Nintendo FY3/2014 Financial Results Briefing, Q&A 1: Software Sells Hardware

NintendObserver“The basic idea that consumers reluctantly purchase hardware only because they want to play with appealing software remains unchanged.”

 

☆ NintendObs Event – Nintendo FY3/2014 Q & A.

Nintendo FY3/2014

 

 

Question:

For the fiscal year ending in March 2015, I understand the Wii U hardware sales unit forecast is 3.60 million units. I would like to know about the relationship between this number and this fiscal year’s Wii U hardware production plan, and its impact on profit and loss. Some other things you explained today are the utilization of various network services of the Wii U platform and game-compatible figurines. In the past, I believe Nintendo’s philosophy, in principle, was that interesting and unique software drove hardware sales. I would like to confirm whether this idea remains the same.

 

Answer:

Satoru Iwata (President):

We set the sales unit forecast of 3.60 million units of Wii U hardware as the target that we should at least reach by making the releases of two key titles for this fiscal year from the very popular, evergreen franchises that have been under development since before the launch of Wii U hardware, “Mario Kart 8” and “Super Smash Bros. for Wii U,” the pillars of our entire marketing strategy for this year. These two titles can be enjoyed alone or with others, and we believe they will encourage those who do not own Wii U hardware to purchase it. With respect to the impact of Wii U hardware sales on profit and loss, in order to sell 3.60 million units, we have to produce some more hardware units on top of our current hardware inventory. However, since the loss arising due to the hardware production costs being higher than our trade price was taken into account in the previous fiscal year, you could assume that there will be almost no loss this fiscal year for the sales of the 3.60 million hardware units.

As to whether our philosophy has changed or not, the basic idea that consumers reluctantly purchase hardware only because they want to play with appealing software remains unchanged. I only mentioned the Wii U software “Mario Kart 8” and “Super Smash Bros. for Wii U” today, but of course, we are going to talk about other Wii U titles at E3 (Electronic Entertainment Expo) in Los Angeles in June. Also, our internal software development teams directed by Shigeru Miyamoto (Senior Managing Director and General Manager of Entertainment Analysis & Development Division) are committed to developing several titles that focus on offering unique experiences only made possible with the Wii U GamePad in order for a large number of people to understand the Wii U GamePad’s significance. The titles we are preparing to show you at E3 vary from being nearly complete to still in the early phases of development but with the core of their appeal noticeable. Therefore, our strategy of focusing on software has not changed.

As for utilizing character figurines, Activision has released video game titles from the Skylanders series over the past three years and Disney Interactive released the software title, “Disney Infinity,” last year. Both video game series are compatible with character figurines and have created an extremely large market for these products. In the overseas markets especially, a huge amount of space has been allocated to those product lines at retail stores with a large market presence. Our primary focus, however, is not to develop software that is compatible with figurines. Rather, we have been developing figurines since last year because we believe there may be different approaches or ways to appeal to consumers by using them, and this could also be one way for Nintendo to utilize its character IP. At the Corporate Management Policy Briefing in January this year, we talked about our policy of actively utilizing character IP imagining that we would be able to show you the actual NFP product, which I mentioned today, at E3. However, when we talked about actively utilizing character IP, people were only focused on to whom and how licenses would be granted. So today, I decided to talk about our own project. Still nothing has changed in our belief that, for video game platforms, hardware is driven by software and our basic approach of developing new, unique and incredibly interesting software has not changed at all. We will work hard to meet your expectations.

 

Source: Nintendo JP.

 

 

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