Nintendo president Satoru Iwata has revealed that opportunities to expand into emerging nations have been halted by the global recession.
Speaking at a press conference after the company’s financial briefing back in March (the translated transcript of which has only just been released), Iwata cited tough exchange rates and topically price-conscious customers as reasons to why the firm has delayed its global expansion plans.
“Developing business in newly emerging nations is becoming a bit harder than before due to the rapid change in economic circumstance since last fall,” he said. “Foreign currency exchange rates are fluctuating.”
Previous accomplishments Nintendo had made in South Korea were cited as a prime example of the effect the recession has made.
Over 1 million Nintendo DSes were sold for two years in a row across South Korea, while the nation has also bought over half a million Wiis. “But the rapid change in Korean Won's appreciation against Yen has come to the extent where it now can significantly impact our business structure. Similar tendencies can be observed in a number of other countries.”
Iwata added that the effect of the recession goes beyond exchange rates. It permeates into the shopping-conscience of hard-hit consumers.
“I remember that around this time a year ago I was telling that deployment in the newly emerging nations would be the theme next year due to supply capabilities for Wii and DS,” he said.
“Due to the changes in the circumstance thereafter, I now feel that the time for us to face this challenge has been delayed a bit. Because of this, we have not accounted for any significant contribution from development in the newly emerging nations into the financial forecast.”
Though a limited hardware supply had previously prevented Nintendo from expanding into emerging nations, the company certainly understands that there lies an untapped market. Casualgaming.biz recently reported that the Game Boy Advance sold an impressive 420,000 units in 2008 thanks to emerging markets and parts of Asia.
Iwata said that, while South America represents “a little more than 5 per cent” of Nintendo’s the entire American venture, he said that the actual market potential “has yet to be realised”.
He admitted that Nintendo’s businesses across Asia – outside of Japan and South Korea – have not yet become significant.
Nintendo’s plan is to now follow its model in South Korea; to focus resources into one nation at a time, rather than stretching across many. “When we see the time has come for us to tackle this, just like we have done so in South Korea, we feel the possibility that we will be able to create a new market by pouring massive efforts in a short time period,” he said.
Iwata concluded that, despite the prospects, Nintendo’s global expansion won’t be happening very soon. “It is not very often that we can find these desirable circumstances where the stars are all aligned in the new markets,” he said.
“When we encounter such a good opportunity, we may try once again, but it is not something we can do immediately.”