Following the information we got from Nintendo’s latest financial briefing we got last week, the company has provided us with more from their investor briefing Q&A with president Tatsumi Kimishima.
Here are some key Q&As about the NX and the Nintendo president’s take on software lineup, and more:
For the fiscal year ending March 2017, projected sales of Wii U hardware is set quite low, due in part to the timing of the launch of NX (development code name for the new-concept dedicated video game system currently under development). During this planning stage, what was the thinking about the effect on the Nintendo 3DS system?
Tatsumi Kimishima (President):By setting the projected sales of Wii U hardware for the fiscal year to 800,000 units, we do not see that there would be any negative effect on the Nintendo 3DS business. We have major titles for Nintendo 3DS for the fiscal year ending March 2017, as I mentioned in the presentation, and there is a solid lineup of titles. That should greatly contribute to the sale of both the hardware and the software. The positive aspect of lowering the projected sales of Wii U hardware to 800,000 units is that it allows us to focus on the Nintendo 3DS system.
I understand that details of NX will not be announced today. However, I would like to ask about the effect of NX in terms of performance in the fiscal year ending in March 2017. There were times in the past when sale of hardware at launch suffered due to the lack of a sufficient number of titles. Can you promise that the launch of NX will be accompanied by a solid lineup of games? We also have the case of Wii U hardware, which was sold at a loss at launch. I would like to know what you are thinking about the cost of NX in terms of analyzing performance for the fiscal year in which NX is launched.
We will introduce NX concepts and details at another time, so I will restrict my answer to the question asked. You are correct about needing a solid lineup of software. One of the reasons for choosing the launch timing that we did is so that the software lineup will be ready in time for the hardware launch. Not only at launch, but we also need to be able to continuously release titles after launch. We are planning for this to be a platform that consumers can enjoy for a long time.
Next, about how we are looking at cost, we are not thinking of launching the hardware at a loss. When Wii U was launched, the yen was very strong. I am assuming that situation will not repeat itself. Selling at a loss at launch would not support the business, so we are keeping that mind in developing NX.
Though enriching software has been given as a reason for launching NX in March, 2017, when thinking about how long it takes to develop software, there would not be any real objections to missing the year-end sales. I recall that at a past Corporate Management Policy Briefing, when the Nintendo GameCube launch was set for September, former President Yamauchi said that it is extremely important not to miss the year-end sales, and I think that former President Iwata also said that it was a big problem when the Nintendo 3DS launched in February and missed the Christmas sales. Since you took over, Mr. Kimishima, both Miitomo and now NX will miss the year-end, which gives the impression that Nintendo’s way of thinking about the future has changed quite a bit. So why will NX launch in March? Has Nintendo’s approach changed?
There has been no change in our way of thinking about launch times. We believe that when launching hardware, the amount of quality software for consumers to play that is available at launch is important, and that we ought to determine our launch dates based on this. The fact that consumers spend more money in the holiday season may be a big factor in why launching then is a good way to start. However, our hardware and software business structure does not end in that year. We want consumers to continue to play this game system for many years, so we believe that in the beginning it is most important to make sure that everything is in order at launch. In that sense, our approach is that we should wait until we can provide a fully realized experience rather than rushing to launch in the holiday season, and this approach has not changed.
Please tell us about your approach to on-hand cash management. I recall that before the Wii U launch, former President Iwata could not exactly indicate how much of funds is considered as surplus funds for Nintendo. After that, a lot of new business strategies were disclosed, and I would like to know how the need to have funds on-hand is being considered as the future of the company is becoming more visible in a lot of areas, including NX.
Concerning our thoughts about the need for funds, as we get the business running smoothly and increase cash inflows, I think that we need to think very seriously about whether we are building on that progress.
That is our approach to money balance. Right now we are proceeding with many projects that make use of our IP, and in those plans there are several projects that will require funds, so we want to use funds for those purposes first. The launch of NX is not the only project which requires funds, and we want to prioritize using it on projects that make use of our IP.
While Wii U sales in the fiscal year ending March 2017 are predicted to be very weak, with NX sales and profit contributions included, looking at these predictions, the numbers look as if you are fairly confident in the NX and ready to take off running. Do you think you can cover the decline of the Wii U with the new NX?
We are predicting about 800,000 Wii U hardware sales in the fiscal year ending March 2017, which is a decrease of about 2.4 million units compared to the previous year. NX and smart device business will be essential to cover this gap, but we also expect download content business to play a role. However, we are planning with the expectation that NX sales will compensate for much of the impact on sales from reduced Wii U hardware sales.
[Image courtesy CNN.]
