1. Seeing Confused Customers at Retail

Iwata - Up until this point, “Iwata Asks” has always involved asking people who create things about their creations, but today I’d like to ask the people who sell things.

Over the last few years at Nintendo we’ve been taking on the challenge of “expanding the gaming population”, but as that happens customer demographics change, and in step so do game sales floors, and I wanted to find out about the thought process that these people that “sell things” at Nintendo had and how they came about creating this “Wii/DS Software Search Guide”. With that as a background I felt that there would be a lot of value in transmitting this through “Iwata Asks”, particularly in regards to how we perceive the problems we face day in and day out, and also to telling the world what we’re trying to accomplish. That’s why I’ve brought you all here today. Thanks for coming.

Everyone - Thanks for having us.

Left: “Wii/DS Software Search Guide: Counter Type” Right: “Wii/DS Software Search Guide: Floor Type”

※1 “Wii/DS Software Search Guide”＝ A search tool that was first deployed at select retailers for testing beginning in December 2009. Includes Wii and DS software information and media for 3rd party software makers in addition to Nintendo that is easily searchable. (The “Nintendo Search Guide” service ended December 25th, 2013.)

Iwata - All right. First off, let’s hear introductions so we can find out what everyone has done up to this point. Senior Managing Executive Officer Hatano, you may need no introduction, but if you please.

Hatano - Sure. I’m Hatano of the Sales Division. Since February 2004, in addition to domestic sales and sales planning and strategy, I’ve overseen the division responsible for interfacing with 3rd party software makers, the planning division responsible mainly for marketing and promotions and the customer service center.

Iwata - Although it may actually be known externally that Nintendo reorganized its development sections in 2004, we actually also brought all of the sales related functions together underneath Hatano-san’s Sales Division, into one massive central organization. And then, after that the DS and Wii were released. The person that became the central figure in that sales structure was Hatano-san.

Hatano - Yes.

Takeuchi - I’m Takeuchi of the Sales Strategy Department. Originally, I originally handled sales on the floor and collected sales data, but in February 2005 I moved to the Sales Strategy Department, and while organizing domestic titles for release, proposing retail strategy, performing work with partner industries as well as network related work, I handled retail related work — the theme for today, as the manager of the group.

Oda - I’m Oda of the Sales Strategy Group. within Takeuchi-san’s group I’m mainly responsible for retail promotions activities such as deciding which products get promoted at retail and what kind of displays to have.

Sakai - I’m Sakai of the Planning Division. Rather than retail promotions per se, the Planning Division handles marketing and promotions overall, and within that I’m responsible for the “Everyone’s Nintendo Channel”（※2）network promotion.

※2 “Everyone’s Nintendo Channel”＝ One of the Wii Channels. Available as a free download from the Wii Shopping Channel. In addition to various information and software videos related to Wii and DS, the channel also allows for software search by “Recommended Rankings” that are based on customer’s “Recommendation Votes”.

Iwata - Sakai-san is one of the central people involved in operating the “Everyone’s Nintendo Channel”, and his involvement came about due to the decision to utilize the data collected from the “Everyone’s Nintendo Channel” in the “Search Guide”, right?

Sakai - Correct.

Iwata - Well then, what we’re here to talk about is the “Wii/DS Software Search Guide” - a search tool meant to help customers who are looking for software at retail, which began test deployment at six locations as of December 2009.

My understanding is that the reason this search tool came about was because Hatano-san always goes to the stores in his neighborhood when the weekend arrives to check on things, and it all began with the problems he felt he saw there. Would you please start from there?

Hatano - Sure. To establish a proper timeline, starting with the latter half of 2005, the year following the launch of the DS, we felt very strongly about wanting to acquire a lot of retail space for 3rd party made games, in addition to Nintendo’s own products.

Iwata - That’s because we didn’t get very much space directly after the DS was released, did we?

Hatano - Part of it was that even after 1 year there weren’t that many titles for it, but no, we didn’t get as much space as we wanted. And then once 2006 came around the DS Lite was released, and the DS market became incredibly healthy.

Iwata - The DS Lite was released in March of 2006, and then in May “New Super Mario Brothers”（※3） also released.

※3 “New Super Mario Brothers”＝ Action game released for the DS in May 2006. Has sold 5,720,000 copies as of January 3rd, 2010. (Source: Media Create)

Hatano - And with that the DS market picked up at a rapid pace, with new title after new title releasing, and as a result - we were able to acquire lots of retail space. And so, was it around the end of summer 2006? where I started to feel customers getting confused at the store.

Iwata - I’m sure it was because you had continued to check out the stores every week that you began to feel that change.

Hatano - Indeed. It was born specifically from the “Expanding the Gaming Population” that Nintendo had made its mission - I began to see with my own eyes that customers were getting confused, not sure what product they should buy.

Iwata - Because there were suddenly all different kinds of customers, something you didn’t really see at game retail spaces up until that point.

Hatano - So of course these new customers were confused by the conventional way product was displayed, and I figured there must be a better, more easily understandable way to organize the product, but it’s a hard thing to change.

Iwata - The floor is ultimately owned by the retailer, so even if we tell them we’d like to see a specific kind of change, they can’t just up and change things the next day.

Hatano - That’s why the Sales Strategy Group and Planning Division teamed up in the interest of providing an easily understandable POP for placing at retail and pamphlets that clearly explained the product, but even then it was still unclear for customers. They would go to the store, and first look at the front of a package they might be interested in, and then they would almost certainly look at the back - but it seemed like even at that point they wouldn’t be able to come to the decision to buy what they were looking at.

Iwata - For us it’s incredibly regrettable that even after they went to all the trouble of reading the back of the package they would just place it back on the rack. They’d have enough interest to think, “maybe I should buy this, what should I do?” But something must be missing if they’re just putting it back on the shelf.

Hatano - Exactly, something’s missing. And furthermore, you’d have a lot of different pieces of similar software in the same genre, confusing customers even more.

Iwata - At that point there was an explosion of new DS software, and as a result it became harder to choose what to buy.

Hatano - For those customers I felt more and more strongly that we weren’t explaining things enough, and thought “this is no good”, but the answer for what to do wasn’t immediately apparent.

Then, around the next year, 2007, retail space expanded more and more, and even more titles were released, making things hard to comprehend.

Iwata - Because game retail space was set up mainly for customers that would find the game they want and just bring it to the register. Previously game retail spaces were targeted mainly towards the type of customer who knew what they wanted, so that layout was fine for them.

Hatano - Exactly. And since that was no good for these new customers, I thought maybe it would be possible to place print materials or something that customers could easily check, but those kinds of materials need to be issued every month. Furthermore, it wasn’t clear that the clerks working at the retail spaces would be able to advise customers well based solely on that. Obviously at the “DS Stations”（※4） a customer can try out games, and watch video on the monitor, which is easy enough to understand, but once they go over to the racks full of product it’s not so clear what to buy. Seeing this, I felt sorry to the customers as a maker, myself.

Iwata - So you must have felt impatient, seeing these clearly confused customers every week, wanting to find some effective way to help them.

Hatano - Yes, for so long I felt that chagrin. So that’s how it all started - seeing these confused customers and their behavior searching for and buying product at retail.

※4 “DS Station”＝Placed at game shops and game corners of mass-sales stores. Players can bring their own DSes and download demos of new software or added content for free, as well as use the Wi-Fi Connection to play with people around the world. Also, exclusively for the Nintendo DSi or Nintendo DSi XL, players can purchase digital software (DSiWare).