“The fate of a video game system is often influenced greatly by the introduction of a single title.”
☆ NintendObs Event – Nintendo FY3/2014 Q & A.
Question:
My question is on the Wii U business and the Nintendo 3DS business. According to this fiscal year’s forecasts, Nintendo 3DS sales are projected to fall slightly from last year. With regard to Wii U, I understand that its forecast reflects the minimum level of sales that Nintendo wants to achieve with titles such as “Mario Kart 8,” but looking at the unit shipment estimate of 3.60 million in its third year, it is difficult to imagine that sales will grow to, for example, 5.00 or 10.00 million units in the following fiscal years. Do you think that Nintendo will have to simply persevere by setting lower targets and reducing expenses and manufacturing costs, until the transition to a new business or a new system takes place? Or do you think that, depending on future titles, Nintendo will be able to realistically aim to achieve unit shipment estimates of, say, 10.00 million units in the next or the following fiscal years?
Answer:
Iwata:
In setting our financial targets for this fiscal year, we have taken into account the fact that in the last fiscal year, we established a target of 100.0 billion yen in operating profit and set sales forecasts to achieve Nintendo-like profits, but we failed to show the results despite having worked hard to meet these goals, and Nintendo has now failed to meet its own financial forecasts for a few terms in a row, and in this sense, by trying to set rather conservative goals we are perhaps using conservative estimates about our unit sales. This does not mean that Nintendo 3DS sales will definitely fall this fiscal year when compared with the previous fiscal year. We have set our estimates for this fiscal year by considering the amount that we are confident we can reach, so it is my hope that we will also do our best with regard to Nintendo 3DS, too, and exceed its sales estimate. In order to show that Nintendo 3DS sales have not yet peaked out and are not to simply decline in the future, we want to exceed last fiscal year’s figures.
As for Wii U, we estimated 9.00 million units of hardware in sales in the last fiscal year, but many of you must be aware of the actual results, and the Wii U market has experienced a sharp downturn. In order to recreate momentum and sell 5.00 million or 10.00 million units of hardware annually, there are indeed challenges that we must overcome. And in the face of these challenges, announcing more optimistic figures before we actually release the Mario Kart and Super Smash Bros. titles to consumers, would not be compatible with our original stance to provide rather conservative figures, so once again we set our estimates by considering how much we could realistically hope to achieve with our software lineup. The fate of a video game system is often influenced greatly by the introduction of a single title. As many of you probably remember, before the release of the Pokémon game, Game Boy had been showing slow growth, and many people wondered whether it was the end of Game Boy. But the Pokémon game singlehandedly changed the landscape of the system, which then started to show the strongest sales in the lifecycle of the system. As I explained back in January, it is true that we cannot draw up a good business plan for Wii U by assuming that Wii U will sell more than Wii did. Therefore, we will need to think very carefully about the balance of revenue and expenses and try to operate by controlling overall costs. On the other hand, we do not believe that this year’s estimate of 3.60 million units of Wii U hardware will be the peak of its lifecycle, and we would like to work hard to make sure that we give sufficient momentum to the system so that we can expect good results in and after the next fiscal year, too. However, as for this fiscal year, as I explained before, the figures you see have been determined by rather conservative estimates.
Source: Nintendo JP.
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