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Details from Nintendo’s 76th Annual General Meeting of Shareholders

Posted on June 28, 2016 by (@NE_Brian) in 3DS, General Nintendo, Mobile, News, Switch, Wii U

Update: All finished! You can get caught up on the full recap below.


Nintendo’s 76th Annual General Meeting of Shareholders is about to begin. NStyles appears to be in attendance and Cheesemeister will be translating, so we should be getting information from the event as it happens.

The meeting will kick off at 9 PM ET / 6 PM PT. We’ll start posting tidbits around then.

– A Mario towel, Pikachu cookies, and room-temperature green tea given to attendees

nintendo-meeting-gifts

– From left: Umeyama, Mitamura, Ueda, Mizutani, Shigeyuki Takahashi, Kimishima, Takeda, Miyamoto, Shinya Takahashi, Yamato, Tanaka
– 20 minutes before it began, the seats were about 30% filled (can hold 1,000); up to 60% around 10 minutes before start time
– About to start; all of the directors have entered
– Nintendo president Tatsumi Kimishima greets the audience
– Auditor Minoru Ueda makes a report

Report

– The 76th annual report is not being read by president Kimishima, but rather a recorded narration is being played with slides
– There were no big 3DS hit titles, so sales were low
– Splatoon, Mario Maker, Twilight Princess HD did well
– amiibo hit 24.7 million units
– Download sales totaled 43.9 billion yen
– Miitomo got off to a good start
– Operating income recovered, but losses due to the strong yen reduced ordinary and net income
– Assets: 1 trillion, 296.9 billion yen; net assets minus liabilities equal 1 trillion, 160.9 billion yen, down 6.6b yen from last
– Issues to address. Up to now, the goal has been to expand the gaming population irregardless of age, gender, or experience. Now, the focus is to increase the population exposed to Nintendo IPs.
– Pokemon Sun/Moon 3DS due out worldwide in November, with many other Nintendo, strong 3rd-party titles to be released
– The aim with 3DS is to make the platform active again
– NX reconfirmed for worldwide launch in March 2017; the dedicated game machine business will continue to be core
– amiibo and download businesses will continue to receive focus
– Fire Emblem and Animal Crossing come to smart devices this fall
– Focusing on My Nintendo, we want to create synergy between the dedicated game machine and smart device businesses
– Nintendo IP will be used in theme parks, character goods, and film contents
– Nintendo said the Wii U would continue to fight on, but only Zelda is coming next year

– The resolutions that were voted upon are explained (these can be found online already)
– There are 6 resolutions this year

Q&A

Q1. I’ve held shares for 20 years. I want to protest the board of directors being all-male. Remember half of the market is female. Also, I don’t use a PC, and I’d like the opinions of those kinds of shareholders to be taken into account.

A1. Kimishima: We don’t have any females [on the board]. For foreigners, Reggie is an operating officer. There are many female employees, and their opinions are applied in product development. It’s important that we continue taking their opinions in dev.

Q2. Looking at the balance sheet, I think this is a very good company, but the stock price is low and needs to be increased. For example, focusing on VR, developing software for elders to exercise and prevent dementia, and other various types of efforts. I would also like a young director to be appointed.

A2. Kimishima: Other companies’ VR presentations at E3 became a topic of discussion. It has captured customers’ interest, and while we’re researching it, we don’t have anything concrete to discuss now. To increase the stock price, we’re utilizing our IP, researching QOL, preparing the NX, and taking on many such challenges.

Q3. It’s been reported that Great Britain is leaving the EU. Does this affect Nintendo, and if so, what are you doing about it?

Kimishima: Financial markets are in turmoil. For now, the yen is strengthening, causing our foreign assets to fall. We have Nintendo UK, and safety standards and personal information regulations from the EU may change under the UK. We’re watching the situation and making preparations.

Q4. About last year’s leadership change. Last July, Iwata-san passed away and in September, President Kimishima succeeded him. There was a problem with not having a president for 2 months. I want to know why that was. What will happen to [Iwata] Asks? Many people are demanding action games as smartphone applications, so will you release a physical controller?

Kimishima: In regards to [Iwata] Asks, I don’t come from a game dev. background, so if I ask, it wouldn’t be interesting. Former president Iwata entered the hospital before passing away and directed Takeda, Miyamoto, and I at that point. However, he didn’t expect to pass away so soon, so we needed time to decide upon the following organization and direction.

Miyamoto: Thank you for the last question. About Iwata Asks, even he said, “It’s gotten in a rut.” For now, we want to continue with Morimoto. We will do lots of new things. There being no female directors was criticized, but I think their contributions as development staff are world-class.

Shinya Takahashi: There are certainly physical controllers for smart devices, but Nintendo wants to make action games w/out them.

Q5. Miitomo is doing well, but I’d like to hear your response to providing contents to other companies’ platforms.

A5. Kimishima: I think we’re still working to resolve the initial challenges with smart devices. We’ll have 5 titles by March. Any IP may be utilized to the maximum extent.

Shinya Takahashi: As for releasing on platforms other than Nintendo’s, it’s a bigger deal to deliver worldwide to places where our platforms haven’t reached and to different age groups in each country.

Q6. Until now, the president has delivered the annual report directly, but this year was an audiovisual presentation. I want to know how much effort the president is putting into Nintendo

A6. Kimishima: This may be difficult to hear, but I’m going through trial-and-error. It may be better for me to report myself so I’ll take it into consideration.

Q7. The marketing budget is being revisited and the balance of payments corrected, but I get the feeling that new product news is declining.

A7. Kimishima: We revisited the marketing budget in accordance with sales figures. As a result, we’ve saved versus 2-3 years ago. It’s not good to just make budget cuts, so we’re trying various media and methods other than TV commercials. We have to use the right timing to reach those who don’t always follow us. For each customer segment, we want to improve by creating a detailed market plan to reach them.

Q8. There was a change to the articles of corporation to add “manufacturing and sales of medical devices.” Please explain.

A8. Kimishima: This is related to QOL devices, but it was added in anticipation of future business expansion.

Q9. When the Wii U added HD support, there were development issues and software shortages. Will the organization avoid the same problems when investing in new technologies like VR? How is NX development structured? (Note: NX question was unclear)

A9. Kimishima: I understand your question as being about my speaking negatively about the Wii U. Some said that the Wii U would sell because the Wii was selling. However, I said that if the Wii was selling, getting users enjoying the Wii to switch would be a hard sell.

Miyamoto: At the time, we sold a game machine with the GamePad for 30,000 yen. However, we faced difficulty from other companies releasing many tablets at low prices.

Miyamoto: We talked about the new Zelda for Wii U and NX at E3. I’d like you to watch this video from the floor. (The screen shows a video from E3.) Reggie: What we can show you now is only a part, but when it’s released next year, you’ll be able to fully enjoy it. (That’s from the video. Reggie isn’t actually at the meeting.) Breath of the Wild had long lines.

Shinya Takahashi: This is a video from day 3 of E3. Many people came to play Zelda. Normally, day 3 isn’t this crowded. Tickets ran out right away. Many people have high expectations for the game. We’re also working hard on the NX version.

Miyamoto: The Legend of Zelda turns 30 this year and has many fans in the west. We’re considering how to get Zelda out of its rut. We’re calling it “open air.” Creating realism with physics, you can go to the far-off mountains without cutting away. You’ll be able to have the same experience on the NX. Normally we would’ve shown the #NX at #E3, but we didn’t. We’re worried about imitators if we release info too early. This year, we only had Zelda on display. As it’s not a game for short play sessions, it was playable for 30 minutes. It was rated as E3 Game of the Show by game magazines.

Miyamoto: I heard VR was a hot topic at E3, so I went to check it out. It was on display, but it wasn’t what I expected. We’re also researching VR, so we have the core technology. Long play sessions are an issue. We want to release something that can be played for long periods, carries value, and is affordable. We want parents to feel at ease.

Miyamoto: Peoples’ reactions at E3 were good, but… (Redacted as Miyamoto said that this is for here only, not the web.)

Q10. There are many questions for game fans, so I’d like you to answer this 2-part question, first about the balance of payments and then if you could answer the 2nd part in a game-related question session. (The audience laughs.)

A10. Two meetings ago, I said that the investors’ meetings are an important place for communication. Investor-related questions are a given, but an opportunity for those [game-related] questions is also needed. We’ll consider making such an opportunity.

Q11: About NX manufacturing, I hear that labor costs in China are rising and that robotic assembly is increasing. While going to fabless contract manufacturing, I want to know how you will keep costs down going forward.

Hirokazu Shinshi: I’m in charge of manufacturing. Labor costs have shot up in the last 10 years in China and across ASEAN nations. Manufacturing automation has long been practiced in Japan, and is now done in China. While making the same product for a long time, the amount manufactured changes based on things like the Christmas season. It’s easy to automate unchanging production amounts, but it’s difficult when they do change. We’re thoroughly communicating with our partners to make adjustments. As for the NX, manufacturing is being prepped. We’re considering how much to automate.

Q12. About utilizing your IPs, I saw a report that you’ll be making movies. What will you do about not just money, but people? Miyamoto-san may be motivated to make movies, but how will human resources be divided among games, theme parks, etc.?

A12. Kimishima: We’re in discussions with a partner to work on films together. People are a valuable resource; each needs to be trained, and the relationships with our external partners are also important.

Miyamoto: I’m Miyamoto, and I’m motivated to make movies. (The audience laughs.) Film is an interesting field, and are needed to help make Nintendo’s IPs unforgettable. The characters used only by Nintendo are precious across the world. For films we aren’t ready to talk about it yet, but we haven’t said that we’re making movies. We made short movies for Pikmin and Star Fox, but those were made mostly externally, and it was just me from Nintendo. For theme parks, we’re cooperating with Universal Studios. It’ll take some time before there are results, but please look forward.

Kimishima: We’re cooperating with DeNA on smart devices. While launching new projects, we’ll continue working with partners.

Q13. I’m a fan of President Yamauchi, that is to say, a believer. Nintendo is different from others in valuing uniqueness, but won’t there be any side-effects in working with DeNA and others?

A13. Kimishima: The spirit of uniqueness is built into our business direction. In tying up with DeNA, they support delivering our uniqueness to customers with their analysis of customer reactions and know-how.

Q14. The Wii U is essentially being retired and the 3DS is past its peak, but aren’t your business forecasts unrealistic? Will they not be revised downward? Please break it down as basically as possible.

A14. Kimishima: 3DS sales have passed 58m. We can profit by delivering software to this base. We believe Pokemon will do so. We believe smart device titles will be profitable. We’re cautious about British EU exit effects, which may affect sales and profits if the yen continues to be strong.

Q15. I believe that the game industry’s biggest problems are increasing development costs and the length of development. I’d like to hear from each director what their approach to this is.

Kimishima: Certainly, development costs have increased in the last 10 years. Let’s have each director answer.

Takeda: We’re using increases in productivity to make an appeal with the greatness of games instead of [hardware] performance.

Miyamoto: Breath of the Wild has over 100 staff, and over 300 people in the credits, spending over 5 years. Our current efforts will be helpful in the next production. The costs will be recovered by selling in large volumes, passing 2m sales. A game is a hit in the domestic market if it reaches 300k sales, but we’re targeting worldwide sales. Reviews on the Internet get around. Details get pointed out, so our staff is working more than is required.

Shinya Takahashi: By using resources made for Zelda on other software, we can make many compact titles. The last Brain Training sold a lot with small resources. We’re doing lots of things to reduce development times like reusing game engines.

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