The 74th Annual General Meeting of Shareholders Q & A

The 74th Annual General Meeting of Shareholders

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16	Before starting, please let me pay my respects to Mr. Yamauchi, former president of Nintendo, who passed away last year. I would like to thank him for providing us with such a variety of fun games. Also, I would like to pray for the speedy recovery of Mr. Iwata. I see Mr. Iwata is a very conscientious person. He is so sincere that, in my view, he is trying to take on all of the things related to the company’s current situation by himself and I think it might have made him ill. I might be biased, but Mr. Miyamoto seems more resilient and is better at taking everything in his stride. I hope Mr. Iwata will take this advice and use it to make him a better president.
16	Takeda: We truly appreciate your advice. We hope to have a frank discussion with Mr. Iwata about the matter you pointed out.

Before starting, please let me pay my respects to Mr. Yamauchi, former president of Nintendo, who passed away last year. I would like to thank him for providing us with such a variety of fun games. Also, I would like to pray for the speedy recovery of Mr. Iwata.
I see Mr. Iwata is a very conscientious person. He is so sincere that, in my view, he is trying to take on all of the things related to the company’s current situation by himself and I think it might have made him ill. I might be biased, but Mr. Miyamoto seems more resilient and is better at taking everything in his stride. I hope Mr. Iwata will take this advice and use it to make him a better president.

Takeda:

We truly appreciate your advice. We hope to have a frank discussion with Mr. Iwata about the matter you pointed out.

17	I understand your point that ups and downs are inherent in the entertainment industry and in this industry, and I also recognize that the company is in a difficult phase now. Is what is happening now a part of the fluctuations which used to take place in the past too? Or, is the fluctuation this time bigger than before? In other entertainment industries, take movies for example, the declining popularity of movies was observed after the 1950s or 1960s, and people with the right mind in the industry tried to stop the decline with quality pictures. Regarding the current situation surrounding Nintendo and its console game business, some are expressing their opinions by saying that it has been caused by smartphones, but I have not been able to find any advice from them that, if executed by Nintendo, would likely make Nintendo a better company. What is Nintendo’s view on these points?
17	Takeda: I recognize that this is a challenging issue, for which there will not be any easy solution. I believe what we are experiencing is a part of a large fluctuation. We, the management, will continue discussions from various perspectives in order to find a solution. We also believe that we can learn from other mature industries with longer histories than ours, such as movies and other forms of media. I have been managing the company mainly from a hardware perspective, so I would like to ask Mr. Miyamoto, who has been observing the content industry, to share his view. Miyamoto: (Commenting on the previous shareholder’s remark in Q16 that the shareholder thinks that Mr. Miyamoto appears to be (taking criticism) in his stride). Just for your information, I too have been feeling a great deal of anxiety. Mr. Iwata is a president whom I can rely on very much, and I would like to continue this journey with him. The point raised by the shareholder is a very important one. It is so important that anyone who can create a solution will become an excellent developer. As Mr. Takeda just said, I believe it is important for us to learn from our predecessors in the movie and other media industries. This is something I mentioned earlier today (during my remarks on E3,) but to some, it might have seemed as though there wasn’t a wide variety of software at E3, and as though many people followed the same direction to make their video games. I believe this is a revelation of creative immaturity on our part as creators in the video game industry. The late Mr. Hiroshi Yamauchi, the former president of Nintendo, often used to say that in the entertainment business, only one can become strong and all of the others will become weak. With this remark, he was not referring to the arrogance of the winner. He mentioned this to describe the nature of the entertainment business, which tends to create just one winner because in the entertainment business everyone buys your offering if you create something unprecedented, and consumers do not think it is necessary to purchase products from others in the industry. To survive in the entertainment industry, it is often the case that everyone tries to follow suit with the strong one. My comment may be at risk of being misinterpreted, but in the digital content field, I think that our creativity is still immature. In the world of comic books and movies, there are people who are challenging themselves to be even more creative than before in creating their content. I believe that we (those who are creating digital content called video games) are still in a transitional period and will eventually step up into the phases where we expand and enrich the substance of our creativity. If we can manage Nintendo without losing sight of this challenge, I believe we might be able to create new entertainment that dominates the industry. Also, some may think it is fair to compete with others on the same hardware platform, but it is always challenging to become the one strong existence among so many companies, and to Nintendo, it is more advantageous to create and propose to consumers a brand new framework that includes hardware as part of the structure. We would like to continuously develop something unique by not abandoning this strength of our company. I ask for your continued support.

I understand your point that ups and downs are inherent in the entertainment industry and in this industry, and I also recognize that the company is in a difficult phase now. Is what is happening now a part of the fluctuations which used to take place in the past too? Or, is the fluctuation this time bigger than before? In other entertainment industries, take movies for example, the declining popularity of movies was observed after the 1950s or 1960s, and people with the right mind in the industry tried to stop the decline with quality pictures. Regarding the current situation surrounding Nintendo and its console game business, some are expressing their opinions by saying that it has been caused by smartphones, but I have not been able to find any advice from them that, if executed by Nintendo, would likely make Nintendo a better company. What is Nintendo’s view on these points?

Takeda:

I recognize that this is a challenging issue, for which there will not be any easy solution. I believe what we are experiencing is a part of a large fluctuation. We, the management, will continue discussions from various perspectives in order to find a solution. We also believe that we can learn from other mature industries with longer histories than ours, such as movies and other forms of media. I have been managing the company mainly from a hardware perspective, so I would like to ask Mr. Miyamoto, who has been observing the content industry, to share his view.

Miyamoto:

(Commenting on the previous shareholder’s remark in Q16 that the shareholder thinks that Mr. Miyamoto appears to be (taking criticism) in his stride). Just for your information, I too have been feeling a great deal of anxiety. Mr. Iwata is a president whom I can rely on very much, and I would like to continue this journey with him.

The point raised by the shareholder is a very important one. It is so important that anyone who can create a solution will become an excellent developer. As Mr. Takeda just said, I believe it is important for us to learn from our predecessors in the movie and other media industries. This is something I mentioned earlier today (during my remarks on E3,) but to some, it might have seemed as though there wasn’t a wide variety of software at E3, and as though many people followed the same direction to make their video games. I believe this is a revelation of creative immaturity on our part as creators in the video game industry. The late Mr. Hiroshi Yamauchi, the former president of Nintendo, often used to say that in the entertainment business, only one can become strong and all of the others will become weak. With this remark, he was not referring to the arrogance of the winner. He mentioned this to describe the nature of the entertainment business, which tends to create just one winner because in the entertainment business everyone buys your offering if you create something unprecedented, and consumers do not think it is necessary to purchase products from others in the industry. To survive in the entertainment industry, it is often the case that everyone tries to follow suit with the strong one. My comment may be at risk of being misinterpreted, but in the digital content field, I think that our creativity is still immature. In the world of comic books and movies, there are people who are challenging themselves to be even more creative than before in creating their content. I believe that we (those who are creating digital content called video games) are still in a transitional period and will eventually step up into the phases where we expand and enrich the substance of our creativity. If we can manage Nintendo without losing sight of this challenge, I believe we might be able to create new entertainment that dominates the industry. Also, some may think it is fair to compete with others on the same hardware platform, but it is always challenging to become the one strong existence among so many companies, and to Nintendo, it is more advantageous to create and propose to consumers a brand new framework that includes hardware as part of the structure. We would like to continuously develop something unique by not abandoning this strength of our company. I ask for your continued support.

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