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Nintendo Q2 Fiscal Briefing Summary

by Steven Rodriguez - November 1, 2007, 8:42 am EDT
Discuss in talkback! Source: Nintendo

TV Program Schedule Channel unearthed, Wii capable of television and movie content delivery, the deal with unplayable Wii demo stations, and more is revealed in a Q&A with Iwata.

As a part of Nintendo's financial briefing in Japan last week, Nintendo president Satoru Iwata and other key Nintendo figureheads sat down to participate in a Q&A session with investors. Below is a summary of the more interesting and informative points of the Q&A. If you'd like to view the whole shebang, you can do so here.

- Nintendo recently had to recall Forever Blue (a.k.a. Endless Ocean) in Japan because the launch copies had a game-breaking bug. When asked how it could prevent such a costly mistake in the future, Iwata said that Nintendo just needs to be more careful about testing games in the future to make sure it won't happen again. He went on to say that play testing video games has become more of a challenge for Nintendo due to the broader audience its games are reaching, giving an example of trying to find out what kind of problems a person in their 50s might face when playing.

- As for what Nintendo is doing to ensure third parties are bringing quality games to the Wii and Nintendo DS, Shinji Hatano, general manager of Nintendo's marketing division, said that third parties sometimes come to Nintendo for advice as to how to implement touch screen or motion control into their games, but Nintendo won't flat-out tell developers how to do things since their game designs are ultimately up to them. Nintendo said that third-party relationships are doing well in this regard, and they have, in fact, born fruit: Flash Focus was actually developed in conjunction with Bandai-Namco, and Sega is co-developing Mario and Sonic at the Olympic Games with Nintendo.

- Why don't Wii demo stations installed in retail shops allow people to play Wii games, especially since the entire push of Nintendo's marketing was "playing is believing?" Iwata explained that as much as Nintendo would love for as many people as possible to try out Wii Sports, the fact is that it's not very easy to clear enough space around the demo units installed in retail stores (in Japan) to ensure safe play. It would also be difficult for a store to keep an eye on people using the Wii unless they dedicated someone to the station. (This would explain why playable Wii demo stations in North America only appeared in specialty game stores like GameStop.) Nintendo said it will try to roll out more playable kiosks once there are enough games that aren't as risky to leave people playing while unattended.

- Nintendo has sold over 20 million DS hardware units in Japan, which is nearly 16% of the country's population, prompting a question of how Nintendo is going to keep DS sales strong once hardware penetration reaches its saturation point. Iwata admits that DS sales in Japan are slowing, but said: "we have never thought, 'we have been successful so far so we should keep on launching Touch Generation titles and new titles periodically and then we will be able to sell DS as before.'" Because of the high install base of the platform, "it would be a shame if we could not use it as an infrastructure for something else." New business models would need to be invented to keep the DS viable in the market, and Nintendo hopes to have some concrete examples of that idea in action next year. Iwata asked everyone to "imagine that something interesting might happen" if you brought a DS to places like a theme park or museum, and that there are plenty of possibilities there.

- The Wii is technically capable of delivering content such as movies or television programs over the Internet. However, Nintendo is not immediately implementing such features, because it wouldn't be financially viable in the long-term. "When we offer, for example, free movies or TV programs, many customers would jump to join," Iwata said, "but as soon as we start asking the users to pay money for these services, the hurdle immediately becomes higher." Nintendo wants to ease people into the whole Wii Channel concept by "enriching the existing channels," and with the new channels coming in the next two months, expand people's perceptions of what the Wii Channels can do.

- A previously unannounced Wii Channel, the TV Program Schedule Channel, will let Japanese Wii owners browse television channel listings. Nintendo is partnering with data giant IPG Photonics to deliver the service. When asked when the channel would come to areas outside Japan, Iwata explained that the service would need to change to suit different regions because of how cable television viewers in America already have built-in programming guides in their cable boxes. We have requested comment from Nintendo of America on this new channel, but did not receive a reply in time for publication.

- Nintendo wants to bring Wii to the Chinese market, but doing so now would be impossible given the level of demand for the console in Nintendo's primary markets. Additionally, Nintendo's arm in China, iQue, has reached the point where it is starting to turn a profit, though not enough of one to significantly impact Nintendo's bottom line. Iwata believes Nintendo will be able to enter China next year, but only after planning with local people on how to grow the software market. As for Korea, Nintendo's Korean subsidiary told Iwata that if his company wants to be successful there, he needs to get local software makers involved. Iwata completely agreed with that assessment.

- Finally, Iwata was asked to explain the relatively slow DS sales happening in the American market, compared to Japan and Europe. Right off the bat, Iwata was "sorry for people at Nintendo of America because nobody commended them" as they were breaking sales records year after year. He admitted that the DS was slower to catch on in the States than in other territories—in fact, the Game Boy Advance was still selling big time here when the DS started cleaning up in Japan. Because of that, NOA was late adopting the DS as a serious money-maker for Nintendo. Iwata also commented on the move of NOA to San Francisco, saying, "we have been questioning ourselves if Seattle can be appropriate for the headquarters of all the marketing and PR activities of Nintendo when we are trying to expand the ordinary concept of game business."

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