I am here to tell you about our future, and to begin with, I would like to mention what Nintendo will not change.

Since the revision to our full-year financial forecast, there have been various reports and comments about us. However, we do not hold a pessimistic view of the future of dedicated video game platforms.

We therefore believe that dedicated video game platforms which integrate hardware and software will remain our core business. Naturally, we are moving ahead with research and development efforts for future hardware as we have done before and we are not planning to give up our own hardware systems and shift our axis toward other platforms.

We believe we can capitalize the most on our strength in platforms which integrate hardware and software. It is clear that, since we have developed products which integrate hardware and software, we were able to offer such devices as dual-screen Nintendo DS with one touch screen, and Wii Remote and Wii Balance Board for Wii.

Nintendo’s history definitely suggests that Nintendo has always flexibly innovated itself in line with the times.

After Nintendo started the manufacture and sale of Hanafuda (traditional Japanese playing cards) 125 years ago, it has innovated itself from a playing card company to a toy company, a toy company to an electronic toy company and an electronic toy company to a company running video game platforms. What has remained the same, however, was we always tried to create something new from materials and technologies available at that time and to position entertainment as our core business. Furthermore, even after we established the business structure of video game platforms, we did not stop innovating ourselves. For instance, home video game consoles were born to play coin-operated arcade games at home, but we have evolved them into something uniquely appealing. Another example is the games to expand the gaming population that we have offered with Nintendo DS and Wii in the last decade, which were clearly foreign to the mainstream video games at that time but were accepted by a great variety of consumers. In this way, we will continue to value self-innovation in the future.

In addition to self-innovation, we have shaped our future by collaborating with various outside partners which we saw as appropriate at the time in order to adapt to environmental changes. Such collaboration has been a part of all our operations from research and development to manufacture and sales. In addition to our own efforts, collaborating with good partners will be one important way to adapt to the recent dynamic changes surrounding video games.

Given this background, in expanding our dedicated video game platforms in the future, we hope to firmly decide what aspects from the past should be kept and what should be dramatically changed in order to leverage our core competency.

One more thing, we will continue to value the motto which we inherited from the company’s former president, Mr. Yamauchi: The True Value of Entertainment lies in Individuality.

Nintendo is not a resource-rich company, with only a little more than 5,000 employees on a consolidated basis. We cannot achieve a strong presence by imitating others and simply competing in terms of size. We have often received advice on overcoming our weaknesses in comparison with other companies and have been questioned about why Nintendo doesn’t follow suit when something is already booming. From a medium- to long-term standpoint, however, we don’t believe that following trends will lead to a positive outcome for Nintendo as an entertainment company. Instead, we should continue to make our best efforts to seek a blue ocean with no rivals and create a new market with innovative offerings as a medium- to long-term goal.

As a platform in its second year, Wii U is currently in a very difficult position. I would like to begin with what we are going to do with Wii U.

Obviously, under the current situation where the company has to report an operating loss, simply executing a price reduction as a way to defuse the situation is not an option. In the short-term, Nintendo will focus on thoroughly enriching the value of the most significant feature of Wii U, the Wii U GamePad.

Unfortunately, as the current situation of Wii U shows, we have not been able to fully communicate the value of the GamePad. We also realize that we have not been successful in answering consumers’ questions such as, “What is the difference between Wii U and the previous platform, Wii, and what is the benefit of upgrading it?” By looking at the current sales situation, I am aware that this is due to our lack of effort. What’s even worse is that there even appear to be not a small number of consumers who think the GamePad is one of the accessories for the previous platform, Wii.

It is more challenging to convey the appeal of the GamePad to consumers who do not engage with video games that often since they do not actively gather information about video games. Therefore, we intend to take on this challenge, and I would like to have this solved before the year-end sales season.

In order to do this, it is obvious that our top priority task this year is to offer software titles that are made possible because of the GamePad. We have managed to offer several of such software titles for occasions when many people gather in one place to play, but we have not been able to offer a decisive software title that enriches the user’s gameplay experience when playing alone with the GamePad. This will be one of the top priorities of Mr. Miyamoto’s software development department this year.


In addition, the GamePad is the only video game platform with an NFC (near-field communication) reader/writer function. “Pokémon Rumble U” has already taken advantage of this function, but aside from this title, Wii U has failed to make use of the full potential of this function so far, despite it being a built-in feature.
This year, we will make full use of this function by preparing multiple proposals, including the implementation of NFC payments with JR East’s “Suica,” which we announced on a previous occasion. We will showcase our detailed propositions for utilizing the NFC functionality at E3 in Los Angeles in June.

Also, one of the major benefits of the GamePad is that we can easily play video games without using the TV, and this has been well received. Unfortunately, however, after starting up Wii U, there is a wait of over 20 seconds before we can select a video game title, and hence it is not an ideal situation for users now.

To solve this problem, a quick start menu for the GamePad will become a reality after a future system update planned for early summer.
This new function is currently under development, and although we cannot show a demo with a real machine, we have made a video to show you what the function can do, so please take a look.

The quick start menu enables you to load one of the software titles you have recently played without being routed to the console menu. From the start, the GamePad has been equipped with a “TV Button,” which is used to start the TV Remote functionality. The GamePad can complete this function without starting up the Wii U console, and so you can turn on the TV almost instantaneously by pushing the TV Button. The quick start menu uses the same mechanism as the TV Button.

We think that this function will make you feel that the time to start up a Wii U software title is cut by more than 50 percent, and that it will also lead to more Wii U users understanding the appealing nature of the GamePad.

On top of that, after spending more than a year on the research and development theme of taking advantage of the GamePad’s features,

We are now sure that we can solve the technical problem of displaying Virtual Console software from Nintendo DS on the GamePad.

The dual-screen Nintendo DS, one of which is a touch screen, has a very strong software lineup, and so we plan to add the Virtual Console titles from Nintendo DS software to the future Virtual Console lineup for Wii U.

As I explained, we will focus on enriching the value of the GamePad to give momentum to Wii U this year.

On the other hand, the situation for Nintendo 3DS is very different from Wii U. Even though we weren’t able to achieve explosive growth in the overseas markets during the year-end sales season, the fact remains that Nintendo 3DS was the top-selling game device around the world last year.

In the Japanese market, in particular, although Nintendo 3DS fell slightly short of the 5 million unit mark, it did reach sales of 4.9 million units in total for the calendar year. As I repeatedly stated, if one considers that apart from Nintendo DS and Nintendo 3DS, no other game system in its peak years has achieved annual sales of 4 million units after the year 2000, we can say that the domestic sales of Nintendo 3DS remained at an extraordinary high level in 2013 as well. In the U.S. market, an independent market research company called NPD publishes data which shows that Nintendo 3DS became the game device with the highest share in the last calendar year with lifetime hardware unit sales exceeding 11.50 million units.

The worldwide hardware sales of Nintendo 3DS have reached 42.74 million units, a sufficient size to expand this platform business.

To symbolize this, “Puzzle & Dragons,” which has been successful using an entirely different business model as a game on smart devices, has also appeared on Nintendo 3DS as the packaged software “Puzzle & Dragons Z” and sold over one million units in no less than one month since its debut in the Japanese market. “Angry Birds,” which also has been successful on smart devices, appeared on Nintendo 3DS as Activision’s packaged software “Angry Birds Trilogy” in the year-end season two years ago and made an impact on the game business when it sold over half a million units in a short time. Now that they have observed the success of “Puzzle & Dragons Z,” the number of companies who have approached Nintendo with an offer to provide Nintendo 3DS with the titles which they originally designed for and grew on smart devices has been increasing. As this example illustrates, the Nintendo 3DS platform has already reached a scale with enough business potential for not only the titles invented for game devices but also the ones originally made for other platforms.

With the overall software lineup, we aim to make this year and the next one a profit-generating phase for Nintendo 3DS.

Let me first talk about redefining the concept of a video game platform.

This medium-term goal is not expected to come to full fruition within the timeframe of this current calendar year. However, I feel that this is going to play an extremely crucial role in deciding whether dedicated video game platforms can adjust to rapid environmental changes in today’s market and can develop as a sound business.

The traditional definition of a video game platform was closely related to some kind of hardware and it would be no exaggeration to say that platforms were equivalent in meaning to physical devices.

That is to say, we only had device-based relationships with consumers in the past. As we were connected with a single consumer differently on different devices, we had some natural problems.

The slide shows all Nintendo platforms that were launched in the past ten years. While we have tried to achieve, among other things, software-driven connectivity between handheld devices and consoles, handheld devices and consoles were in principle separated completely in terms of our ability to connect with our consumers.

In addition, we tried to encourage consumers to upgrade from an existing handheld device to a new handheld device, or from an existing console to a new console, by providing backward compatibility that enabled them to take their software assets from their existing system. However, we became disconnected with our consumers with the launch of each new device as we could only form device-based relationships.

On Wii U, we launched Nintendo Network IDs, which are abbreviated as NNIDs. This is the first step of our efforts to transform customer relationship management from device-based to account-based, namely, consumer-based, through which we aim to establish long-term relationships with individual consumers, unaffected by the lifespans of our systems. Our future platform will connect with our consumers based on accounts, not devices.

As a second step, Nintendo 3DS became compatible with NNIDs in December 2013. Nintendo 3DS was originally designed for a device-based management system, so making it account-compatible at a later time meant that not all of its features were perfect. However, we feel that we have taken a step in the right direction as we now have a uniformly managed system in which we are connected with our consumers on both handheld devices and consoles.

Of course, when we do launch new hardware in the future, rather than re-creating an installed base from scratch as we did in the past, we wish to build on our existing connections with our consumers through NNIDs and continue to maintain them. Another very important point that we need to consider is how we will incorporate smart devices into Nintendo platforms, which were composed solely of Nintendo hardware in the past.
The traditional definition of a video game platform imposed a restriction in which we were unable to connect with consumers unless they purchased a Nintendo system. Given that the competition for consumers’ time and attention has become fierce, I feel that how we will take advantage of smart devices is an extremely important question to answer. However, in order to be absolutely clear, let me emphasize that this does not mean simply supplying Nintendo games on smart devices. Taking advantage of smart devices means connecting with all consumers, including those who do not own Nintendo’s video game systems, through smart devices and communicating the value of our entertainment offerings, thus encouraging more people to participate in Nintendo platforms. I will elaborate on this point later.

As I just illustrated, we will manage our relationships with our consumers through NNIDs in a uniform manner, and connecting with our consumers through NNIDs will precisely be our new definition of a Nintendo platform.

In other words, our platform will not be bound to physical hardware and, instead, will be virtualized.

I have often heard the opinion from many that Nintendo should release its first-party content on smart devices. The rationale behind such a suggestion, in my view, is that it would be illogical not to expand our business on smart devices given that they have outsold dedicated video game systems by a large margin.

Many people say that releasing Nintendo’s software assets for smart devices would expand our business. However, we believe that we cannot show our strength as an integrated hardware-software business in this field, and therefore it would difficult to continue the same scale of business in the medium- to long term.

Therefore, we would like to, instead of directly expanding our business on smart devices, focus on achieving greater ties with our consumers on smart devices and expanding our platform business.

However, creating stronger ties with consumers would require them to engage with our offers frequently. As we know that this is not an easy task to achieve,

We will use a small, select team of developers to achieve it. Also, we recognize that attracting consumers’ attention among the myriads of mobile applications is not easy, and as I said before, we feel that simply releasing our games just as they are on smart devices would not provide the best entertainment for smart devices, so we are not going to take any approach of this nature. Having said that, however, in the current environment surrounding smart devices, we feel that we will not be able to gain the support of many consumers unless we are able to provide something truly valuable that is unique to Nintendo. Accordingly, I have not given any restrictions to the development team, even not ruling out the possibility of making games or using our game characters. However, if you report that we will release Mario on smart devices, it would be a completely misleading statement. It is our intention to release some application on smart devices this year that is capable of attracting consumer attention and communicating the value of our entertainment offerings, so I would encourage you to see how our approach yields results.

Also, there is one more thing that I would like to mention about utilizing smart devices. With respect to services previously released on dedicated video game systems that are, however, capable of improving usability and consumer experience when they are implemented on smart devices, we will try to actively shift their focus to smart devices. This is to say that we will no longer spend an equal amount of resources toward providing the same service both on and off device, but will instead concentrate on the one that has greater purpose as well as room for improvement.

The environment in which our users can download paid software is one example of where we should aim to make more off-device improvements than on-device ones.

As we continue to redefine our platforms from a device-based system to an account-based system using NNIDs, we will also try to change the way in which dedicated video game systems as well as software are sold that people have come to take for granted.

The way in which dedicated video game systems and their software are sold has not changed significantly since the business model of dedicated video game platforms was first established 30 years ago. Dedicated video game systems are sold for two hundred or three hundred dollars, on which standalone software titles are distributed for 30 or 50 dollars. This simple model received widespread support from consumers that enabled us to create today’s market. The decision to change it is the manifestation of our recognition that we cannot expect this model to work forever amid dynamic changes in people’s lifestyles.

If we succeed in the redefinition of video game platforms that I speak of today, our account-based connections with consumers will become very clear. For example, until now it has been taken for granted that software is offered to users at the same price regardless of how many titles they purchase in a year, be it one, five or even ten titles. Based on our account system, if we can offer flexible price points to consumers who meet certain conditions, we can create a situation where these consumers can enjoy our software at cheaper price points when they purchase more. Here, we do not need to limit the condition to the number of software titles they purchase. Inviting friends to start playing a particular software title is also an example of a possible condition. If we can achieve such a sales mechanism, we can expect to increase the number of players per title, and the players will play our games with more friends. This can help maintain the high usage ratio of a platform. When one platform maintains a high active use ratio, the software titles which run on it have a higher potential to be noticed by many, which leads to more people playing with more titles. When we see our overall consumers, they generally play two or three titles per year. We aim to establish a new sales mechanism that will be beneficial to both consumers and software creators by encouraging our consumers to play more titles and increasing a platform’s active use ratio without largely increasing our consumers’ expenditures.

Nintendo aims to work on this brand-new sales mechanism in the medium term, but we would like to start experimenting with Wii U at an early stage.

Also, we are planning to utilize Nintendo’s abundance of character IP more actively. I think the reason that Nintendo is now considered to have this “abundance of character IP” is perhaps because of our passive approach toward the character IP licensing business, which tends to have a high risk of damaging the value of the character. In other words, we think that spending time to develop our approach of having our characters appear mainly in our carefully selected games has created our current fortunate circumstances. However, we are going to change our policy going forward.

To be more precise, we will actively expand our character licensing business, including proactively finding appropriate partners. In fact, we have been actively selling character merchandise for about a year in the U.S.

Also, we will be flexible about forming licensing relationships in areas we did not license in the past, such as digital fields, provided we are not in direct competition and we can form win-win relationships.

By moving forward with such activities globally, we aim to increase consumer exposure to Nintendo characters by making them appear in places other than on video game platforms.

In addition, we will change our approach to new markets in which we have not sufficiently expanded due to various issues such as infrastructure, consumers’ income and the legal system.

So far, we have localized our products which we distribute in developed markets, where video game markets have been firmly established, and tried to sell them in new markets. This method worked to some extent in the past, but it has recently become far more difficult to recoup our investment because of increasing hardware production costs and the cost of localizing highly sophisticated and complicated software.

Needless to say, there are core users in new markets who buy our hardware and software at the same price as in the existing markets and we really appreciate these consumers. For a large majority of consumers in the new markets, however, the current prices of hardware and software in the existing markets are generally difficult to accept.
To leverage Nintendo’s strength as an integrated hardware-software business, we will not rule out the idea of offering our own hardware for new markets, but for dramatic expansion of the consumer base there, we require a product family of hardware and software with an entirely different price structure from that of the developed markets.
As you might know from today’s topics of redefining the concept of a video game platform and taking advantage of smart devices, we aim to connect with consumers who do not own Nintendo’s video game systems yet, which will play an important role in cultivating new markets. Once we can establish such a connection with consumers in these nations, we will be able to use smart devices to share our information as well as important content distribution infrastructure. We plan to take significant steps toward such a new market approach in the year 2015. I would like to share more information with you in our future IR events.

It will have been 12 years in May this year since I took office as president in 2002. What we have focused on in this decade is our basic strategy to expand the gaming population by offering products which can be enjoyed by everyone regardless of age, gender or gaming experience.

In order to cope with the challenge of consumers’ apathy, we adopted a means to extend the definition of video games and thereby focused on expansion of the gaming population as our strategy. I feel that we achieved tangible results with Nintendo DS and Wii.

Ever since I succeeded Mr. Yamauchi as the president of Nintendo, a company specialized in entertainment, I have deliberated on the meaning of entertainment and in this decade,

I have run Nintendo with the belief that the raison d’etre of entertainment is to put smiles on people’s faces around the world through products and services.

In addition, as the business environment around us has shifted with the times, I am willing to redefine the meaning of entertainment. As the extension of the definition of video games gave new potential to video games, I think now is the time we need to extend the definition of entertainment.

This time, we decided to redefine our notion of entertainment as something that improves people’s quality of life in enjoyable ways, and take a step forward in expanding our business areas. Being an entertainment company, making “enjoyable improvements” is something that Nintendo excels at, and this definition provides us with a clear distinction from simply “improving QOL.”
Ever since Nintendo was founded 125 years ago as a manufacturer of Hanafuda, Nintendo has continued to transform itself into offering various propositions to consumers from toys, electronic toys, and then video games, improving, in my view, people’s QOL in enjoyable ways.

What Nintendo will try to achieve in the next 10 years is a platform business that improves people’s QOL in enjoyable ways.

This definition includes, of course, dedicated video game platforms. While we will continue to devote our energy to dedicated video game platforms, what I see as our first step into a new business area in our endeavor to improve QOL is,

The theme of “health.” Of course, defining a new entertainment business that seeks to improve QOL creates various possibilities for the future such as “learning” and “lifestyle,” but it is our intention to take “health” as our first step.

Please note, however, that rather than simply setting health as our theme, Nintendo will also try to expand it in a new blue ocean.

It has been a long time since people started to say that the console era has now shifted to a new mobile era, with wearable technology in the spotlight at CES this month.
However, as I said at the beginning of the presentation today, Nintendo is a company that sees the true value of entertainment lies in its individuality. Following others into the exceedingly crowded market of mobile applications or the market of wearable technology that is expected to become increasingly competitive and fighting with brute force is not our way of doing business. Yet again, it is our intention to go into a new blue ocean.

With that said, we wish to achieve an integrated hardware-software platform business that, instead of providing mobile or wearable features, will be characterized by a new area of what we like to call “non-wearable” technology. When we use “health” as the keyword, some may inevitably think about “Wii Fit.” However, we are considering themes that we have not incorporated to games for our existing platforms. Including the hardware that will enable such an idea, we will aim to establish a blue ocean.

As we attempt to challenge ourselves with the area of health from a new perspective, we are considering unique approaches by leveraging our strengths. First, I feel that there is strong public awareness for health around the globe.

As those who are already suffering from illness can seek medical care, our new business domain would be providing preventive measures which would require us to enable people to monitor their health and offer them appropriate propositions.

However, what is generally good for health requires some kind of effort to be made by the individual, and, as I am sure that many of you have experienced this, it is sometimes difficult to stay focused and engaged, and it is not uncommon to give up after a few days. This is where our strength as an entertainment company to keep our consumers engaged and entertained comes into play, assisted by the non-wearable feature, which is the biggest differentiator of this new business field, as well as user experiences that integrate into people’s daily lives, all of which help us overcome this difficulty. If we do indeed succeed in doing so, we will be able to provide feedback to our consumers on a continual basis, and our approach will be to redefine the notion of health-consciousness, and eventually increase the fit population.

I feel that not only can this QOL-improving platform utilize our know-how and experience about video game platforms but also we can expect it to interact with games and create a synergistic effect.

Nintendo has released a series of games entitled “Touch Generations” that seek to expand the definition of games by releasing games in various fields including health-themed titles such as “Brain Age” and “Wii Fit,” or educational titles such as “English Training” and “Art Academy,” or lifestyle software such as “Cooking Navigator” (translation of Japanese title, only available in Japan). The know-how and experience we have acquired about entertainment through these games, or to put it differently, the ability to keep consumers engaged and entertained on a continual basis and the hospitality we can offer is something that we can take advantage of now in order to increase the value of our QOL-improving platform.

On the other hand, while we feel that this is going to take two to three years after its launch, we expect the QOL-improving platform to provide us with new themes which we can then turn into games that operate on our future video game platforms, too. Once we have established such a cycle, we will see continuous positive interactions between the two platforms that enable us to make unique propositions.

Through our new endeavors with the QOL-improving platform, we strive to promote our existing strategy of expanding our user base even further.

As all dedicated video game platforms ever since Famicom (Nintendo Entertainment System) in 1983 have continued to expand the gaming population as well as Nintendo’s user base, our QOL-improving platform will attempt to create an environment in which we can expand the population of those who are conscious about their health and use that expansion to expand Nintendo’s user base.