A Summary Of Nintendo’s Investor Q&A

By Ishaan . November 15, 2009 . 1:20pm

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I can’t imagine their recent earnings briefing and subsequent investor Q&A having been much fun for Nintendo staff. Profits were down, the media had been snapping at their heels, and for the first time in a long while, they were facing genuine competition in the portable games space from the iPhone. Naturally, investors had questions they wanted answered, and unsurprisingly, this year, they seemed more aggressive than in the past.

 

The Q&A began with investors asking relatively mild questions about the company’s future products, both in the hardware and software space. One investor was keen to know what genres Nintendo were focusing on internally, while another asked for an update on Zelda Wii and the Vitality Sensor. As you’d expect, both questions were neatly sidestepped; managing director, Miyamoto threw out a vague hint about a potential "Nintencats" game and pointed to Spirit Tracks as the Zelda game people needed to keep an eye on, while company president Iwata said to expect more information on the Vitality Sensor next year, stating that he hoped to further explore the idea behind Wii Fit using the device.

 

Next, a quick mention was made of Nintendo’s stock and lowering the unit exchange to make buying stock easier for fans and investors. To this, Iwata replied that the company was currently exploring the idea of revising the unit of exchange. The discussion then switched gears to focus on the crux of the problem — the increasing cost of game development and the problems faced by Japanese developers while trying to maintain their profit margins. While a high-definition Wii and facilitating ease of development were both touched upon as part of the consumer satisfaction / cost-balancing debate, the real elephant in the room was the inability of software developers to sell enough units of software to turn a profit.

 

"Aside from how we develop a new software, there is the point in asking how we market the software. In terms of our relationship with the third party partners, that aspect is becoming increasingly important. The number of opportunity when I discuss this with [General Manager, Marketing Division] Mr. Hatano internally within our headquarters is increasing lately." said president Satoru Iwata. Shinji Hatano then followed up with his own two cents on the publisher’s increased focus on third-party co-operation, citing Dragon Quest IX as an example of a game that Nintendo’s team would help promote overseas.

 

Going forward, things only got more heated up as investors remained unconvinced of the company’s ability to maintain a steady stream of hit software. One investor said, "Even after your presentation, I cannot completely understand how you are going to learn from the past mistakes and what you will change and how. I agree that it is impossible to make every single game you develop the great success, and I do not think that the mistake that was made was detrimental. However, when I think about the examples of Facebook application, surge of iPhone, motion sensor introduced by Sony and Microsoft at the E3 show and other changes in competitive landscape, I have the impression that you are one step behind in taking such countermeasures as the following markdown of Wii, if I can be rather blunt."

 

Iwata conceded to this point and followed up with his thoughts on allotting resources for development.

 

"Naturally, I understand that there are such criticisms that Nintendo was late in addressing various issues. However, I also have to analyze if the company really owns enough resources in order to take the first move in any and all the fields. Since Nintendo does not have very many employees, we have to focus upon the things which we are good at. If we had to take measures and countermeasures in any and all the possible business fields, our resources could be dispersed very quickly and easily. Rather, my job is to find out the potentials in something that others could not find a possibility, to secretly pour the resources into them and to realize the situation that the products have already become great hits before no one else know. If we can realize such a situation at or above a certain level, the company can be publicly appreciated. If not, people would look back and say, ‘It was certainly a turning point for the company.’"

 

He went on to state that he couldn’t understand why people would feel Nintendo had "lost its edge" after the reveal of Natal and the Sony wand, nor why the media constantly tried to position the DS as having lost to the iPhone, when penetration of the device has actually been growing. The Q&A concluded with a discussion of portable game services, which you can read more about in a separate report.

 

For those interested, you can read the entire Q&A transcript here. Please note that any grammatical or punctuation errors in the report were present in the original translation as well.


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  • http://meikiyou.deviantart.com meikiyou

    very interesting but they could try to establishes new IP WW so they have something to launch while we wait for the BIG IPs…
    NoA isn’t very appealing on publishing NoJ games…

  • Joanna

    Kind of see Iwata’s point. If Nintendo tried to counteract every little thing, it would spread itself much too thinly. All Nintendo has to do is continue developing the DS’s and Wii’s successor, and quality games for both systems in the mean time. After all software moves hardware.

    Yeah, I don’t see how anyone could be saying the DS lost to iPhone. For one, people who buy an iPhone do not necessarily do so for gaming, so Nintendo would not appeal to these consumers. And if they buy an iPhone expecting it to be a decent portable gaming device…well they are in for some surprises. The only good game on the iPhone are ROMs of Nintendo games, ironic no?

  • Tokyo Guy

    Hmm. A few comments on this. First off, I love how Nintendo is acting like this 3rd party issue is just now a problem. As if it hasn’t existed since the Nintendo 64 days. Their consoles have consistently been sold for their products, with consumers buying some 3rd party software on occasion. Personally, I feel this lies in the game quality/genres made for Nintendo’s consoles versus the competition’s.

    Though I don’t really know if Nintendo is entirely to blame for this problem. So many 3rd party developers are equally as guilty of their lost profits, namely because they make crap games and ignorantly think the masses will buy them. Seems to me that, if developers spent the same time and effort Nintendo spends on their 1st party games, then maybe more people would buy the 3rd party software as well. But poorly converted multi-console ports, poor control, gimmicky features, and a total lack of creativity don’t really make money.

    I am a bit disappointed though, that Nintendo has truly entered a new era, and an era that no longer cares about the “real” gamer. Considering how successful the Wii and DS has been with non-gaming consumers, I think Nintendo will continue to shun those who made it what it is today in favor of the money-making market.

    On a final note, exactly what is the big deal if sales of the Wii and DS are down? Honestly, could they remain that high forever? People have some truly unrealistic expectations.

    • sd28

      I am a bit disappointed though, that Nintendo has truly entered a new era, and an era that no longer cares about the “real” gamer.

      please explain this as so far its the biggest load of crap i ve ever heard

      • http://twitter.com/matty_125 matty

        Did you read the other article where Reggie Fils-Aime, NoA president, mentioned about Apple and such being part of their competition? Not that it has much weight now (and seeing how this is Reggie stating this here), it at least shows where it could be heading eventually.

        Personally, I’m loving the Wii games and not seeing what “real” or “hardcore” gamers are really asking for other than improved online multiplayer and FPSs – there’s some really great stuff here even for the old (not just older) fans.

        That said, seeing Nintendo wanting to branch out business-wise makes a lot of sense, but unlike Sony and Mircrosoft, seeing them focus on other matters other than games (something they’ve been criticized a lot for recently) really does seem like new era is approaching (just look how people are pointing out Natal and the iPhone in this article. Seems like prodding Nintendo to do *something* and Big N is just going “lol wut? n e wayz…”. I understand, it’s difficult to tackle head on). Probably not a bad thing, I don’t know, but we’ll see what happens in the next couple years. The gaming landscape could be a bit different.

        • sd28

          well you pretty much mirror my own thoughts as most of the time i dont understand most of this whining and real gamer crap but the thing is most people take what they say as you mentioned as lol wut? n e wayz…”. where as to me it seems more like “were working on it but were not telling you until its ready” as is the case with the wiiware demos that came out rather quickly after the announcement that they were working on it .

          i only say this since Ninty loves to be secretive and denies any thing until they are ready or forced to say some thing in the end we dont know know much of any thing so proclamations such as real games aren’t being made just sounds like crap they made up because of this .

        • Joanna

          I don’t know, what do you expect them to do about Natal? after all Natal was a response to the Wii. All that Nintendo can do is make a better successor and chances are they are on it.

          iPhone. again Nindento did respond with DSi/DSWare, but it would be crazy to expect Nintendo to produce a phone. Iwata said he was not interested in billing the consumer’s monthly and I think that is smart. If I want a phone, I’ll buy one, I don’t need my handheld to do that for me. That’s also the reason I don’t like MMOs, I pay the retail and then monthly installment?! It’s crazy!

          • Tokyo Guy

            Well the other problem with Apple-related products is that the prices are very low, and in addition to games there are thousands of other types of applications as well. Personally I’ve been surprised by the sheer quality of some of the App Store games, many of them worthy of being formal console releases. Sure the DSi Ware games are a good way to compete, but from the lot I’ve played, the quality just isn’t on par with the App Store, nor is there anywhere near the variety. But its not just Nintendo who is having this problem, many of the mobile companies are as well (Nokia for example) and companies like Palm with their Palm Pre, or Microsoft with Windows Mobile.

        • Tokyo Guy

          Well I consider myself a “hardcore” gamer, but don’t care for FPS and such. The comment was more directed to the Nintendo platform itself, as well as Nintendo specifically. Nintendo has always put out only so many games for each console, some mainstream some not. But its the 3rd party companies that also adopt their software to the market.

      • Tokyo Guy

        Ah, allow me to explain what I meant.Essentially, from the launch of the Nintendo 64 to the launch of the Wii, Nintendo had been in a rut, of sorts. It was always second to Sony (or at times even relegated to third with MS). Although it released games like Pikman, the company was largely committed to the core gaming audience that made it what it was then.With the release of the DS and Wii, however, Nintendo’s market fundamentally shifted. Instead of catering to the core gaming market, it began to focus on the “non-gamer” that had taken interest in its products. My comment was that, from the Wii/DS onwards, Nintendo is PERMANENTLY “responsible” for this new market. Anything and everything it now does will be scrutinized and assessed in comparison with its decisions during this era, and more specifically all of the new consumers it created. So, if Nintendo decides to move back to traditional gaming conventions (i.e. a single screen “DS” 2) or stop putting out so many “alternative” games, suddenly there will be an outrage from the casual-gamer. Well, not so much an outrage as they just won’t buy anything, which then will filter to the investors and company performance. Heck, there was a comment made recently about how game sales in the USA are down significantly for October, and (IIRC) the CEO of Activision was suggesting that the problem is many of the casual “non-gamers” just aren’t buying as much.Think of it this way; you have trade newspaper that has been reporting on specific things for years. Then all of a sudden it has a HUGE story and everyone takes note. But then the new readers continue to read the paper, but the paper must now change to meet the needs of the mainstream reader; it can’t focus as much on the original niche.

        Or, to boil it all down: everyone is going to be MUCH more critical of Nintendo from now on,primairly because of how successful it was this console-era.

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