More news from Iwata, others about 3DS and much more
Iwata on 3DS hardware and software shipment figures/Miyamoto’s hobbies/Miyamoto’s DSiWare app…
“First, about the Nintendo 3DS software, you asked what the basis for our unit shipment forecast is. Please note that this forecast is Nintendo’s shipment number, so not all the 4 million hardware units and the 15 million software units are expected to reach consumers’ hands. Now that we are launching a new hardware device, for which people’s anticipation is fortunately high, and in terms of the current circumstance where a number of software developers with strong will to make the software for it are wanting to launch their software on or close to the launch date of Nintendo 3DS, we think that the company will be able to make that size of software shipment from Nintendo. In addition, since the retailers also have high expectations for this new hardware, we are expecting them to offer sufficient shelf space to showcase and sell a certain good amount of the software from the beginning. These are the reasons as to how we have come up with that software shipment figure.
I understand that your question was based upon a concern that the 3.75 tie ratio (software sales per hardware unit) will be too much for a period of just about one month from the hardware’s launch, but please understand that there is certainly a small time gap between when Nintendo ships Nintendo 3DS software to the retailers or to the third-party publishers and when this software is actually sold at the retailers, and, by taking into consideration the high expectations for this product before the launch, we have concluded that we would be able to make that shipment figure (sell-in). I hope you will understand this point.
About your question on Mr. Miyamoto’s hobby, let me supplement this for other people. Nintendo posts interviews which are called, “Iwata Asks” (on its official website) from time to time. Commemorating the 25th anniversary of Super Mario Bros., we have opened a dedicated campaign website. Because I hear a lot of information from Mr. Miyamoto on a daily basis, I thought that we would be able to hear from him some interesting anecdotes about Mario if we changed the interviewer. So, we asked Mr. Shigesato Itoi to do “Shigesato Itoi Asks in Place of Iwata.” The subject of Mr. Miyamoto’s involvement with his neighborhood association happened to be included in this interview article.” – Satoru Iwata
“Well, I am asked about my hobbies all the time. But I have always been told not to answer because it could be a hint for our next project. It is true that some of my hobbies have turned out to be the themes in our games. You know, we sometimes see TV programs which introduce you to something successful, and when the programs look back on the journey to success, some unexpected facts are revealed. These TV programs conclude that these facts must be the reasons of success, so if we do something similar, we may be able to succeed in the same fashion. In my case, I would never start a new hobby with the hope to somehow make it into a Nintendo product in the future.
Because some of my recent hobbies have actually turned out to become some of our products in the end, when I explained about the background of these software titles, some people start to suggest that my next hobby will become the next Nintendo product. However, it is not the case. I think I am not exceptional in this regard because many people make something from their own personal interests, but it is only after the product is finished when we can realize that our personal hobbies have turned out to be that way.
Unfortunately, few people discuss Wii Music, but only after we completed this game, I realized that I had wanted to make that software because I personally love music. When it comes to my personal interests, and I wish more people were interested in this particular topic, we have been working on the voice guidance system that can be used in many places such as museums. All you need to do is bring your Nintendo DS (to museums and other places). You don’t need to buy any dedicated software. The operators of the facilities transmit voice guidance, together with simple pictures, to your Nintendo DS. The visitors can enjoy the service free of charge as long as they bring their Nintendo DS with them. The service is already available at such places as “Kaiyukan” aquarium in Osaka and “Shin Enoshima Aquarium.” We have upgraded this service, so what these venues can offer to your Nintendo DS has been improved.
Also, we have just developed new software, which even individuals can make use of it. For example, neighborhoods in our community won’t have to face so much trouble when they make and send out messages (for example, to make a message for neighbors to enjoy a stamp-rally event). We are planning to make this software available as one of the downloadable Nintendo DSiWare titles next month (November). Utilizing Nintendo DSi (it’s camera and microphone), you can insert some simple sounds and pictures. Then, people who visit your place with their Nintendo DS can receive and enjoy that data. If an owner of a cafe in a neighborhood shopping arcade happens to like this kind of technology, he or she can make it so that the customers can open their Nintendo DS device to see the restaurant’s menu and other things like a detailed introduction of the restaurant. Shop owners can also make it so that the customers at the tables can push a number on the screen to listen to some audio messages, just like the visitors to the museums can receive the audio guidance. We will soon make this software downloadable. This will not directly contribute to our sales, but we are hopeful that this type of service will greatly contribute to encouraging people to use and bring their Nintendo DS devices wherever they are and wherever they go, just like Mr. Iwata mentioned before (during his presentation). Overall, I do not have any new hobbies that I can disclose now.” – Shigeru Miyamoto
Iwata discussing SpotPass and StreetPass…
“I explained this at Nintendo Conference 2010 a month ago, but I myself believe that the communication capability is one of the large strengths of Nintendo 3DS in addition to its ability to show 3D images without the need for special glasses.
I’ve already expressed this idea often, but in the world of entertainment, and especially in the entertainment business of Nintendo, anyone regardless of age or gender can choose to play, so the need for monthly costs or monthly subscription fees are not well suited. If we should apply that business model, the sheer number of our consumers would be narrowed down to a certain limited group of people. By asking ourselves, “what can we do without asking our consumers to make monthly payments?”, we came up with the structure of “SpotPass” communication. Ten years ago, something like this “SpotPass” was an impossible dream. Today, however, in densely-packed areas, we can see the spread of Wi-Fi access points that we can use with certain reasonable costs. This kind of change in the circumstances has enabled us to offer such functions as “SpotPass.”
You just mentioned the spread of such devices as portable Wi-Fi routers and the emerging new communication technologies such as LTE. They too will change the circumstances, I believe. Nintendo may be able to find a business model which does not require consumers to pay monthly communication fees, and we may be able to provide our consumers with a more convenient communication environment. Of course, even today, Wi-Fi routers and Nintendo DS or Nintendo 3DS devices can be used together, but doing so today must rely upon consumers to execute the relevant contracts and pay several thousands of yen monthly. In the future, when we may be able to find a different structure, we will be able to offer services to the real mass audiences.
Be it “SpotPass” or “StreetPass” communications, how these new communication services can impact society varies depending on whether new hardware, like Nintendo 3DS, can show massive expansion in the market in a very short period of time or if it steadily but slowly penetrates into the market. In that sense, the launch sales will become critical. I have often talked about this, but any game platform needs the momentum in order to create a good sales cycle, so rapidly expanding new hardware will be important as a matter of course. For that matter, in addition to making the sufficient preparations ourselves, such as preparing for the applicable first-party software and services for the expansion of the hardware, Nintendo has been simultaneously considering how we can best collaborate with the software developers and publishers. Because a number of software creators are holding high expectations for Nintendo 3DS, more consumers will feel safe in deciding to purchase the hardware because they can expect a sound number of software titles to arrive at an early stage.”
Iwata on evergreen titles as well as launching “noble” software for Wii and Wii/DS momentum…
“First, about the Wii in this year-end, if my presentation left you with the impression that we are depending only on the evergreen titles (that we launched last year or before then), I should have explained it in a better way. As a matter of course, we have a number of new titles (that we will launch this year.) On the other hand, as many people say that each one of these new titles does not seem to sell in a volume that can be compared with the titles we launched a year ago, I wanted to explain in my presentation today that we want them to consider how the sales of such software a year ago are still continuing, without which the entire picture is hard to be seen. This is why I put a bit more emphasis on (the room for further sales of) the evergreen titles.
When it comes to concrete campaign and promotional activities, we have to refrain from elaborating on them before we actually carry them out. However, it is true that a number of major retailers, not just in Japan but around the world, are expecting the demand to significantly grow in the year-end for such gaming systems as Wii and Nintendo DS that are enjoyed by families, so we are receiving a variety of proposals from these retailers.
One reason why we are able to count on the year-end sales while the sales so far in this calendar year have not been so good is our review of the most recent situation. In October, certain retailers usually start their own, limited weekly-offer type of sales promotions, and they are starting such promotions in the U.S. and in Europe. Whether the consumers actually react to such limited weekly offers or not can tell us a lot and can be our sales indicator for the year-end. If they do not react with significant purchases, we will have to think that Wii and Nintendo DS have little more demand. On the other hand, if three times or even five times as much as the previous week’s sales are made as a result of such limited offers, we can conclude that our consumers are actually waiting for some incentives.
By now, we have come to notice that such special offers from retailers have prompted significant increases in the weekly sales, so we are interpreting the current situation as our consumers are patiently waiting, instead of interpreting it as diminishing demand (for Wii and Nintendo DS). I think this is how the difference in expectation can take place between when you estimate the November and December sales based upon the past years’ sales trend and when we forecast our sales in this fashion.
Next, let me address your question of whether or not we will be able to launch unique titles on Wii. Needless to say, Nintendo always wants to introduce you to unique titles and it has always been making efforts to create such titles. On the other hand, when it comes to unique titles, there is never 100% assurance that we can make software which will become the software which will receive massive support and appreciation from a wide range of our consumers. When we tackle with the actual development, many issues arise, which adds to the total development period. Also, when the software is unique, it is more challenging for us to communicate its appeal to consumers. Actually, the initial reaction to such titles should be, “Will it be really fun at all?” or “I just don’t get it.” So, we cannot afford to make the software too unique. Such titles as “nintendogs,” “Brain Training,” “Wii Fit” and “Wii Sports” were able to cross that hurdle in a short period of time. At Nintendo, we have not come to the stage where we need to give up on the developments of such unique titles at all. We do not feel that Wii has come to its limit.
This graph indicates the transitions of Nintendo DS and Wii users. As you can see, the number of DS users is not increasing significantly. Actually, it should be appropriate for me to say, “the number of Nintendo DS users is stable.” On the other hand, the number of Wii users is still growing. As we have the Japanese counterpart graph for this, I’d like to show it to you.
As we have been conducting the research for a longer period of time here, we have more graphs for the Japanese market. As you can see, Nintendo DS experienced explosive sales in the past, and since then, it has started to show decline but the actual number of Nintendo DS users is being maintained at a certain level. Having said that, in case of Wii, the number of users is constantly increasing. By looking at such graphs, we come to think, for example, we need to launch a device to succeed Nintendo DS in the near future while we have more room for expansion with Wii. We always look into how the number of our consumers is increasing, at which level it is being maintained and, because someday the number of consumers has to decline, how we can launch a successive system before the consumer base starts decreasing significantly. Having said that, however, we do not believe that we should apply any certain predetermined product lifecycle to this. When we conduct this type of survey semi-annually, we can clearly understand the fluctuations of our consumers’ interest in our platforms, so this must be one of the criteria for us to judge the transition to the next product.”
Iwata on Nintendo’s strategy for year-end sales, consumers holding off on DS purchases this holiday for 3DS, future development resources…
“Let me first discuss the consumers who are going to newly purchase Nintendo products at the end of this year. We already have large installed bases for both types of hardware. We have a number of evergreen titles. Apart from the new software titles, now that so many people have already purchased our products, who is going to be willing to newly purchase them? They can hardly be impulse purchasers. They must be the people who do not immediately purchase our products even if they start to have some interest in them. Or, they must be people who need some reason or trigger, such as peak shopping seasons or the influence of people surrounding them. A variety of things could be triggers, such as campaigns which give consumers the impression that, “this surely is a bargain.” Those who are patient enough to purchase products until they have some strong incentive are the consumers who can be described as the “late majority.” Your statement is probably true that the late majority will be the core audience for our hardware during the upcoming year-end sales season. I tell you this because a significant amount of our Wii and Nintendo DS systems have already been sold around the world.
So, how are we going to sell our products to these consumers? For one thing, our proposals must be simple and very easy to understand. We tend to think that more options are better. It is true that for those who are knowledgeable about something and who aggressively pursue relevant information, more information is better. On the other hand, I myself can relate to this sentiment, but when we do not have any particular interest in something, and if there are a number of options to choose from, it is difficult to actually select just one. It is often said in the world of behavioral economics that, with too many options, people tend not to make a selection and tend not to make a decision. For example, when we plan for a trip, as we open a travel pamphlet and notice that there are many options, it must be good for those who can afford to use sufficient energy for researching the best option, but for those who do not have time to choose, it becomes a challenge. Knowing afterward that we didn’t choose the best selection will make us feel very uncomfortable, so we cannot make an immediate decision.
Accordingly, conveying our message, “this is the software we can recommend to you,” in a way which is very easy for our potential consumers to understand, will be the key. This is not something Nintendo can achieve only by itself. Of course, Nintendo will run TV ads and encourage our consumers to recognize that we have various products for them. In addition, we must be able to advise consumers about where the product is available, and which retailers have the best offer. Going to that extent will become important. So, TV ads will be important as always, but our ability to collaborate with our retailers will be especially important.
On the other hand, you may have some concern that Nintendo 3DS may not sell well in 2011 if we put so much energy into selling our products to such late-majority people. I am not saying that there will be no overlap between those who will purchase Nintendo DS and Wii at the end of this year and those who will be quick to purchase Nintendo 3DS early next year, but I believe that the overlap will not be very big. After all, those who will kindly purchase Nintendo 3DS in the launch period will be the people who are interested in anything new on the market and who are always proactive in getting access to the relevant information and making the actual purchases. Because we will launch Nintendo 3DS in a period other than the peak sales season, not many of those who are willing to buy due to seasonality will participate in those initial purchases. In all, I believe we can approach different consumers in different ways.
As for your question on our capital investment, just as we have not disclosed the details of each capital investment in the past, please allow me to refrain from disclosing the details of our planned capital investment this time.
Finally, let me discuss your question on the allotment of our future development resources. If we focus only upon our efforts to create and launch very attractive and appealing software which can dictate the positive future of new hardware, it will become rather challenging to sell sufficient amounts of the hardware and make our business grow healthily. Still today, the fact that we definitely need a killer title, which can make our consumers feel like purchasing the hardware even only to play that title, is unchanged. However, launching such a killer title alone cannot solve all the issues today. For example, in addition to killer titles, we need to protect our hardware from illegal copies, we must prepare network services that can satisfy our consumers, and we must include some attractive features on the hardware so that consumers can enjoy the new platform even without purchasing any applicable software at all. Our consumers today have higher expectations of our new hardware and it must offer increased value for them. There is a gradual increase in the development work of things other than packaged software. About a decade ago, almost all the Nintendo development resources were spent on making killer software. Today, it is no more the case.
Having said that, however, not all of the Nintendo titles have been created only among our own internal developers. We have actually been collaborating with a number of outside companies to attempt a variety of different projects, and the total development power has significantly expanded in comparison to the past. So, at a time when we need to allocate our development resources to newly emerging fields, and when the development of the software has become more complex than before, how we can tackle the increasing needs of development resources internally at Nintendo and work together with outside companies in order to launch the new hardware have become important. Efficient allocation of development resources has become one of the managerial decisions with extremely high priority. Because timely decisions on effective allocation are required for us to launch appropriate products at appropriate times, I am personally paying special attention to this.”
Iwata on 3DS marketing opportunities in the U.S…
“You just mentioned that Nintendo DS had a hard time in the U.S. at the beginning, and it is true. By now, the U.S. sales of Nintendo DS have been outpacing those of Game Boy Advance in the U.S., but for some time at the beginning, Nintendo DS was selling at a much slower pace than Game Boy Advance did in its initial phase on the market. In the U.S., a number of people in this industry were wondering if Nintendo DS would ever be able to spread in the U.S. market at all.
My recognition about the Japanese market for Nintendo DS is, approximately half a year after the launch of Nintendo DS, we launched “nintendogs” and, then, “Brain Training,” and each of the two titles needed another six months on the market to gradually increase the sales and eventually to start to show explosive sales, just in time for the 2005 year-end sales season in Japan. However, at the end of 2005, we were yet to launch “Brain Training” in the U.S., and “nintendogs” had just hit the market in fall, so Nintendo DS was not able to make explosive sales there at that time. Because the company was late in launching key titles for Nintendo DS in the U.S., we could not simultaneously reproduce the Japanese situation there. For this time, we recognize the importance of creating a sound launch for Nintendo 3DS and making quick expansion.
To this end, it will become critical for us to provide hands-on experience opportunities for our consumers, although I do not know whether we will do a similar type of event as the Japanese one. The Japanese equivalent of “seeing is believing” can be perfectly applied to Nintendo 3DS. When it comes to holding hands-on opportunities for consumers, I can say that our marketing team at our U.S. subsidiary has the ability to handle them pretty well. I believe we will deploy such opportunities at the appropriate timing when we have concrete evidence that our consumers there will appreciate Nintendo 3DS if we can provide them with the opportunity to see the screen with their own eyes. For the sales spread of Wii, shopping mall tours worked well in the U.S. I think the expertise gained from these activities may become useful for Nintendo 3DS.”
Iwata/Genyo Takeda on why Nintendo is using the PICA200 chip with fixed shaders, how Nintendo found out about the 1T-SRAM chip, using the chip for software development, and IC chips…
“Because the questions this time are rather technical, I think I will need to supplement for the majority of you today as to what “fixed shaders” and “programmable shaders” are.
Each 3D computer graphics hardware system includes a circuit called a “shader.” So, what does this shader do? In short, it is circuitry to shade the pictures. When a 3D object receives light, the part which receives the light becomes brighter and the other side without the light becomes darker and, partially with that effect, we human beings can recognize its 3D nature. Ever since approximately 15 years ago, when computer graphics were available for the first time in video games, significant progress has been made in how to realize that kind of visual effect even though, at the very beginning, what it could offer was rather primitive. In the last decade, “programmable shaders” have started to spread in the developers’ community. With programmable shaders, software developers can send to the hardware the programs to dictate which shading should be realized. On the other hand, Nintendo has adopted for Nintendo 3DS a different approach from the programmable shaders that are commonly used today. More specifically, even though there are various shading methods available with programmable shaders, because there are certain sets of typical combinations the developers are using, we have made it (the hardware) so that we can offer the Nintendo 3DS developers this method or various alternatives from the start. I understand that the person with this question called this technology “fixed shaders.” So, the question was, why we have decided to choose such an approach, what the advantage is and what the disadvantage is. I’d like to ask Mr. Takeda to answer this first.” – Iwata
“As for the reason we chose fixed shaders this time, I was not directly involved in that particular process, but my understanding is that the company has chosen the most appropriate methods for the appropriate areas, so it is not a case of one method being generally better or worse than another.
In designing a handheld game device, power consumption is one of the biggest factors to consider. Naturally, the designers have to make efforts to lower the power consumption. The advantage of handheld devices is that they do not require such high-end resolution like that of home TV sets. The users are going to look at the lower resolution screens at closer distances from their eyes. When the company considers this and other factors comprehensively, just as Iwata mentioned just before, the question is whether we should make it perfectly flexible or would it be better for us to focus upon the methods which are expected to be used most often. When we conduct a comprehensive review, we also need to take into consideration such factors as software development costs and many other things. My understanding is that the company has concluded, after reviewing everything comprehensively, that fixed shaders are the most appropriate choice for this handheld device.” – Genyo Takeda
“I believe Mr. Takeda’s explanation has already summed up almost everything. From the software developers’ point of view, we need stable performance to be yielded from the hardware. A long time ago, when we were making software for Famicom (Nintendo Entertainment System), the hardware took care of almost everything automatically, so we were able to anticipate very stable performance. Of course, there were always other limitations, though. Based upon such experiences as well, rather than following suit with what other companies are doing in general, we thought that Nintendo could go its own way. Such a philosophical aspect was also there when we made this selection, but the primary reason was the anticipated stable performance.” – Miyamoto
“I was personally involved in that specific decision making process. After receiving the proposal, I personally thought that it was the right choice because it had the right balance between power consumption and graphical capability. I don’t know if this method will be the best choice forever, but as of now, I have concluded that it’s a very well-balanced method. You just referred to one of the “Iwata Asks” articles. When the developers said that they had hard times in order to get the expected performance, it actually has something to do with what Mr. Miyamoto said right now, namely, he prefers to have a machine which can yield stable performance. This is something both Mr. Miyamoto and I had a challenging time with as software developers, so maybe this is not a pleasing subject for Mr. Takeda, but we did experience a lot of hardships when working on Nintendo 64. When we were working on Famicom (Nintendo Entertainment System) and Super Famicom (Super NES), basically, whatever was promised in the hardware spec sheets could actually be done. However, since Nintendo 64, the concept of hardware has drastically changed to, “the software developers can do anything as they like, but the total amount of the work the hardware can execute is limited.” In other words, we were told, “you are free to choose the allotments of the total performance.” We, the software developers, are always greedy when it comes to the game ideas we want to realize. We tend to make every possible effort, here, there and everywhere. And then, after we have incorporated everything, we find that the software does not work. When just one designer, be it Mr. Miyamoto, me or someone else, did some extra effort in order to make slightly better graphics, the total frame rate greatly decreased. Such things happened, and we had a hard time dealing with them. The biggest trouble with Nintendo 64 was, when something unexpected happened, we could not tell why it had happened. At one time, the system was working just fine, but at some other time, the anticipated performance could not be generated. When we happened to be able to make it right, it was very quick, say, something like a tuned-up sports car, which could not show its maximum performance otherwise. That lesson we learned from Nintendo 64 was taken into consideration when we designed Nintendo GameCube, and the learning through the development of this hardware was there when we designed Wii. The developers have been able to take advantage of the performance of Wii for such a long period of time since it was launched, and this fact must have something to do with how Mr. Takeda and the other hardware developers have made the most of the experiences and expertise they have learned from Nintendo 64, and Nintendo, as an organization, has recognized the importance of a machine for which software developers can always expect stable performance from the hardware.
So, please understand this as a sort of background for what you read in “Iwata Asks” about the hardship the software developers experienced on Nintendo 64. As for your question on the choice between programmable shaders and fixed shaders, almost everything fixed shaders can do can also be done by programmable shaders. On the contrary, fixed shaders cannot do all the things which programmable shaders can do. Please consider it this way: among the myriads of possible things that programmable shaders can do, fixed shaders have chosen the functions that are expected to be used most often, and the hardware will offer these functions. Fixed shaders have certain limits in their graphical representation capability, but if you ask me, “will they be too restrictive?”, I should say that all the functions anticipated to actually be used are there, so I can’t find any inferiority. Many of you have already seen with your own eyes the graphics on Nintendo 3DS into which the developers have poured a lot of their energy, but I don’t think you have ever been dissatisfied with the visual quality. With that and other factors, such as taking the most appropriate balance between the power consumption and the entire performance, we have chosen this method for this time. Thank you for your understanding.” – Iwata
“We do not have any particular know-how to find such IC chips. However, increasingly, we have the opportunity to be able to communicate with a number of people inside and outside of Japan. Recently, there are increasing opportunities to talk with European people as well. Nintendo itself is not such a company (which designs and produces IC chips), so we have the advantage that we are able to openly discuss anything with anyone. In the case of larger entities, some part of its operations often have business conflicts with some IC chip companies, but in the case of Nintendo, due partially to its uniqueness, no IC chip companies see us as a competitor. So, we are leveraging upon such a unique position we have and we are always able to discuss relevant deals with anyone in the world. This is the general answer I can make.” – Takeda
“Maybe, what Mr. Takeda told you right now is one of the unknown strengths of Nintendo. For example, those who originally designed acceleration sensors probably did not imagine in the beginning that Wii Remote, with its acceleration sensor, would spread all around the world in such a massive volume and that other devices are now adopting the same technology. Acceleration sensors were not originally designed for remote controllers. So, from the view points of designers and makers of such technologies, Nintendo can be seen as a company which has the potential to make use of their technologies and the resulted products may generate huge global demand, which may even further expand the use of their technologies if Nintendo does it right. I sometimes discuss this with Mr. Takeda, but Nintendo can be regarded as a unique company because many others expect something unexpected from us all the time and, as a result, many other companies are approaching us with a variety of proposals. The ability to be a good judge plays a very important role here.
Sometime ago in the Operational Briefing, I discussed the importance of being able to anticipate the number of units each software title can sell. For the hardware, the ability to be able to tell whether or not certain technology has the potential to support the needs of the company becomes important. The last time when we thought we made the right selection was probably when we adopted 1T-SRAM. When a technology has not been proven in the marketplace yet, we need to review and conclude if it will work for us in the future. As we actually adopt such technologies, more and more companies become willing to offer their latest technologies to us by thinking, “Now that we have invented this new technology, there is a possibility that Nintendo would be able to make use of it for use in the mass market and, thereby, greatly expand the demand for our technology.” As we can create such a stream, one of the very important jobs for us developers today must be to be a good judge” – Iwata
Iwata on how much he’s willing to spend on Wii hardware, getting more Wii owners on board, and more…
“The so-called late-majority consumers are the ones to whom it is challenging to sell products to even when they have some interest in the subject products and, in the world of general marketing, in order to sell products to the late-majority consumers, it is said that we cannot use an effective marketing approach, that we need to spend additional costs, that we need to take extra time, that we need to repeatedly dispatch messages for them to increase their awareness and that, in the end, at the retail outlets, we need to encourage them to make the final step forward to purchase the products. As one of the reasons why we are saying that we can expect to sell our products to such consumers in the upcoming year-end sales season, I explained about the early indications of how they would positively react to the attractive offers from the retailers. In addition, we believe that “family agreement” will play an important role in their purchase decision making process at home.
As I have often said in the past, we have an indicator called “number of users per household,” which shows an average of how many people inside a household, which owns a game machine, are actually using the hardware. For years, we have been surveying this figure. Until Wii, there used to be no game machine which was able to have three or more users per household on average. However, this hardware (Wii) has been able to keep three or more users constantly since its launch. The average users per household includes the households of single people, so when the average number per household is three or more, it means, in the case of four-person households, everyone plays with the hardware at a substantial number of these subject households. Otherwise, the average user number could not exceed three. When we compare our numbers with that for other companies’ platforms, there are clear differences. When one member of a family purchases and returns home with a new video game system, whether the entire family will welcome the purchase or if just a few of the members, if any, are expected to appreciate it will become a critical factor for the consumers who are hesitant in making a purchase decision, I believe.
Christmas is very important season in the U.S. and in Europe. High priority is put on sharing common time and joy among the family then. For ordinary products, the need for additional costs and extra promotional activities are regarded as a must in order to sell them to the late majority. But our belief for our products is that we may be able to sell our products as long as we have been able to lay out a situation where our consumers can remember our products and can make the final purchase decision when the appropriate time comes. We are not thinking that we will need to mark down our products by the end of this year in order to achieve our sales forecasts. Of course, I’m not saying that the company will never change the price of its products. I’m just saying that we have no such plan in the near future.
As for your question of the expected sales level for this year-end, and first about your comment that “New Super Mario Bros. Wii” drove our 2009 sales, while I share the same impression that the title greatly contributed to our sales in Japan, when we saw the U.S. and Europe, I do not think “New Super Mario Bros. Wii” alone was driving Wii hardware sales in those regions. Actually, several different factors were intertwined, and as we were increasing the number of reasons and incentives for consumers to purchase Wii, when a certain threshold was reached, the consumers made moves. As the consumers become more patient, that threshold level increases a little too.
So, Nintendo has been trying to go beyond that threshold by adding to the number of evergreen titles such new titles as “Donkey Kong Country Returns” that will be launched this year and such endeavors as our collaboration in retailers’ campaigns, not to mention the Super Mario Bros. 25th Anniversary Campaign and the launches of new dedicated hardware. If we can successfully pile up each one of these different incentives, the number of consumers who are willing to cross the final hurdle should be near the 2009 level even if it cannot actually reach the 2009 level. We cannot guarantee specific numbers for the future, but this is how we see the market today.”
