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Iwata Faces Tough Investor Grilling: "We Do Not See A Dark Future For Nintendo”

Author:
Jonathan Lester
Category:
News
Tags:
Financials, Nintendo, Q&A, Satoru Iwata

Iwata Faces Tough Investor Grilling: "We Do Not See A Dark Future For Nintendo”

Nintendo CEO Satoru Iwata has been hauled over the coals in a new investor Q&A, wherein he remains defiant in the face of accusations of flip-flopping on stereoscopic 3D and failing to secure third party software support for the Wii U. Their ¥100 billion operating income projection remains unchanged.

When grilled about the ambitious forecast and lack of third-party support in a particularly vicious question, Iwata suggested that the Christmas season will play a huge role for the 3DS and Wii U, and that he believes that continuing to deliver quality software is the key to getting consumers to spread the word via social media and word of mouth.

“I believe that my ultimate responsibility is to maximize the long-term corporate value of Nintendo," Iwata said. "That is how I view my role, but on the other hand, I am not saying that the current financial forecast has become unattainable. As I remarked just a while ago, the annual financial performance of a video game company rests heavily upon its success in the year-end sales season.

“There would of course be a significant difference between the most optimistic and the most pessimistic scenarios. This is the inevitable fate of any video game company, and even if one may hope it to be more foreseeable, we operate in an environment where it is impossible to know the outcome of a product we have produced until consumers have tried it for themselves.

“What is more, how players influence the value of our products and turn them into hit titles through interacting with each other, and thereby creating buzz in society, is simply beyond our reach. All we can do is offer the best entertainment that we can and do our best to motivate our consumers to talk about our products, but there is inevitably a fair degree of uncertainty in our performance. Therefore, I do not think that it is the right time to change our financial forecast.”

As far as third-party support is concerned, however, Iwata notably side-stepped the question. "In terms of how we view our relationship with third-party publishers, I think it is natural that there is a difference between publishers who have the software development resources like Nintendo’s to build a software lineup of their own and publishers who do not. Since former President Yamauchi passed away, I have been considering what he taught us in the end, and his words that the worst thing we can do in entertainment is to follow what others are doing spoke directly to my heart.

"Following and imitating others is the kind of reasoning that Nintendo tries to avoid the most, and while we certainly do not have a negative attitude toward strengthening our ties with third-party publishers, employing the same methodology as the other manufacturers would only lead to the most simplistic competitive approaches, such as price wars or money-giving that would never end. We would like to take a unique approach of our own and build sustainable relationships with our third-party publishers."

Tackling the issue of whether Nintendo might need to downsize or streamline their staff, Iwata suggested that it would only occur in the worst case scenario, and that the current workforce is already operating efficiently. “I would like you to understand that this is because we do not see a dark future for Nintendo,” he said.

Iwata also fielded questions about whether the 2DS shows a lack of faith in the 3DS' stereoscopic 3D, stating that the newly-released 2DS has been in production for 18 months and was always intended to be an entry-level product, while the stereoscopic functionality is still being well supported by upcoming titles. The rise of mobile gaming was also brought up, causing Iwata to point at smartphones and tablets as opportunities to create social buzz around products rather than a major threat - citing games like Animal Crossing and Monster Hunter 4 as games that cannot be found on other platforms.

You can read the entire Q&A here. It's clear that Nintendo are worried about a very slow year in terms of Wii U sales, especially heading into a new console generation, but we suspect that this Christmas will treat them fairly well. Either way, we'll have to wait and see what their next financial report has to say.

Add a comment4 comments
Late  Nov. 6, 2013 at 14:30

He's got his head in the sand.

When they don't come anywhere near their projected 9m Wii U console sales by March he'll be on very shaky ground. The Japanese seem to have a lot of patience, but it runs out eventually - and of course the company isn't just owned by the Japanese these days.

And whilst the handhelds (and related software) are selling well, they're not without their problems. Bringing out a 2D version made a mockery of their "vision", but their biggest mistake was not including a second analogue pad on the machines.
I think people are slightly jaded by Nintendo handhelds lately, too. Just as they get some great games for the console and it becomes attractive they announce a new model - leaving you wondering whether you really should buy that one you're eyeing up, or wait for the next one (you just know they're close to announcing a version with the second analogue pad built in).

ChrisIW  Nov. 6, 2013 at 20:42

He's got his head in the sand.

When they don't come anywhere near their projected 9m Wii U console sales by March he'll be on very shaky ground. The Japanese seem to have a lot of patience, but it runs out eventually - and of course the company isn't just owned by the Japanese these days.

And whilst the handhelds (and related software) are selling well, they're not without their problems. Bringing out a 2D version made a mockery of their "vision", but their biggest mistake was not including a second analogue pad on the machines.
I think people are slightly jaded by Nintendo handhelds lately, too. Just as they get some great games for the console and it becomes attractive they announce a new model - leaving you wondering whether you really should buy that one you're eyeing up, or wait for the next one (you just know they're close to announcing a version with the second analogue pad built in).


I agree with pretty much everything you've said. I was absolutely gutted when the 2DS was announced, I held back from buying a 3DS XL as I thought the next update would be a 3DS with the 2nd analogue stick built in. The 3DS was the only thing going well for Ninty, so the fact that they're now cocking that up is yet another ominous sign that they are run by a bunch of clueless, out of touch, old men who pat themselves on the back for doing the absolute bare minimum to please their customers.

The Wii U is a joke and I feel more foolish for buying one every month it sits there gathering dust. There has been little to shout about in terms of games this year and most of the ones that do come out are flawed or half hearted. Things like Game & Wario, Wii Party U, Mario & Sonic at the Winter Olympics should have all been great showcases for the Wii U's functions, but all have had bad reviews and with a stack of great PS3 games I've yet to play it seems stupid to fork out full price for such average tosh that they put together in about 2 weeks. Delays are another problem. One of the "launch" games I was looking forward to was Scribblenauts Unlimited, almost a year later and I'm still waiting (plus it'll cost about £40 when it has been available on PC for about a fiver for the last year). Smash Bros, Mario Kart and Donkey Kong would have provided much needed quality around the time of the PS4 / XBone launches - but ALL have been pushed back until next year!!!

It's bad Nintendo, really bad.

Realhoneyman  Nov. 7, 2013 at 01:13

Reading these responses by Iwata-san and the comments above, am I the only one wondering if Nintendo should go handheld-only for a generation (or two) until they can figure out how to produce a console that can compete fiercely and directly with its two main competitors?

I would hope they can avoid entering a SEGA-like situation where they become a software-only manufacturer as they still offer a different gaming experience to their broader and perhaps more mature-orientated competition. It would appease the shareholders as well due to generating greater profits and lowering their expenditure, maybe.

In any case, Nintendo still lead the way in handheld gaming entertainment and I don't see that changing anytime soon. Let's hope they can bring some of that magic to their home console strategy again soon.

N.B Pardon the ramble but I'm dog tired typing this right now.

Last edited by Realhoneyman, Nov. 7, 2013 at 01:15
Late  Nov. 7, 2013 at 10:05

[aussieaccent]Call that a ramble?
THIS is a ramble...[/aussieaccent]
http://www.wearysloth.com/Gallery/ActorsH/8085-4108.gif



There's definitely a good argument for Nintendo to give up the tv-console game and focus on their handhelds and their software.
Personally I'd hate to see that happen - and I think it would be the wrong move (though of course I don't have all the info).

Irrespective of how you measure success, Nintendo have been one of the front-runners in the console game for a looong time. The NES, SNES, N64 and Gamecube were all successes in anyone's books. The first Wii didn't have the power we wanted and mine has spent the last few years gathering dust (I think it's the same for a lot of gamers). But it was pretty cheap to produce, it sold in amazing numbers, and it sold massive amounts of software. I didn't like the machine, but I still bought about 35-40 games for it.
It brought new things to the console wars - primarily motion control, a whole new audience, and "shovelware".

The latter of those is a strange one. It's not new for a console to have lots of mediocre/poor games, but I think the Wii's software catalogue was massively dominated by shovelware. Combine that with the new customer base - lots of older people and families that have never really been into gaming - and those cheap party games often sold better than the triple-A titles. Whether that's good or bad for Nintendo is down to opinion. It certainly made them a lot of money. But it damaged their reputation as a console contender.
That reputation could easily be turned around by bringing out a proper next gen machine. They'd dominate the world. The gamers would want it if it was a powerful console. And the non-gamers (or new gamers) would go with the brand they know.
Unfortunately they instead decided to re-employ last generation's policy of bringing out something a bit different, a bit quirky, but cheap. Ish. But not different enough (to the uninformed - and most of us are uninformed thanks to Nintendo's penchant for not disclosing technical data and not advertising this particular machine) and not cheap enough.

http://s23.postimg.org/uki0soahn/wii_U.png

The U is struggling a bit, but could still end up being a success. They just need to get it into everyone's house.
Once it's there the money rolls in. At present I'm contributing £0 every year to Nintendo's coffers. I've not bought a Wii game in years, I've not bought the U, and the last handheld I bought was the DS-Lite - which hasn't been played in a long time.
Knock the price of the U right down to approx £100-£120 and you'll likely be making a small loss per unit - but you've got literally millions of them sat in humongous warehouses around the world. Better to sell them at a small loss than write them off - or wait a couple of years and sell them off cheap. Get them into front rooms!

Once your machine is in our homes we'll buy games for it. We'll buy your Marios, your Zeldas, your Metroids and your Donkey Kongs. We'll also buy your cheap shovelware party games - because they're cheap and if there's 30 games on the disk you know at least two or three of them will be good fun, and another eight or ten will be okay for a few plays - and we'll feel we're getting something for our money. We'll buy games and fill our shelves (and our virtual library) - and you'll be making a tidy profit on each and every one of those games.

Drop the U's price, take the short term hit, ensure massive future profits. And for the love of God, make your next console powerful, Nintendo. You'll have it all and rule the world!
Again.

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