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Nintendo FY3/2014 Financial Results Briefing, Q&A 2: Balance

NintendObserver“The idea I mentioned about redefining the definition of video game platforms will also require approximately two years.”

 

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

Nintendo FY3/2014

 

 

Question:

In your presentation, you made it clear that in this fiscal year Nintendo would prioritize restoration of the balance of revenue and expenses. My question deals with the company’s mid-term prospects. I would like Mr. Iwata to tell us his current thoughts on what he would like the following two terms (the fiscal year ending March 2016 and the fiscal year ending March 2017) to mean for the company. Given that Nintendo already made a significant devaluation of inventory in the previous fiscal year, I suppose you are envisioning that the financial performance of the company is set to recover by some extent this fiscal year, but what are the key factors that will drive the business from the next fiscal year? Or, do you think that investment will expand yet again from the new businesses in and after the next fiscal year? Please tell us how you would expect the company’s financial performance to change from the next fiscal year.

 

Answer:

Iwata:

With regard to this fiscal year, I feel that it is essential for us to restore the balance of revenue and expenses that has been lost temporarily in order to gain trust in the financial markets. On the other hand, while it is difficult to talk about the next two fiscal years using concrete figures, I feel that in the next fiscal year we will be able to be more specific about the kinds of mid-term projects that we discussed at the Corporate Management Policy Briefing in January, and in fact, we will even start to offer some of them to the public. In the following fiscal year, I expect some of these measures to start serving as a source of profits for the company. In this sense, instead of seeing a great and sudden recovery in our profitability in the next fiscal year, I am rather expecting to be able to report Nintendo-like profits from around the following fiscal year.

 

Question:

The company has set multiple measures for its mid-term future, but I think that sometimes it is necessary to make a big investment while maintaining a sound revenue-expenses balance. From this perspective, I would like to know whether you have set any priorities.

 

Answer:

Iwata:

While I believe that increasing the long-term corporate value of the company is naturally our most important task, as it is impossible to make that our sole priority without regard to the short-term revenue-expenses balance on an annual basis, I think it is necessary to make investments while maintaining a certain balance of revenue and expenses. However, in terms of when we will be able to regain Nintendo-like profits, I would ask you to give us a bit more time and see how we do in the following two years.

As for our focus, we are already going to utilize, for example, our character IP from this fiscal year in ways that I described in my presentation today, so it is perhaps easier to see relatively early on the actual content of this new business endeavor and understand more clearly what we are going to do with it. Also, regarding what I mentioned at the Corporate Management Policy Briefing in January about our efforts to go into a new business area, namely our platform business that seeks to enrich people’s QOL (Quality of Life) in enjoyable ways, I would like to talk more specifically about the kind of business we have in mind within this year, and the current time frame we are working on puts the actual deployment of the initiative in the next fiscal year, with contributions to our profitability to follow in the following fiscal year. Moreover, I feel that we will be able to further stimulate our platform business by taking advantage of smart devices, and I think that we will be able to provide detailed information on this as well as some concrete results between the current and the next fiscal years. Also, the idea I mentioned about redefining the definition of video game platforms will also require approximately two years. This is how we would like to talk more about our mid-term measures and lead them to actual results. However, we will not be able to create a good environment for the company unless projects are undertaken simultaneously, so this is the kind of timeframe that we have in mind.

 

Source: Nintendo JP.

 

 

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