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Iwata on Wii U experience, Wii sales, 3rd party support, online approach, lack of Blu-ray/DVD playback, manufacturing process, enticing the core gamer, use of two Wii U controllers, poor 3DS sales, threat of mobile gaming
Iwata on enhancing the Wii experience with Wii U…
So, the first thing that we did when we designed the Wii U console was to think about what we could do to enhance and refresh the Wii experience.
We started by looking at some of the things that we wanted to achieve, but weren’t fully able to, with the original Wii console. And, we also looked at things like technological advancements in terms of the penetration of HDTV, and we have incorporated it into the Wii U console.
What we are proposing this time with Wii U is a console that will give those consumers who did not even have an opportunity to interact with the Wii system, more opportunities to connect with and use the Wii U console and, at the same time, offer the consumers who desire those high-quality HD visuals in their gameplay, a product that will meet their needs as well.
In Nintendo’s E3 Presentation, I mentioned that there are now two categories of consoles: one for casual players, and the other is for core gamers. In our world, what has been said is that there have been two categories of players: one group is casual and the other group is core and that there is a barrier between these two groups. We believe novice players, who started playing games as casual players (since there is no one who is inherently a core gamer), come to have a budding interest in games and spend a greater amount of time with gameplay so that they mature into core gamers. What we have tried to do with the Wii U console is to create an environment where we can break down the barrier that exists between those two groups and provide, on a single console, an experience that will satisfy both types of users. Through that process we continue to expand the gaming population.
I believe the concept of the “Blue Ocean” conveys the idea that if you try to have too broad of a focus, then you may not have as great of an impact, or things may not go as well as you desire. So, part of the philosophy of the Blue Ocean strategy is to really bring your focus into a specific area by “abandoning” or “eliminating” some good ideas.
Perhaps the reason that you asked this question is because you may feel that we have lost our focus by going with this seemingly broader strategy.
So, to define what the focus is this time, there are really two points that we are focused on. One is that we looked at the system and we asked the question, what can we do to attract people who were not inspired by even the Wii Remote or the Wii Balance Board to participate in video gaming, and how can we, through this system, capture their attention? The second point that we focused on was how can we satisfy and meet the needs of everyone in the industry who is developing games now and their desire for HD visuals, and how can we convince them that this will be a system with which “they can take full advantage of their game development.”
On consumers not purchasing Wii due to Wii U…
It can be said that for any consumer product, different audiences buy a product at different points in time, and there are certain audiences that want to buy a new product when it first comes out, before its reputation becomes solid, because they want to be the first ones to try it. There is also, for every product, an audience that waits until some of those first impressions have come out and want affirmation that the product is one that is worth their investment and, at that point, they will purchase that product. Similarly, there is another group that waits an even greater period, for a product to really take hold for the vast majority of people in the marketplace, before they move and purchase that product themselves.
So, what we are considering with the current state of the Wii system is that our objective is to sell Wii to the group of late adopters.
And, of course, this is a group of people who, despite the Wii becoming a social phenomenon, still have not bought the system. So, we need to move beyond that and try to find other reasons for them to want to purchase the system.
The same could be said for last year and even the year before but, as we went into the spring through fall months, sales of the Wii console were not as strong as many people had expected, and we certainly heard concerns to that end. But, in both of those years, once the holiday season started, we saw that the Wii console then began to gain great momentum so that by the end of the year, it had retained its top spot as the best-selling hardware system.
So, the more that our business focuses on that group of late adopters, the more that our sales tend to peak in the holiday season.
For those people who are considering their holiday season purchases, it becomes our job to convey to them that the Wii has great entertainment value and it will make their family and friends happy during the holiday season while they are at home.” If those individuals are looking to make a purchase during the holidays this year, then the Wii U system, which won’t be out in time for the holidays, will not be an option for them to choose from. Conversely, because the majority of the people who will purchase the Wii U system initially already own the Wii system, I don’t think that the information about the Wii U system launch taking place next year will affect the sales of the Wii system. Of course, the ideal scenario for Nintendo would be that if people are considering purchasing another HD video game console, then knowing that they will have opportunity to purchase Wii U when it is released next year, they perhaps might delay their purchase of a console.
Reggie Fils-Aime (President & COO, Nintendo of America Inc.):
If I could add three points from a Nintendo of America perspective: first, we recently changed the configuration of the Wii hardware less than a month ago to include “Mario Kart Wii,” which here in this market is the number 2 selling Wii title — so that is a very strong consumer offering. We priced that bundle at US$149, and we’ve already seen positive momentum from that move.
Secondly, we just launched a line of games called Nintendo Selects. These are value priced offerings at US$19.99 that have sold very well again in this short period of time, and we believe that that will continue to offer great value to consumers who are buying right now.
And, the third opportunity I would highlight from a North American perspective, or from a total Nintendo of America perspective, is that we continue to have targeted opportunities here in our territory to continue driving penetration. Whether those opportunities are regional, for example, in our Latin America markets, or whether those opportunities are ethnic, we have identified the Hispanic consumer as a key opportunity for us. They share the family values that we have in our Nintendo product line. And then, from a demographic standpoint, there continues to be specific age segments that have indicated an appeal or a desire to have a Wii system, but they have not yet bought it. So, certainly as Mr. Iwata highlighted, we look forward to a very strong holiday season, especially with the launch of “The Legend of Zelda: Skyward Sword,” but in addition, we have very specific opportunities on a regional basis that we will continue to focus on even in advance of the holiday season.
On third party Wii U support…
There are, of course, a variety of genres within the video game arena, but perhaps one of the most popular, particularly in the West, is the First-Person Shooter and that is a genre in which people feel that the experience is greatly intensified by enhanced visuals.
Within the current environment, there are a number of the companies that are spending a significant amount to create these First-Person Shooters but, with the graphics capabilities of the Wii hardware, we have not been able to get them to create Wii versions of key franchises, and they have developed few games of that genre with Wii as the primary gaming console.
So, some of the hardware limitations that have been a hurdle for those developers to create their games on our console, are going to melt away when we move to Wii U because it is an HD system.
And, I think that as we’ve shown the concept behind Wii U system, many of those large third-party publishers are showing great interest in what we have to offer.
We were fortunate enough to have Electronic Arts Inc. appear on stage with us yesterday, but beyond that, we also had individuals who didn’t appear on stage but did appear in the developer video in which we showed (at our presentation) both developers as well as executives from many of those third-party companies talking about the possibilities of the Wii U system.
So, I feel that we will have an opportunity and we will be able to bring many of those key franchises to Wii U as a result of the work that we’ve done so far.
And, within those efforts, if we do find a third-party publisher who is interested in taking advantage of the unique functionality of our new controller and styling the games that they are creating to take advantage of that, I think that’s where we’ll see the opportunity for Nintendo to cooperate with them. So, I think it would be safe to say that you can expect there to be more opportunities for those games to come to Nintendo platforms in the future.
(Note) In the evening of the day when this Analyst Q&A Session was held, the Developer Roundtable, hosted by Nintendo, was held and Ubisoft Entertainment S.A. made a presentation describing its engagement for Wii U. In our view, this is one of the examples of how third-party publishers are engaging in Wii U.
On growing the market with Wii U…
It really comes down to some of the points that I mentioned before. But first, when we created the console itself, one of the key things that we looked at was how we could make it a console that would be relevant for people who, so far, have not engaged in gaming, and that is an area where we feel that there is an opportunity to continue to expand the audience. Second, we are looking to focus on those individuals who desire high-quality visuals and meet their needs while, at the same time, offer new styles of gameplay that they haven’t experienced before with the new controller. So, from those standpoints, I feel that there is a tremendous opportunity to appeal to that audience as well. Of course, I understand that it will not be easy for the new console to surpass Wii in sales. But we do believe that this is a challenge that we can take head-on, and if we didn’t believe that, then we wouldn’t be proposing this style of new system.
On Wii U’s approach to online content…
To start, I’ll have to say that I don’t have any materials with me today that can illustrate precisely what our online environment will be like, but I can speak generally about the direction that we are moving in.
I think, in general, the online environment is changing quite rapidly.
So, what I have come to feel lately is that the idea of saying, “we are going to create this style of online structure and that we would like you, the developers, to fit into the online structure that we are creating” is perhaps already out-of-date.
I think that Nintendo’s past console business has often included this idea of a set and fixed online structure. So, I think that, going forward, the question is really to what degree Nintendo can create a more flexible system for its consoles.
And, what we found at this point is that, as we discuss the online structure with different publishers, the things that the different publishers want to do are in fact seemingly rather different.
Our current direction is how we can take the desires of the third parties and create a system that’s flexible enough to enable them to do the types of things that they might want to do.
So, for example with the question of VoIP, I think then what we would like to do is work with them on how to enable them to do that. But, what we’re not going to do is to consider as prerequisite conditions that every game includes features like that because obviously there are some developers who may not want to do that.
As for social networks, after examining the penetration and adoption rate of social networking services like Facebook, etc., we’ve come to the conclusion that we are no longer in a period where we cannot have any connection at all with social networking services.
Rather, I think we’ve come to an era where it’s important to consider how the social graph of the social networking services can work in conjunction with something like a video game platform.
So, once we get to a point where we’re able to talk more concretely about our online plans, I think that once you hear what we’ll have to say, you’ll feel that Nintendo has a policy of adapting itself to changes in the network environment in a flexible fashion rather than the one of sticking to a rigid mechanism, or perhaps you’ll notice that we have found ways to take advantage of these types of features like VoIP and social networking, where our systems have been seen as being weak in the past. However, unfortunately, we won’t be able to share anything concrete today.
On poor 3DS sales…
So, first I think it’s fair to say that while Nintendo 3DS had a strong launch day, the results since then have not met our expectations.
By which I mean to say that although pre-orders for this system were very strong and initial impressions of this system were very positive, those early indicators stand in conflict with where the system is at today. So, I can’t say there are no issues at present.
So, what we have analyzed up to this point is that the initial move by the early adopters has not translated into broader movement by the broader market in the ways that we had expected.
The current situation resulted from the fact that the delay of developing Nintendo 3DS software and launching online services, like Nintendo eShop, 3D video services and so forth, occurred simultaneously, so we could not meet people’s high expectations that they had before its launch, and we did not see momentum after the launch.
I think that we’ll be able to show you that as Nintendo eShop and 3D video services come online, and a number of key software titles become available, we’ll be able to regain momentum for this hardware.
Regarding the form factor, I think that people who purchase video game systems tend to purchase it for the experience that the system offers, so while I do agree that it’s important for us to work on creating products with appealing form factors, I don’t think that the current state of the Nintendo 3DS is because of a result of not having a significantly different form factor from our other handheld systems.
But, as you have pointed out that you have a concern about the form factor, then as we continue to look at what we do with the system, we’ll continue to take that into account and see what we can do to satisfy that concern.
On lack of Blu-ray/DVD support on Wii U…
Wii U does not have DVD or Blu-ray playback capabilities.
The reason for that is that we feel that enough people already have devices that are capable of playing DVDs and Blu-ray, such that it didn’t warrant the cost involved to build that functionality into the Wii U console because of the patents related to those technologies.
On Wii U’s manufacturing process…
One of the reasons that we’re talking about Wii U at the show this year is because our estimates of when we would be able to manufacture it and the timeline for launching the hardware are such that we feel confident that we’ll be able to meet those timelines. So, if perhaps you were worried about a boom in smartphones that might use LCD screens having an impact on our business, with the current estimates that we have, I am not seeing any significant manufacturing issues.
On reaching out to the core gamer with Wii, Wii U and 3DS…
Among those people that we generally refer to as the “expanded audience,” there are a large number of people who don’t actively seek out information about video games.
In other words, those people don’t read gaming magazines to find out about what games are coming out, and they may not go directly to Nintendo’s website to look at what new offerings we may have.
So, with those people, what becomes incredibly important is how we reach them with our key messaging about which software they should purchase to truly be satisfied and have a good gaming experience.
It becomes very important for us to match the consumers’ expected levels of satisfaction to the largest extent possible because, if they spend their money on a product that they are not satisfied with or they don’t enjoy playing, then that gives them an opportunity to drift away from playing video games.
So then, it becomes a question of how well we understand the different tastes that those consumers have and how to meet the expectations that they have, and how we deliver our messaging to those consumers, who do not proactively gather gaming information, in a way that will help them understand that we have products that will satisfy them.
Partially, the concepts that we had with both the Wii system and the Nintendo 3DS system were attempts to address this. With Wii, we wanted it to be a system that people would turn on and interact with every day, and with Nintendo 3DS, it’s a device that we want people to carry around with them every day. So, in terms of how we can leverage an online system to try to address this issue, we’re looking at ways that will convey to this audience which games are fun and, ideally, in a way that will enable people who are playing those games with others, to share that information socially. So, once we’re in a position to share more concrete information about how we’re going to do this, we will certainly do that, but I do think it’s an important issue that we need to address and one where we hope to introduce some kind of big innovation.
On the threat of mobile gaming…
I gave a speech this year at the Game Developers Conference (GDC), and in that speech I delivered a message to the creators of video games that we were coming to an era where it was important to consider how to protect the sense of value that we have in video games.
Unfortunately, after I gave that speech, I think there may have been some misunderstanding that the message that I was trying to deliver was that quality was more important than quantity, or that perhaps I was criticizing social platforms and mobile platforms, and the games that they had to offer, which wasn’t my intention. My intention was to deliver a message to the creators of games that the question of the value that a consumer places on a video game is something that we, as developers, should be very sensitive to because, if we are not, it will become difficult to sustain the industry.
Personally, I don’t feel that there is competition or threat from mobile games for our video game business from the sense that, even before mobile games appeared, it’s always been the nature of our job to continue to offer new experiences that players can’t have on other devices, and that, as long as we can continue to do that, the consumer will want to play our games, but what we are sensitive to is the notion of the sense of value and what consumers are willing to pay for games.
On Wii U support for two controllers…
What I can say is that we are also thinking, as you imagined, that with one console you would get one of the new controllers as a complete set.
As I am sure you can imagine, the cost of the new controller will exceed the cost of a standard controller up until now.
Regardless of the technical question as to whether or not we could do that (use two of the new controllers), for the time being, we will focus on what we can do with a single new controller with the system.
In the future, we may look at what other opportunities there are for gameplay and, how having two of those controllers might create fun or interesting new styles of play, but of course in doing that, it would require a consumer to purchase an additional controller. Therefore, we would need to carefully consider how we could create such an experience and, potentially, how we could ensure that there would be enough value within that experience for the consumer to accept that cost and make that purchase.