Nintendo Co., Ltd. and DeNA Co., Ltd. Business and Capital Alliance Announcement

Mar. 17, 2015
Nintendo Co., Ltd.
DeNA Co., Ltd.
Business and Capital Alliance Announcement

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1	You said that the new membership service would be operated by Nintendo and be launched from around the fall of this year, but approximately when and in what form will the first game application be released for smart devices? And, which party will be primarily responsible?
1	Satoru Iwata (Director and President Nintendo Co., Ltd.): As to when and what kind of game titles we will release on smart devices, we would like to explain the details as soon as we are ready to announce each title. However, if we do not release any titles by the end of this calendar year, it might suggest that our alliance does not make sense in terms of speed, so please note that we will release some kind of software title by the end of this year. Assignment of roles between the two companies will vary for each game title. When we determine that our brand name should be exposed for global marketing, it will be more likely that people will see the Nintendo brand name. But, aside from such public exposure, when it comes to actual role assignment and the responsible party, the two companies will discuss and determine what is appropriate for each title. (To Mr. Moriyasu) Do you have any supplemental comments? Isao Moriyasu (President & CEO DeNA Co., Ltd.): In terms of role division, each company will emphasize doing what it’s good at. In many cases, the front end will be handled by Nintendo, and we will work on back-end server side and service operation. But we will have to look at what type of IP games we are developing and then decide what roles each company should play. They will depend on the IP title itself. Iwata: I think many of you understand these technical terms, but to avoid any misunderstandings, when Mr. Moriyasu referred to the "front end" he meant the applications which run, and which people actually control, on smart devices. As Nintendo has a lot of know-how when it comes to the feel (of video games), having Nintendo take care of the "front end" will provide consumers with the most benefit. On the other hand, DeNA has accumulated vast experience in such fields as web services, servers and consumer behavioral analysis. DeNA also has a strong ability to swiftly analyze relevant data and determine how a service should be evolved in subsequent phases. Accordingly, these activities will be primarily handled by DeNA.

You said that the new membership service would be operated by Nintendo and be launched from around the fall of this year, but approximately when and in what form will the first game application be released for smart devices? And, which party will be primarily responsible?

Satoru Iwata (Director and President Nintendo Co., Ltd.):

As to when and what kind of game titles we will release on smart devices, we would like to explain the details as soon as we are ready to announce each title. However, if we do not release any titles by the end of this calendar year, it might suggest that our alliance does not make sense in terms of speed, so please note that we will release some kind of software title by the end of this year.

Assignment of roles between the two companies will vary for each game title. When we determine that our brand name should be exposed for global marketing, it will be more likely that people will see the Nintendo brand name. But, aside from such public exposure, when it comes to actual role assignment and the responsible party, the two companies will discuss and determine what is appropriate for each title. (To Mr. Moriyasu) Do you have any supplemental comments?

Isao Moriyasu (President & CEO DeNA Co., Ltd.):

In terms of role division, each company will emphasize doing what it’s good at. In many cases, the front end will be handled by Nintendo, and we will work on back-end server side and service operation. But we will have to look at what type of IP games we are developing and then decide what roles each company should play. They will depend on the IP title itself.

Iwata:

I think many of you understand these technical terms, but to avoid any misunderstandings, when Mr. Moriyasu referred to the "front end" he meant the applications which run, and which people actually control, on smart devices. As Nintendo has a lot of know-how when it comes to the feel (of video games), having Nintendo take care of the "front end" will provide consumers with the most benefit. On the other hand, DeNA has accumulated vast experience in such fields as web services, servers and consumer behavioral analysis. DeNA also has a strong ability to swiftly analyze relevant data and determine how a service should be evolved in subsequent phases. Accordingly, these activities will be primarily handled by DeNA.

2-1	Mr. Iwata mentioned during his presentation that Nintendo had not released games on smart devices because of certain issues, and that now Nintendo has found solutions to them. What exactly are these solutions?
2-1	Iwata: Although this is very simple, the first one was establishing the philosophy that we will not release identical games for the two platforms - smart devices and dedicated video game systems. There have been many cases where games originally made for other devices were simply ported to smart devices. But when I asked myself if the best play experiences that these original games contained were incorporated effectively into the smart device versions, I doubted that I could always give a positive answer. The number of consumers who have access to the same game certainly does increase. On the other hand, if the ported game does not reproduce the same satisfactory experiences that the original game provided, information that the game is not satisfactory would just end up spreading and, therefore devalue the content. Alternatively, if identical games were released for these two platforms, the different price points at which the seemingly identical games are offered might be considered unjustifiable to users even if it may simply be due to the different business models applied to the two different platforms. These are just a few of the challenges that existed. It was important for Nintendo to analyze and clearly recognize that smart devices and dedicated video game systems are two completely different things even though, at a glance, they may appear to be very close from the viewpoint that you can play games on both of them. Some of you may wonder why it took so long to recognize something so simple. The fact of the matter is, however, I have never heard of anyone who has clarified this point. We aim to develop and release our smart device applications with Nintendo IP which, after their releases, will help you to say, "Now I understand what Nintendo meant," or "This is indeed a win-win situation for both smart device applications and dedicated game systems." And, we have arrived at this alliance because we concluded that rather than doing everything by ourselves, we should collaborate with a capable partner in order to achieve a timely deployment. While we were pondering what Nintendo should do and how we should take advantage of smart devices, we were discussing various possible collaborations with DeNA. In a sense, through all kinds of strokes of luck, we were able to come up with a good solution for both companies.

2-1

Mr. Iwata mentioned during his presentation that Nintendo had not released games on smart devices because of certain issues, and that now Nintendo has found solutions to them. What exactly are these solutions?

2-1

Iwata:

Although this is very simple, the first one was establishing the philosophy that we will not release identical games for the two platforms - smart devices and dedicated video game systems. There have been many cases where games originally made for other devices were simply ported to smart devices. But when I asked myself if the best play experiences that these original games contained were incorporated effectively into the smart device versions, I doubted that I could always give a positive answer. The number of consumers who have access to the same game certainly does increase. On the other hand, if the ported game does not reproduce the same satisfactory experiences that the original game provided, information that the game is not satisfactory would just end up spreading and, therefore devalue the content. Alternatively, if identical games were released for these two platforms, the different price points at which the seemingly identical games are offered might be considered unjustifiable to users even if it may simply be due to the different business models applied to the two different platforms. These are just a few of the challenges that existed.

It was important for Nintendo to analyze and clearly recognize that smart devices and dedicated video game systems are two completely different things even though, at a glance, they may appear to be very close from the viewpoint that you can play games on both of them.

Some of you may wonder why it took so long to recognize something so simple. The fact of the matter is, however, I have never heard of anyone who has clarified this point. We aim to develop and release our smart device applications with Nintendo IP which, after their releases, will help you to say, "Now I understand what Nintendo meant," or "This is indeed a win-win situation for both smart device applications and dedicated game systems."

And, we have arrived at this alliance because we concluded that rather than doing everything by ourselves, we should collaborate with a capable partner in order to achieve a timely deployment.

While we were pondering what Nintendo should do and how we should take advantage of smart devices, we were discussing various possible collaborations with DeNA. In a sense, through all kinds of strokes of luck, we were able to come up with a good solution for both companies.

2-2	One possible (smart device) business model (known in Japan) is "Gacha," which encourages consumers to spend money (on random game items that may make it easier to progress in a game). What is Mr. Iwata’s opinion regarding this business model, which is criticized because it earns revenue through the gambling urges of consumers?
2-2	Iwata: Because these game applications (that are developed and released as a result of the alliance between Nintendo and DeNA) are going to be offered to consumers by utilizing Nintendo IP, I naturally believe it impossible that they will be offered to consumers via a business model to which Nintendo cannot agree. Both companies have already thoroughly agreed that we will decide the business model based upon mutual agreement - that we will only develop and offer products with which consumers feel comfortable and satisfied. Of course, I do not deny any and all "free-to-start" style payment systems. However, Nintendo does not want our IP to be used in any scenarios that consumers might think we have taken it a bit far or question whether the content is suitable for children. We do not foresee such games as a result of this alliance.

2-2

One possible (smart device) business model (known in Japan) is "Gacha," which encourages consumers to spend money (on random game items that may make it easier to progress in a game). What is Mr. Iwata’s opinion regarding this business model, which is criticized because it earns revenue through the gambling urges of consumers?

2-2

Iwata:

Because these game applications (that are developed and released as a result of the alliance between Nintendo and DeNA) are going to be offered to consumers by utilizing Nintendo IP, I naturally believe it impossible that they will be offered to consumers via a business model to which Nintendo cannot agree. Both companies have already thoroughly agreed that we will decide the business model based upon mutual agreement - that we will only develop and offer products with which consumers feel comfortable and satisfied.

Of course, I do not deny any and all "free-to-start" style payment systems. However, Nintendo does not want our IP to be used in any scenarios that consumers might think we have taken it a bit far or question whether the content is suitable for children. We do not foresee such games as a result of this alliance.

Presentation by the President | Q & A