Saturo Iwata has been speaking about Nintendo’s future at the company’s third-quarter financial results briefing for the fiscal year ending March 2009. An English-language transcript of Iwata’s address has been posted on the investor relations section of Nintendo Japan’s official site, and it’s certainly an interesting read, giving a fascinating insight into the next fiscal year for Nintendo, and the ideas of Iwata himself.
He’s refreshingly honest about the success of Wii, suggesting that prior to launch, Nintendo was “hopeful that we would make this new system the best selling hardware in the next generation” but that “if you ask me if we were able to foresee today’s situation, I am not that optimistic so I have to admit that today’s situation is exceeding even our original expectations.”
Iwata suggests the unexpected nature of Wii’s success is the reason why third-party publishers have thus far failed to take advantage of the console’s large userbase, and that explains why “some are reportedly saying that they bet on the wrong horse or that they need to change course.”
Obviously, the current global financial crisis has made things difficult for third-parties, something which Iwata recognises - hinting that companies will have to reduce the overall number of games they make, but that we will soon see the focus on Wii and DS start to bear fruit. “Overall, we recognize that our relationships with the software manufacturers are shaping up better than before. So, in the mid-term, we believe that more attractive titles will be launched by them for our platforms.”
He also speaks frankly about Wii Music’s failure to scale the heady heights - at least in sales terms - of Wii Sports, Play and Fit, admitting that it’s not necessarily for everyone, but that its comparative lack of success doesn’t mean it won’t perform well in the long run. “I agree that Wii Music, as of now, has not achieved its true potential,” Iwata concludes. “I feel that Wii Music is a software that elicits largely two extremely different reaction from consumers. There are people who highly appreciate it and those who do not appreciate it at all. Usually for other software, if there is a fair amount of people who evaluate the software positively, the appreciation level of that software becomes slightly skewed toward a positive note, but on the other hand, if a number of people evaluate it poorly, the overall reaction to the software is bad.”
Iwata goes on to compare it to Brain Training, which wasn’t initially a huge success but went on to become the DS’s most popular software. Referring once again to the oft-discussed ‘long tail’, Iwata warns “we should not have the attitude that a game does not have sales potential because the first week or first month sales were small.” In other words, expect Nintendo to continue promoting Wii Music, and perhaps trying new strategies to sell the game to those unconvinced by its qualities. DLC would help, Iwata-san. Just saying.
Also, while many are saying this is the year Wii truly goes hardcore, expect Nintendo to continue to work on games which have real breakout potential - the kind of phenomenon that brought Wii success in the first place (Wii Sports, Fit) and those which helped DS dominate the handheld market (Nintendogs, Brain Training). Wii Sports Resort we know about, but that won’t be the only one, especially with Iwata talking of the need to create a new buzz around Wii - a cycle of new buyers who experience these mainstream hits with friends and relatives and decide it’s high time they owned a Wii for themselves. A new Wii Play would undoubtedly sell the idea of MotionPlus, but Iwata’s suggestion that it’s a new phenomenon Nintendo needs suggests something completely different may be on the cards.
As far as other strategies go, it seems Iwata is very keen for Nintendo to clamber aboard the user-generated content bandwagon. Indeed, to a degree it already has, with Wii Music offering the opportunity for players to easily share songs with other Wii Music players (though I maintain it would have better viral appeal were Nintendo to allow users to share their tunes with Wii owners who don’t own the game either). Iwata talks about the growth of network gaming being one way to expand the medium, but that to a degree its competitive nature can be off-putting to novices, with the gap between skilled players and beginners widening, and preventing those curious parties from taking their interest in gaming any further.
“This is where UGC comes in,” claims Iwata. “There are some people, although they may be a minority, who love to create something creative, share that with others, and enjoy seeing other people being entertained or responding positively to their creation. At the same time, great majority of people are rather passive and love to applaud the creative efforts by others and enjoy playing with them. In other words, UGC has the unique characteristic that, regardless of their game skills, people on both sides can enjoy.”
Iwata talks about Daigasso! Band Brothers and its music composition side, suggesting up to thirty times more users are downloading user-created songs than those who are submitting them, but that “both sides are happy”. And the next big thing in UGC is a small piece of software that’s starting to become the best reason for people to upgrade from DS Lite to DSi - the free application Flip Book, which allows users to create simple animations and share them online with other DSi owners.
Interestingly, he moves on to discuss the Japanese success of Wagamama Fashion: Girls Mode, suggesting that it is likely to be a big title for Nintendo in the west this coming year - but also that overseas markets were initially reluctant to embrace the idea. As Iwata explains, “when we announce that a new Mario or Pokemon software is developed, marketers of Nintendo products all over the world naturally look forward to the launches even when they do not know the contents of the game. On the other hand, when we make a presentation to the same people about software which has had no previous track record and no name recognition, their reactions are not positive for most cases. I am not trying to offend our people in overseas marketing companies at all, and actually, their attitude is quite natural. If one is presented with two products, and the successful sales of one of them is guaranteed, and if they have to anticipate allocating a lot of resources to sell another, it is only natural that people have higher expectations for the one guaranteed to sell.”
He uses Nintendogs and Brain Training as examples of this phenomenon, and then moves on to talk about Girls Mode and Rhythm Heaven - admitting that reaction to the titles in the west was cool to say the least. But Iwata is happy with proving the ideas in Japan before selling them overseas - “we are establishing a system where we produce some tangible results in Japan first and thereby encourage overseas people to get excited in order to sell them locally, and I see no issue with this system,” adding that “overseas subsidiaries are looking forward to the launch of Girls Mode and Rhythm Heaven as strategically important products in the next fiscal year.” In other words, expect big marketing pushes for those two.
More exciting, perhaps, is the suggestion that Nintendo will be developing more titles in the west. Iwata observes that the difference between eastern and western cultures means that even a publisher as universally-loved as Nintendo has to tailor its content according to the territory. “As we strive for the expansion of gaming population worldwide, we are also thinking of developing products that cater to the American or European markets. We are actually working on U.S. and Europe-originated Touch Generations products, which may have a smaller demand in Japan than overseas. I can not tell if it will go well or not at this moment. I think one or two of these initial trials will reach the market within this year. If they actually flourish, I think our strategy will have to take the next step.” Fingers crossed.
It’s not all good news, of course. It seems we’ll be paying a premium for DSi when it finally makes the journey over from Japan. “Considering the current foreign currency exchange rates, there is no possibility of selling DSi overseas with the same price as DS Lite at all. There will have to be a difference in price. With this price difference, I think that the DS Lite and DSi will be sold side by side in the Americas and in Europe, but I will not be able to comment on their ratio today as we have not announced the prices and we will have to see how people react to the announcement.” With DS Lite still selling well in the west (as opposed to Japan, where it was starting to labour a little against the renaissance of the PSP) Nintendo will do well to provide compelling enough reasons to upgrade. The camera and its photo-manipulation tools will help. Flip Book, too. But is that enough to convince Lite owners to move on, and - as seems likely - pay upwards of £130 for the privilege? I’m not so sure. That said, I can see GAME doing well from trade-ins - allowing DS Lite owners to swap their old handheld plus a wodge of cash for a spanking new DSi.
More than anything else, this all proves that Nintendo absolutely has the right man in charge. Iwata clearly has an excellent awareness of the current market, and for someone in charge of a massive corporation, he stays well on top of things at ground level. He’s refreshingly honest about where his company has gone wrong, and has plenty of ideas on how to keep Nintendo on top, even in these trying times for the global economy. 2009 represents a very important year for Wii and DS, and if anyone can steer the good ship Nintendo through the choppy waters that are claiming all sorts of victims in the videogame industry at present, it’s Satoru Iwata.
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