Nintendo Financial Results Briefing Q & A Summary

The latest Nintendo Financial Results Briefing Q & A has been uploaded to the Nintendo Japan website. Among such topics that were discussed, one was on Nintendo expanding upon the sales of Super Smash Bros. Ultimate, Pokémon: Let’s Go, Pikachu! and Pokémon: Let’s Go, Eevee! 

Other topics include but not limited to:

• Teasing plans for future switch games
• Why Nintendo partnered with LINE for Dr. Mario World
• The Issue of Video game addiction
• Increasing the appeal of Nintendo Switch Online service
• Nintendo Mixing Old with New in its IP’s
• Why Nintendo Lowered It’s Fiscal Goal of 20 million to 17 million

We have put together a summary of the Nintendo Financial Results Briefing Q & A below.

Lowering The Fiscal Goal To 17 Million

Regarding the downward revision of the Nintendo Switch hardware unit sales forecast for this fiscal year, what is different now compared to your expectations at the start of this fiscal year? Iʼd also like to know how many units you intend to sell in the coming fiscal year, and your sales strategy for doing so.

Shuntaro Furukawa (President and Representative Director): This holiday season, we were able to release three major titles (Super Mario Party, Pokémon: Let’s Go, Pikachu!/Pokémon: Let’s Go, Eevee!, and Super Smash Bros. Ultimate), and were able to grow our year-on-year hardware sales in every region.

Yet despite having been able to sell fairly large volume of hardware during the holiday season, it is true that we now do not anticipate reaching the forecasted 12-month sales volume set at the beginning of this fiscal year. As we look back so far (for this fiscal year), we now evaluate that our efforts to fully convey the appeal of Nintendo Switch hardware and software to the number of new consumers we originally hoped to reach were insufficient.

Mixing Old With The New

Even though youʼve stated your intention to maximize the value of Nintendo IP, itʼs still impressive to see that titles using existing IP can exceed sales of 10 million units. But your titles that have offered new kinds of play have not yet demonstrated explosive growth in sales nor have they taken the world by storm like some of your past offerings. Do you think the variety of consumer preferences is a factor in this? Considering the possible reasons and how the environment has changed compared to how it was before, Iʼm wondering if you feel the need to alter Nintendoʼs development concept in response. Also, have there been any changes with regards to the younger developers to whom Mr. Miyamoto is delegating responsibilities? I can imagine there are some aspects that should change and some that should not, and Iʼd like to hear your current take on the matter.

Takahashi: It is really gratifying to see so many consumers enjoying new games that make use of the Nintendo IP we have developed to this point. Some may say that those titles are just reusing our old IP, but I donʼt see us creating the same things over again, given that the actual content of these games is different.

It is true that consumer preferences are becoming more varied, but when we make games, the most important points are how we will make each game enjoyable for consumers and how we will create sources of fun, and I see no reason to change that. That said, games are being made differently now in comparison with the past ways of game development before the Internet and some other aspects of the current era, and we are constantly aware of those changes and thinking about how to incorporate them. So I think it is best that we keep thinking of ways to mix the old with the new, to incorporate new ways of thinking and to bring forward any old ways of thinking that are still valid appropriately.

Miyamoto: The reason Iʼm delegating responsibilities to the younger generation is not because I feel that I cannot keep up with the sensibilities of young people. And I donʼt think Nintendo developers are hung up on the classics and unable to develop anything new. You do not have to worry because we are capable to respond to the variety of preferences in todayʼs world.

In baseball, if you want to hit a home run, you need to take a decisive swing to send the ball into the stands. Likewise, we take on the creation of bold new games without fear of failure. And because Nintendo has the strength for backing to do so, we can aim to hit home runs rather than trying squeeze bunt. To me, thatʼs the entertainment business.

Making Nintendo Switch Online More Appealing

You mentioned (in the presentation) that the Nintendo Switch Online subscriber base (excluding free trials) has exceeded 8 million accounts, which suggests the service has gotten off to a really good start. I assume the people who purchased Super Smash Bros. Ultimate subscribed to the service at once, but I am wondering how many signed up for 12-month memberships. Given the current content of the service and your pace of releasing a few major, first-party titles in a year, I imagine it might be hard to maintain a relationship with those members. The service is off to a great start, but what do you plan to offer to members going forward?

Furukawa: We do think Nintendo Switch Online has had a good start coming out of the holiday season, helped in large part by Super Smash Bros. Ultimate.

We are not disclosing details by each membership plan but among consumers who have purchased memberships, however, a growing percentage is now opting for shorter plans like the one-month membership. This is in contrast to the situation around the end of October of last year, when we reported that over half were opting for a 12-month family or individual membership.

It is critical that these members want to continue using the service for a long time rather than letting it expire, and for that we need to build relationships with consumers and enrich the content. With this in mind, we are currently planning ways to boost the appeal of the service on a yearly basis. We will announce more details as soon as we are ready.

Takahashi: The recent release of Super Smash Bros. Ultimate built on the first surge in membership sparked by Splatoon 2 led to take the subscriber base to where it is today in terms of numbers. We are preparing various new offerings for consumers who subscribe to the service.

 

Nintendo’s Stance On Video Game Addicition

On the other side of the globally expanding gaming population and the sudden rise of e-sports, video game addiction is currently under study by the Ministry of Health, Labour and Welfare in Japan and it seems to become a social issue. What is your acknowledgment of video game addiction, and what measures are you considering to combat it?

Furukawa: I think the problem of game addiction is more about becoming overly dependent on video games than is about any issues with the games themselves. One thing we have done as a company that creates games is to implement features that allow parents to limit the time that their children can play games. I think that further implementing features like this, and raising awareness among more people that these features exist is one way we can face this issue.

Working With LINE On Dr. Mario World

What are you hoping for going forward from the collaboration with LINE Corporation, beyond Dr. Mario World? By collaborating with LINE, are you signaling a particular interest in developing games for younger segments of the population, such as teens?

Furukawa: I believe everyone is familiar with LINE, which is virtually synonymous with “messaging application” in Japan. We believe that the real-life social graph (connections between friends via the Internet) cultivated by LINE, as well as the technologies supporting it, will be a very strong platform for consumers to enjoy our game applications, which is why we have formed this collaboration. And Dr. Mario World is a puzzle game, so we hope many people will enjoy it, regardless of gender or age.

 

Teasing Plans For Future Games On Switch

The “expanding” part of “expanding the number of people who have access to Nintendo IP” may be important, but looking at third-quarter software sales and the presence of two titles with sales of over 10 million units in a single quarter, it seems pursuing “depth” is also important. I think it is important to provide more software for consumers who have already purchased Nintendo Switch. I’d like to know your software lineup for next fiscal year and after, and if you’ve considered the possibility of increasing R&D spending to increase title count going forward.

Furukawa: As you’ve pointed out, “depth” is also important, and we’ve considered many factors with regards to our future lineup.

Takahashi: In addition to the titles we have already announced for scheduled release in 2019, we’re also preparing for releasing software titles which would delight consumers including one that is good fit for Nintendo Switch Online. As developers, we are always thinking about how we come up with seeds of entertainment that consumers are going to enjoy, and how to grow it to new products. I would like to continue developing and releasing such products in the future as well.

Miyamoto: I have a very positive attitude about R&D investment. Because we are cooperating with other companies on software development, weʼre working on a larger scale than what can be handled solely within the company in terms of managing software development. But even as we expand the development scale, it is important that we will firmly maintain the Nintendo-made quality of the software. I know some people say we just need to hire more developers. We arenʼt merely focused on increasing development staff, but we are focusing on nurturing more developers adequately within Nintendo. I want us to actively invest in the products we develop, in order to maintain the quality we desire.

Expanding On Smash Bros. Ultimate & Pokémon: Let’s Go Sales

I’d like to hear about the future of your big hit titles released during October to December last year. The initial response was extremely strong, but will that be met with a drop in sales momentum? Or will the strength of that initial momentum on release help download sales and purchases based on word-of-mouth to grow, resulting in a net positive effect on future sales?

Satoru Shibata (Director, Senior Executive Officer): We feel very fortunate that the initial sales pace for Super Mario Party, Pokémon: Let’s Go, Pikachu!/Pokémon: Let’s Go, Eevee!, and Super Smash Bros. Ultimate has been so strong. However, that doesn’t exactly mean we’re satisfied. Before their release, we challenged ourselves to see how we could expand our consumer base with each of these titles. For Super Mario Party, the question was “How could we reach people other than children and parents?”

With Pokémon: Let’s Go, Pikachu!/Pokémon: Let’s Go, Eevee!, we asked “How could we reach people who had played Pokémon GO, for example, but never played Nintendo Switch?” With Super Smash Bros. Ultimate, we asked “How could we reach not only fans of the Super Smash Bros. series, but also those who had never played it before?” If you look at the demographics of the consumers who purchased each of these titles, Iʼm not convinced weʼve completely overcome these challenges yet.

So our aims are to keep working on them this year, to expand sales of these titles to new consumer demographics, and to keep selling these games for a long time, which is one of our strengths.

If you would like to see the full Nintendo Financial Results Briefing Q & A and see what other questions were asked, You can check the PDF via this link. The Q & A spans over 8 pages and there are questions that have not been covered in this article.

Source: Nintendo Japan