Iwata on portables vs. smartphones, using them to help market games, not abandoning 3D
I use the term “smart device” to refer to both smartphones and tablets, and over the last two years, smart devices have certainly been a central topic in society. On trains, it is common to see people playing on their smartphones, while it is probable that they were playing with handheld gaming devices until recently. There are people who then think that the market for handheld gaming devices may be shrinking, and because there are numerous articles in favor of this notion, some people then conclude that the market for dedicated gaming systems will be eclipsed by smart devices and will diminish quickly. On the other hand, I would like to draw your attention to what I emphasized in my presentation today. In fact, I said the same thing to reporters at the Osaka Securities Exchange yesterday, but while it is true that smart devices drew the most attention in Japan last year and will probably continue to do so this year, Nintendo 3DS sold five and a half million units last year, and I am confident that we will be able to surpass the five million mark this year, too. There have been various dedicated gaming systems in history and each generation had what one might describe as a massive hit. However, even those best-selling systems in their peak year sold around four million units. Previously, the only platform to have sold more than five million units was Nintendo DS, and this time, Nintendo 3DS is set to surpass this mark for two consecutive years. The hypothesis that smart devices will replace dedicated gaming systems, in my view, does not explain this phenomenon. However, while we were able to create great momentum for Nintendo 3DS in the Japanese market, we are yet to do so in the United States and Europe. One reason why the market for dedicated gaming systems appears to have shrunk more drastically in the U.S. and Europe is that home consoles, which occupy a high proportion in their markets, are undergoing a generational shift. Nintendo launched a new hardware system, but we have yet to place Wii U on the right sales track. Others in the industry have already announced that they would launch new gaming systems, meaning that consumers feel that it is not the ideal time to purchase new hardware. The contraction in the market has in part been caused by such factors, and I do not expect this trend to continue.
On the other hand, I believe that the era has ended when people play all kinds of games only on dedicated gaming systems. For example, I think it is natural that many people feel that it is more convenient to use smart devices, as opposed to dedicated gaming systems, to play games to kill a bit of time. That is to say, there are some areas in which dedicated gaming systems were once used that now have greater potential on smart devices. On the other hand, dedicated gaming systems are developed by considering the software that is designed to run on the hardware, enabling us to make unique propositions. With that in mind, my view is that the gaming market will be segregated to a fair degree. However, this does not mean that smart devices will simply compete with dedicated gaming systems. Given their growth, I feel that we should make an effort to take advantage of their existence. For instance, we already made it possible to browse Wii U’s networking service called Miiverse on smart devices. Starting with this attempt, we are discussing among us how we can expand the use of smart devices to help drive the business of dedicated gaming systems. Smart devices have already played a central role in creating buzz among consumers above a certain age with respect to, for example, “Animal Crossing: New Leaf,” “Monster Hunter 4” or “Pokémon X/Pokémon Y.” Twitter timelines filled with tweets about Monster Hunter and Pokémon can certainly help create awareness for the products, and we also know that many watch Nintendo Direct on their smart devices. Rather than simply viewing smart devices as competitors, we should consider ways in which we can use them for our business.
I would now like to turn to your comment that Nintendo is perhaps wavering in its vision by launching Nintendo 2DS, which abandons 3D, the biggest differentiator of the product. However, launching Nintendo 2DS at this point in time requires its development work to have begun a long time ago. Generally speaking, it takes approximately one and a half years before we can bring a new hardware system onto the market, and we already realized beforehand that it would be difficult to maximize the sales potential of Nintendo 3DS without an entry-level product ready in time for the release of a new Pokémon title. Because we already knew that the range of price options for Nintendo 3DS was not sufficient in light of the highly appreciated yen at the time, we had been preparing for this launch. Incidentally the yen is now somewhat depreciated and we are able to offer Nintendo 2DS without facing profitability problems. This is very fortunate considering our business structure. We are offering such an option in order to further propel the popularity of the Nintendo 3DS platform in the overseas markets. Nintendo 2DS is, however, simply one of the options for consumers and we will continue to offer the existing Nintendo 3DS and Nintendo 3DS XL platforms in the overseas markets, and we are not saying that we will abandon 3D or cease to make new propositions in 3D. “The Legend of Zelda” title that we are going to release toward the end of the year is a superb showcase of the 3D effect, featuring a top-down style and offering a new form of gameplay by taking advantage of the 3D effect vertically. - Satoru Iwata
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On the other hand, I believe that the era has ended when people play all kinds of games only on dedicated gaming systems. For example, I think it is natural that many people feel that it is more convenient to use smart devices, as opposed to dedicated gaming systems, to play games to kill a bit of time. That is to say, there are some areas in which dedicated gaming systems were once used that now have greater potential on smart devices. On the other hand, dedicated gaming systems are developed by considering the software that is designed to run on the hardware, enabling us to make unique propositions. With that in mind, my view is that the gaming market will be segregated to a fair degree. However, this does not mean that smart devices will simply compete with dedicated gaming systems. Given their growth, I feel that we should make an effort to take advantage of their existence. For instance, we already made it possible to browse Wii U’s networking service called Miiverse on smart devices. Starting with this attempt, we are discussing among us how we can expand the use of smart devices to help drive the business of dedicated gaming systems. Smart devices have already played a central role in creating buzz among consumers above a certain age with respect to, for example, “Animal Crossing: New Leaf,” “Monster Hunter 4” or “Pokémon X/Pokémon Y.” Twitter timelines filled with tweets about Monster Hunter and Pokémon can certainly help create awareness for the products, and we also know that many watch Nintendo Direct on their smart devices. Rather than simply viewing smart devices as competitors, we should consider ways in which we can use them for our business.
I would now like to turn to your comment that Nintendo is perhaps wavering in its vision by launching Nintendo 2DS, which abandons 3D, the biggest differentiator of the product. However, launching Nintendo 2DS at this point in time requires its development work to have begun a long time ago. Generally speaking, it takes approximately one and a half years before we can bring a new hardware system onto the market, and we already realized beforehand that it would be difficult to maximize the sales potential of Nintendo 3DS without an entry-level product ready in time for the release of a new Pokémon title. Because we already knew that the range of price options for Nintendo 3DS was not sufficient in light of the highly appreciated yen at the time, we had been preparing for this launch. Incidentally the yen is now somewhat depreciated and we are able to offer Nintendo 2DS without facing profitability problems. This is very fortunate considering our business structure. We are offering such an option in order to further propel the popularity of the Nintendo 3DS platform in the overseas markets. Nintendo 2DS is, however, simply one of the options for consumers and we will continue to offer the existing Nintendo 3DS and Nintendo 3DS XL platforms in the overseas markets, and we are not saying that we will abandon 3D or cease to make new propositions in 3D. “The Legend of Zelda” title that we are going to release toward the end of the year is a superb showcase of the 3D effect, featuring a top-down style and offering a new form of gameplay by taking advantage of the 3D effect vertically. - Satoru Iwata
Link
