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Analyst Interview of Nentendo 2007 by Chairman/CEO Iwata

Nentendo's corporate investor relations have published a financial results briefing for the 67th fiscal term of the company, ending March 2007. In it, they stage a 27 question and answer session with Nintendop CEO Mr. Iwata.

Much of what is discussed is relevant ony to Nintendo investors, or the general gaming market. However, several passages are very interesting:

Question 4
Tell me about the Wii Channel possibilities and its effects upon your sales and profits. Right now, except for Virtual Console, you are offering all the services for free of charge. How will you take advantage of them, as marketing tools or as a revenue source? Will you also increase the number of paid services?

We created the Wii Channel structure after asking ourselves such questions as "How can we make a video game machine that will be relevant to all family members?" and "How can we make Wii the machine that puts smiles on surrounding people's faces?" In other words, we did not mean to make it to be a revenue source in the beginning. Having said that, however, the Wii Channel has ended up with a structure that has a number of potentials. The structure to electronically deliver and bill for the contents is up and running globally, as has already been demonstrated with the Virtual Console. So, when Nintendo thinks we have a Channel which is worth asking our customers to pay for, we are in a position to make a business out of it.

Question 7
At the Tokyo Game Show of September 2005, Mr. Iwata mentioned that the unique controllers for Wii would be good for First-Person Shooter games. What kind of core-gamer reactions have you received, say, for Metroid Prime 3?

The game has yet to hit any market, so my comments are referring only to the feedback from the game's testers. Talking about the first-person shooters in general, many of the players are playing FPS games on their PC, not on home console systems. Specifically, I heard they often say that FPS are more effectively played with keyboard and mouse rather than home video game systems' controllers. They can aim the target with mouse and move their characters with keyboard. Those who recognize that mouse and keyboard combination is the best for FPS are now sharing with us their impression that Wii Remote and Nunchack of Wii give them quite similar play feel.


Even those who are not good at FPS are now commenting that the Wii Remote and Nunchuck are lowering the hurdle for them to get started. We really want to invite newcomers to the world of first-person shooter games. Also, there are other areas where rather sophisticated play control systems have already been established, such as sports game titles that EA is famous for. With the Wii Remote and Nunchuck, we believe there are lots of new possibilities which are worth exploring.

Question 13
Nintendo has been taking very cautious attitudes on doing anything other than game entertainment. I also understand that this is not the year when you should explore something completely different in a public way, as you should focus upon the expansion of Wii hardware. However, I would like Mr. Iwata to tell us what kind of image you have about the challenge, schedule and size of these non-gaming efforts.

You said that Nintendo has been cautious in doing anything other than games. It is true that Nintendo is an entertainment company and that Nintendo should focus upon entertainment. However, my understanding is that entertainment is expanding its framework. In the past no one would think that training your brain or studying English could be a video game, but they do now. Even cooking is a video game today. Compared with how Nintendo defined video games 5 or 10 years ago, we are now involved in far greater fields.


We cannot review any proposals that may harm our existing business model of video games. On the other hand, as long as they do not interfere with our business model, I think we should review any such possibility. I am afraid but I cannot give you any concrete example today, but Nintendo is not reluctant in this kind of approach. With the increased numbers of a hardware with one architecture, there will be a variety of different possibilities for the machine to be used for the better sake of society, and it can be a step to make DS "the machine that enriches the owners' daily lives."

Question 17
I don't know if we can call it a game, but something called Second Life is gaining in popularity. What do you think of Second Life? Will it have any impact on the video game industry? What do you think is the definition of "Video Games" in the first place? Where will video games be heading in the future? To understand your philosophy, I would like you to tell us your observations on these points.

I personally have virtually no interest in Second Life. I don't think it will be considered as an important existence in the future. That is all I can say today. If I need to supplement my remarks, modern human beings have less and less time and energy to spend on any activity. A great many things are changing with incredible speed. The energy one can spend on any entertainment has never been very big in the first place.

With this background, I would define a video game as something to which a human being makes an input and from which the human being receives something more valuable than the labor needed to make the input. Maybe it is more of the definition of interactive entertainment than of video game.

You touch something and, as the result, you receive something back. That something is more beneficial than what you originally did to get that result. In such a circumstance, people feel like continuing their efforts, without stopping them, I believe. If you receive a smaller reward than the energy you have spent, a lot of you won't feel like continuing. The reward varies depending on the software.

We have very unusual software for DS, which tells you how to make a dish. I myself love to use this cooking software and I myself am now cooking at our home on my days off. There are no rewards in this game. But it will let you cook real dishes, and you will enjoy eating the results. That is the reward in this case. So, because I received the reward as the result of my efforts, I have not gotten tired of this software by now. Ever since I touched this when it was still a prototype and I gave the developers my advice, I have been touching this software from time to time. I think it important for us to create this type of software that will keep the owners' interests for a long time period without letting them stop using it.

There are different types of people. Some of us want to spend a lot of energy in a short time period and look for rather complicated play natures. Some of us just don't have time and want to have quick fun in a short time. So, there are different types of ways to let the users feel they have received their due rewards. But rewards must be there if it is being called a game, I believe.


Nintendo inancial Results Briefing for the 67th Fiscal Term Ended March 2007

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