Iwata on that 3DS price crash

Christopher Dring
Iwata on that 3DS price crash

It is my opinion that the biggest reason for the lull of the Nintendo 3DS is the insufficiency of the software lineup. I want you to once again analyze the reason why there was not enough software. Also, from a third-party perspective, there appear to be opinions such as "more work is needed to create software in 3D, but that does not directly relate to the appeal of the software," I want to hear about that point, too.

The Nintendo 3DS did not sprint out of the gate from the start in accordance with our sales scenario. So we have done various analysis (on the cause), and we ourselves have many things to reflect on. But if I say, "That was a mistake," or "We shouldn't have done that," at this point, my words might be only partly cited, or in some cases distorted and spread. Therefore, I do not think talking about what we did wrong in a public space will have a good impact on the future of the Nintendo 3DS. Of course, there are several things I am reflecting on, and I am also considering a number of things, but please let me refrain from mentioning respective points in detail. But at least, I think we have to greatly reflect on the fact that, at the launch, we could not implement the functions we have offered by the system update (via the Internet) around the time of E3 in June this year.

I do not think that creating 3D software always requires significantly additional work. It can be said that it adds to the R & D work for performance tuning, but if the world in the game was originally meant to be constructed in 3D, making them viewed as 3D images do not require significantly more work. However, it is true that it is more challenging than we initially expected to communicate the appeal of 3D. One reason is that we cannot communicate the appeal of 3D through TV commercials, and it greatly differs by game content whether the appeal of 3D is easy to present or not. If one tries to show the appeal of 3D for difficult content, it will be hard and one might have to try repeatedly for a long time. This might lead to the idea that 3D may not have appeal worth its efforts.

I think that it is better to have a variety of ways to show the appeal of the software, depending on the titles. For example, Nintendo just released software called "Rhythm Heaven" for the Wii console. Because this software is for Wii, you would usually think that we are supposed to shake the Wii Remote. However, this is a title which only uses buttons to control it, and does not require users to shake their Wii Remotes. It does not use any of the Wii-specific features, so some people might say, "Why did you release it on the Wii (if you only control it using only buttons)?" or "I can't see the necessity of releasing this for the Wii." But from the users' perspective, rather than all Wii software using the same feature in the same way, it is better to focus on other features of the Wii. For example, Wii is connected to a big TV in the living room, and because all of the family members have touched it at least once, we thought that if someone starts to play it, people around him or her can be involved. This is why we decided not to use the major feature of the Wii and concentrate on button control.

This can be also said for the Nintendo 3DS. I think there could be a Nintendo 3DS software title which does not use the 3D feature at all, and I believe Nintendo will develop such software. Instead, other features of the Nintendo 3DS should be focused on. It might be a communication feature, or other functions (such as the gyro sensor or the motion sensor). The important thing is that each respective software title has its own characteristics, and appeals to the consumers in a way that fits the software. So I am not worried in a way like, "The value of the Nintendo 3DS will decrease when the novelty of 3D wears off." Having said that, however, our main software for the end of this calendar year, Super Mario 3DLand and Mario Kart 7 both integrate well with 3D. Regarding Super Mario 3DLand depth is an important theme because Mr. Miyamoto has been tackling the depth issue, like having Mario run to the back of the screen, jump and correctly hit a block, for many long years since Super Mario 64, but it was difficult for users to play it without 3D display.

Concerning the 3D for Mario Kart 7 looking at the reactions of the people who experienced the demo version at E3, many people are naturally enjoying the appeal of 3D, so I think we will be able to convey the appeal of 3D with this software too. But I do not think consumers would be satisfied if every software title we release in the next year only focuses 3D. So, I believe we have to implement new proposals focused on another appealing feature of the Nintendo 3DS, which is the communication feature.

 

Various content has been available on multi-platforms beyond the past one-to-one relationship between content and hardware. Also, content has been not only for possession but for consumption. Do you see these trends as business opportunities and, in the future, will you consider granting licenses for Nintendo's content to other companies with which Nintendo collaborates to establish a new growth axis?

The idea that the relationship between content and hardware is changing or content is now being transitioned from something you own to something you consume is definitely being referred to as a trend. We think, on the other hand, that valuable content cannot be easily created in succession. It might be true that we could increase our short-term profit by granting licenses for our popular software assets in various ways. But what would happen to Nintendo's future if these assets were fully depleted by licensees? I could make such decisions if I were responsible only for our profits for this fiscal year. But, as I am also responsible for Nintendo's mid-to-long-term vision, we have to create special content which will not be easily depleted and preserve the value of such content to keep our business competitive.

One advantage for us is that we can offer software together with hardware, in which we can add such functions to our hardware as necessary to enhance the value of our content. Basically, therefore, we do not think that we will grant licenses for our intellectual property to outside companies and have them depleted (even if they would give us short-term profits).

On the other hand, it is meaningful that we should ask ourselves the question about a closed circle where Nintendo platforms only connect to other Nintendo platforms. For example, you have a Nintendo console at home which connects to another Nintendo console that a friend of yours has at his or her home and you place high value on them because you can use these systems to play together with your friend. In this case, if our platforms are connected to other open platforms in some way and, when you are out, your smartphone gives you information from your friend like, "Let's play with this game tonight," or "I broke your record on this game," you will be motivated to start a new game. In that sense, we are not interested in our business involved in such infrastructure today as smartphones and social networking services, but we are very interested in how to make use of them for our business. We are currently drastically changing our way of thinking regarding networks, which might have looked very closed before. We would like to respond to the changing times in this way, and our basic policy is to keep the value of our software assets and to do business in a manner where these assets are not easily depleted. 

 

Would you please tell us about your current view on shareholder returns in as much detail as possible?

 You might have various ideas as you see the fluctuation of our stock price today (July 29), but the most important thing for us is to turn our current business environment for the better before the end of this calendar year to prove that our business model is firmly sustainable going into the future. Naturally, in compliance with fair disclosure rules, we are not allowed to mention here in what cases and how many shares we will buy back. Although this might not adequately answer your question asking for as much detail as possible, our first goal is to improve our business situation to a level which is appreciated by our shareholders by the end of this year. Otherwise, any measure would be nothing more than a band-aid solution. So, this is where our primary focus shall be emphasized. With that as the premise, we will make specific decisions on shareholder returns as the situation demands. Please understand that we cannot touch on any more details.

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Tags: Nintendo , 3ds , satoru iwata

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