintendo has always had however is that when the get serious about something they are like the Juggernaut when he gets a full head of steam. NOTHING can stop him.

    I think critics and trolls-alike are scared to death that Iwata has finally “woken up.” The Wii U doesn’t need a whole lot ot get fixed. All Nintendo really needed was a wake-up call and attitude change.

  • Nintendo Fan 4 Lif3

    Very interesting stuff. Particularly about France having higher sales and licensing IP to other companies. thanks for sharing Brian.

    • itsthomas

      Perhaps the French do not like xBox and Playstation, because they are always the losers in competition!

      I jest , Now I’m an American with Italian blood.. If there’s one thing we in America and we Italians love, it’s making fun of the French. I am interested in why France ate up Wii U.

      • Nintendo Fan 4 Lif3

        yeah supposedly. I see that, LOL. I hope Nintendo can give an explanation, which can further feed into their marketing strategy.

      • Mr Ninty

        thats funny we dutch make fun of italians and americans. but the belqiums are on top of that list

  • itsthomas

    Great story, thanks for posting this.

  • Rowdy

    Brian, thank you for posting! This is quite interesting and I’m eager to see where Iwata will take the Wii U and Nintendo next. With regards to whether or not the next hardware unit will be merged, I do hope it is a combined console/portable and not two separate units. Whatever the case, these next two-three years will be quite exciting for Nintendo (and us fans)!

  • TalesOfBS

    “- Wii U sales while weak in USA or UK they were strong in France and currently studying why that was the case”

    Did it sold good in France? I wanted to know why too.