Reggie on eSports, fixing Wii U's missteps, 3DS sales, 3rd party, reintroducing franchises, 3DS here to stay, Skyrim

Coming from a Glixel interview with Reggie Fils-Aime...

G: Nintendo seems to be quietly becoming more and more about competition in the design of its games. Mario Kart, Splatoon, now Arms and of course, Smash Bros. Is that a recent shift? Is there a broader, esports ambition there?

RFA: You know, it's not a recent shift. When you look at the NES system – the first system with two dedicated controllers. If you look at what we've done with N64, which was a true four-player machine – and you look at GoldenEye and some of those experiences and obviously Smash Bros. has been part of the competitive gaming circuit for a long long time and even the original Nintendo Championships from 1995, we've been in the space for a long time. What I would say is different in how we think about competitive gaming is that we think about the community, we think about trying to encourage and empower the community – you see that with Splatoon, you see that with Smash Bros. – and for us it's about having more and more players engaged and having fun and battling each other versus how others are thinking about in terms of leagues and big startup money and things of that nature, that for us is not as interesting, at least not today.

G: You're doing The Invitational here at E3 on the show floor – a more localized event. Is that more along the lines of what you're thinking?

RFA: Absolutely. A lot of that activity is happening. We've done invitationals when we've done our mall tours, we've done invitationals in our store in New York. So we've done a lot of these kinds of activities. With Splatoon it's the first time it's on a worldwide stage – four different teams, four different parts of the world – that's interesting and unique. We like that. We'll probably be doing more of that type of activity. One of the things we like with Arms, especially with E3 now being open to 15,000 consumers, is the ability for someone to battle their way up to being on that big stage. We think that's interesting. And so, maybe it's more "competitive gaming for the masses" as an approach versus thinking about the "pro" who's all about big payouts and things of that nature. That's not an area – at least from our own investment standpoint – that's as interesting to us.

G: And you can't control what the competition is doing...

RFA: Right. You can't. And even to that point, I remember having a conversation with Mr Iwata and asking him directly "what was is like when at an E3, all Sony did was mention that they were working on a PlayStation portable device and our stock I think took something like a 15 percent haircut?" So, then we transition from then to the DS and Wii generation – to massive, massive devices. The DS over its life sold over 150 million hardware units and the Wii over 100 million. There were years that from a Nintendo of America perspective, we were selling 20 million pieces of hardware. Just Nintendo of America. Then we transitioned to the 3DS and the Wii U generation and the 3DS – though it was slow out the gate – as we sit here today is 66 million units sold as of our last reporting. So certainly, a healthy, vibrant business. So, what does this all mean? Well, first it means that this company has been around the block and knows what it's like to have systems that people just can't wait to get their hands on and others that maybe aren't comparable. What we talk about internally is that you can't get too excited when things are going really well, and you can't get too depressed when things are not, because just one game make the difference. One game.

Now, the Nintendo Switch. As we prepared to launch the Switch we were really mindful of three things. The first was that we need to make sure that the proposition of Nintendo Switch would be easy to understand: a home console you could take on the go, play with anyone, anywhere, any time. That's it – 20 words or less. And it resonates, because what gamer hasn't been in that situation where they're having so much fun but then [claps his hands] "I gotta go." I gotta go to work, I gotta go to school. I gotta go take a cab – whatever. Now I can take that experience with me. So we had to have a clear proposition that we could articulate and that would resonate.

The second thing we needed was a regular cadence of great games and if anything, with the Wii U, that's what we were unable to do. We planned on it. We talked about having Pikmin come out early and Starfox and all of these great games, but the development schedule for these took longer and so it created gaps in the schedule.

G: What was the reason for that? Was it the tech?

RFA: No, it's just..part of it is that Nintendo developers are perfectionists and that's why the game quality is what it is. Making sure that the play was unique and fun.

G: So, polish?

RFA: Right. I mean, look at Breath of the Wild. The team took a lot of time to polish that game and the result is one of the highest rated games of all time. So, with the Nintendo Switch, we wanted to make sure we had a great cadence of games. And we've been able to deliver against that. Breath of the Wild at launch, 45 days later Mario Kart 8 Deluxe. We're launching Arms on Friday, then we've got Splatoon 2 in July. We've got content coming August, September, October - that regular pace. And third, we needed to make it easy for developers to create content. Job one certainly is to drive the install base, but we needed to make it easier for developers to bring their content to our platform. So, we made sure from the get-go that we had Unity and Unreal 4. We've worked long and hard with all the key development studios and publishers to enable them to bring their best content to life. That's why you see a company like Bethesda – who hasn't had a key franchise on a Nintendo platform in a very long time – bringing Skyrim and all this other great content coming to the platform like FIFA, a fully-fledged FIFA experience on Nintendo Switch. So we needed to make sure we also had third-party on board.

G: But you've not always been great at that. There have been some pretty lean years where third party seems to have either abandoned Nintendo or Nintendo didn't seem so interested in them.

RFA: I would correct you on that last statement. There's never been a time when we didn't want third-party. Fill in the blank with any third-party entity out there – any publisher – and we're always having conversations. We're always trying to find ways to do business together. So it's never been a lack of desire. At times, historically, our platforms have been incredibly tough to develop for and so making sure that these key development tools are available and that they work well for the system – that was really important. And that's something that's going to pay dividends this holiday and beyond in terms of great third-party content. Those were the three things that we needed to make sure differentiated the Nintendo Switch generation from, say, Wii U.

G: Is that why Kirby and Yoshi are very simple brand names – which feels like a reboot? Are you seeing a generational shift?

RFA: Certainly we constantly have to reintroduce people to our IP. Zelda: Breath Of The Wild – I'm a huge Zelda fan – but I recognize there were 15 year olds who didn't know what Zelda was, didn't know the magic of the Zelda franchise and creating something that they could own and say "this is my Zelda, this is fun, this is a game I want to play," was critically important. And yes, we're doing that with Metroid and we're doing that with Yoshi and we're doing that with Kirby. We have to. Continuously. Folks like us will continue to play these franchises that we love but we constantly have to refill that pipeline with new fans to engage with these intellectual properties.

G: So does that explain Nintendo's push into mobile, after years of staying away?

RFA: Certainly it's about getting an American child who's ten to have a great Super Mario experience but it's also about getting that adult in India who's never had access to a Nintendo platform but has heard about this thing called Super Mario, to get them engaged. China, Korea, all of these markets that historically have not had great access to our content now have access to our IP. That's a key part of our mobile strategy.

G: Do you think, with the Switch being effectively mobile, it's going to make the DS obsolete?

RFA: No.

G: But there might be a bit of overlap.

RFA: Certainly. There certainly is an overlap. The difference is there's over a thousand games available for the 3DS. The variety of different form factors, from a US marketplace standpoint, takes you from $79 up to $199. The difference in colors, all the things that are important in the handheld space, are all there in the 3DS family. As long as we continue to have great content like Metroid: Samus Returns and Ultra Moon and Ultra Sun and the new Mario And Luigi game that we announced today – as long as we continue having great content for the device we believe it's going to continue to thrive even as Nintendo Switch continues to grow.

G: The last time we spoke at E3 was before we'd seen the Switch and before we saw the commercial with Skyrim in it. Can you walk us through how the hell that happened?

RFA: At it's core the same is true as to why Mario Plus Rabbids happened. That is, as you both well know, developers play each other's games, developers create an attachment or an attraction even when you've got developers in Japan and developers in the US, and there was this attraction and it was as a result of that that discussions happened around Skyrim. Its why there's Zelda items that are going to show up in our platform's execution of Skyrim. Typically there is this attraction or this commonality that leads to the business conversations around "hey, how do we do something together?"

G: So who was a fan of who? Who spoke to who first?

RFA: I can't tell these kind of tales out of school. But as you can imagine, there needed to be an attraction on both sides. We talk with developers and publishers. Every developer and every publisher, we have conversations with. Even if they've never developed for our platform, we have conversations with them. At the heart, we are a dedicated gaming company, we create great platforms, great games, we want everybody's best content on our platform. Even if they've never done it before. So yeah, we gave Todd [Howard] a demo of the Nintendo Switch tech, we shared some early prototypes of the content and certainly he was excited about it. But there needed to be more than that right? There needs to be more than just that initial attraction and then the conversations go from there.

G: And what is it that Nintendo looks for in a partner?

RFA: We look for partners that pride themselves on creating great content. Great content. And let me take it out of the gaming space and let's use Universal as an example. Highly highly immersive experiences – you look at what they've done with Harry Potter as an example. It's that craftsmanship that Nintendo looks for in a partner.

I'm going to give you a two minute Japanese history lesson. Kyoto is the Emperor's capital. When the new capital became Tokyo, the Emperor would still travel to Kyoto, why? Because that's where the finest silks were, that's where the finest pottery was, and there's this – I don't know what the term is in Japanese, but in English it's "Kyoto craftsmanship". Our developers have this Kyoto craftsmanship mentality and they look for partners that similarly have a pride and a capability in their craft. When that capability is there that becomes the foundation of a strong partnership.