Iwata on expanding into new markets
Nintendo president Satoru Iwata was asked to comment on the company’s approach when it comes to expanding into new markets such as China. Here’s how he responded:
To begin with, I have said this repeatedly about China, but when we have made comments outside China, the process of translating my statements into English and then into the Chinese languages alters the nuance of these statements and my words have been misunderstood. So, I’m not going to talk about our plans for China in specific terms today, because we feel it would be better to announce them in China. We are considering all kinds of things, and it is worth noting that the video game business can be conducted in China officially, thanks to the establishment of the special economic zone in Shanghai, so we are currently researching what would be best for us.
Furthermore, with regard to new markets, our approach used to be one of localizing products that had been successful in Japan, the U.S. or Europe. We achieved a certain level of results by slightly reducing costs when localizing products for release, and by having a “perhaps people in new markets would also buy this” approach. However, it is not easy to reduce the cost price of video game systems, and one of the limitations of doing things this way is that it would only result in games being bought by wealthy consumers in new markets, or by extremely enthusiastic game fans who would devote a very large percentage of their income to buying games. We understand that our investors are interested in how we will expand into new markets because they feel that Nintendo should appeal to a broad range of consumers and that with Nintendo DS and Wii, the company has been able to dramatically expand the user population, from very avid game fans through to casual users. However, I do not think that our old approach would be successful in new markets.
About two years ago, I read a book called “Reverse Innovation,” written by a person called Vijay Govindarajan, which made me realize that simply carrying on our old approach without change would not result in big business, nor would it signify that we had truly blazed a trail in the new markets. Recently, I said that we were thinking about how Nintendo could make practical use of smart devices in its video game platforms. For example, Nintendo could use smart devices to make connections with consumers and direct them to our video game systems. We believe that our new approach for new markets will be based on how we can bring new things to these markets while making connections with new consumers through smart devices, rather than merely localizing the same things that we offer in developed nations. There are various opinions on when and where we should actually start our new approach and what kinds of products should be involved, but there is no benefit to be gained from leaving too much time between a statement from me and actual development, so this is all that I would like to say on the subject today. Thank you.
