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Iwata - social games/smartphones haven't impacted DS, but they hurt game prices
At the same time Nintendo’s performance was declining, the growth of social games and smartphones was seen, and I think there was much speculation, along with reports and articles stating that there was a causal relationship between the two. For example, social games became popular, or iPhone and Android were launched, and smartphones became a large presence in the mobile-phone market and a number of applications including games became available at a very low price. Then articles were published saying that “this is the cause of the decline in the Nintendo DS business,” and even this morning there was an article with such tone. I have repeatedly brought up the question, “Is Nintendo’s performance as it is because it has been affected by social games or smartphones, or is there a separate cause?” In other words, “Is there a causal relationship or is it just that the two things are happening at once?”
As I emphasize again and again, if there was a causal relationship, there would be a significant difference between Nintendo DS users who play social games and Nintendo DS users who do not play social games, or a significant difference between Nintendo DS users who play games on smartphones and Nintendo DS users who do not play games on smartphones. For example, if we discover that users who play social games are not playing with Nintendo DS as much anymore, or if there is a decline in how many games they buy in a year, we would need to start believing that there is a causal relationship because, no matter what I think, we would have actual proof, but if we cannot find any proof, the assumption that there is a causal relationship may not be correct.
I have mentioned that we are researching the gaming population in Japan and the United States, and at the same time, we have also researched whether respondents play social games, have smartphones, or play games on smartphones. As for the use rate of Nintendo DS, we have not found any significant differences. I can not say that no one said, “I recently stopped playing Nintendo DS because I am now playing games on my smartphone,” but statistically, there was no significant difference.
On the other hand, we found out that people who play paid social games have a higher Nintendo DS use rate. This was a significant difference. Isn’t this the opposite of your impression? Therefore, I think that the people who play paid social games are people who like games. And as a result, they have a higher overall use rate.
As for the number of games purchased during a year, we only have data for Japan and it’s very recent data, so the Nintendo DS business is not that sensational and the number of games purchased during a year is a bit small, but again, there were no significant differences in contrast with users who play social games or play games on smartphones. The number of games purchased during a year by users who play paid social games was an average of 1.5 titles. This figure was larger than the average of all Nintendo DS users, which was 1.2 titles (year average). This number is not per hardware (meaning the tie-ratio) but per user (who plays Nintendo DS now) basis, so please do not misunderstand this point.
When I look at these numbers, I do not think we can say that the growth of social games and smartphones has had an impact on our Nintendo DS business.
However, in terms of any kinds of effects, the unique aspect of smartphone games and social games is that the players are able to enjoy playing with them at a very low price among all the applications which are categorized as games. This occurred for music contents in the past, but now, I think there is pressure to lower the video game prices. It is becoming more difficult for us to correctly communicate the value of the video game business, which is where we do business, and have consumers acknowledge that the games they enjoy are worthy of their paying a few thousand yen. Therefore, if we can not overcome this challenge, Nintendo’s business will shrink in the future, and conversely, if we can, I believe it can expand even more.
By the way, I have also repeatedly said this, but when the past mobile phones became compatible with games, there was much speculation that “If gameplay is available on everyday mobile phones which everyone carries, the handheld game devices genre will disappear,” and I have been interviewed many times and read many articles regarding this topic. If we had unthinkingly repeated what we did during the Game Boy Advance era, I think our fate would have been sealed. However, we kept moving forward, and because we didn’t stop, we were able to create this new large market for Nintendo DS. We would like to do the same for Nintendo 3DS and, of course, even beyond Nintendo 3DS, we will need to continue to take on new challenges. Nintendo’s lifeline depends on whether we can offer something different from other systems and whether we can provide added-value through the integration of hardware and software. We would like to continue offering such experiences to consumers.
Also, to answer your question concerning whether we will enter into the social-gaming industry, we do not have any intention to simply enter into the present social-gaming structure. Our fundamental policy is to provide Nintendo software only on Nintendo hardware.
On the other hand, in terms of games with a social element, we were engaged in this area long before the term “social games” was created. We have offered gameplay that increases its value by real people-to-people connections. The evolution of gameplay started from our first game system that had two controllers, which allowed two players to play together, then to Nintendo 64 with four controllers, to “Pokémon,” where people were first connected with cables and then with wireless communication. Games like “Mario Kart” or “Smash Bros.” are also good examples of social games because the “social” element increases the games’ value. In addition, I think we can say that we take pride in the fact that “Animal Crossing” had an influence on the current so-called social games. Therefore, Nintendo will engage in this so-called social-era by proposing gameplay with social aspects which can be done under the current circumstances and which is only possible on Nintendo 3DS, Wii, or Wii’s successor. - Satoru Iwata
Once again, Iwata says there’s no impact on DS via social games and smartphones, and he’s got his own set of data to back it up. Do we believe him, or is Nintendo in denial?