Last week, Nintendo held their Fiscal Year 2019 conference with shareholders, and Nintendo president Shuntaro Furukawa responded to some questions during the Q&A session regarding their entry into China partnered with Tencent, how they plan on increasing Nintendo Switch Online subscribers, and more.
Here are the highlights:
I’d like to hear more about the thinking behind Nintendo’s business expansion into China. Can we presume that you chose to collaborate with Tencent in order to establish a solid base for your business there? Also, how long do you anticipate it will take to grow the business in China into one of the pillars of revenue?
Shuntaro Furukawa, president: “It is true that Tencent has applied for a game console review to launch Nintendo Switch in China […] The reason for our collaboration with Tencent is because they hold one of the largest positions in China’s network communication and game marketplaces, which we think will allow us to maximize the expansion of our business there. In the past, our dedicated video game systems like Nintendo DS and Nintendo 3DS were sold in China under the brand of our consolidated subsidiary, iQue (China) Ltd., but we cannot say these were a great success.”
“We recognize that the Chinese market is vast and attractive, but looking forward, we don’t expect our video game business in China to easily expand, given that our primary markets for dedicated video game consoles, Japan, the Americas, and Europe have been built over the course of more than 30 years.”
Amid a significantly changing external environment, including cloud gaming and 5G, what are your thoughts on the future of Nintendo’s core integrated hardware and software business?
Furukawa: “I don’t think all games will move to the cloud right now, but the technology is steadily advancing. In the future, I expect that technologies such as the cloud and streaming will evolve further as a way to deliver games to consumers. We must keep up with such changes in the environment. On the other hand, I believe that our core value, the unique entertainment experiences that can only be achieved through the development of integrated hardware and software, will further increase in value. Delivering unique entertainment only Nintendo can create will continue to be our top priority.”
The number of accounts with Nintendo Switch Online memberships has reached 9.8 million, but are there people coming and going? For example, are people joining to play Super Smash Bros. Ultimate or Splatoon 2 and then canceling their memberships, or joining just to play Tetris 99? Or, have most of them continued to be members once they have joined? I would like more details about the growth in account numbers.
Furukawa: “We recognize that the number of accounts that have subscribed to Nintendo Switch Online is increasing steadily corresponding to the pace that the hardware install base is growing. Naturally, not everyone remains a member, and there are cases where users joined during the holiday season and then canceled after three months. There are also new members who joined after Tetris 99 was released in February as an exclusive game for Nintendo Switch Online members, and others who have remained members because of Tetris 99. To expand Nintendo Switch Online even further, we need to continue offering elements like this, that highlight the distinct value of Nintendo Switch Online.”
You can read the full Q&A here.