Iwata:

  For one thing, this must be something accessible to anyone, and, before they realize it, users will have comprehended many different functions for it. A great number of daily necessity type products are made so that you need to read through the instruction manual in order to master usage. If customers complain that they cannot understand how to use it, those who have made the device think that fault lies with the users who did not bother to read through the manual. When it comes to video games, although I hate to admit this for the sake of Nintendo’s internal people in charge of making game play manuals, we are making video games so that the majority of our customers will not bother to read the manual at all. At Nintendo, blaming customers who do not read manuals is not allowed. Nintendo believes that games must be made so that players will understand how to play as a natural consequence of playing with it. This is a major difference with utilitarian goods. Also, we always want people outside of Nintendo to say, “Oh, you did it, didn’t you, Nintendo!. I want them to be surprised and say “Wow, the thing will work like this if Nintendo makes it!” This feeling of “you did it, didn’t you!”, stems from the gap between what the general public expects and what we have actually delivered. This gap must be something unexpected, but also fun or useful to experience, which can influence people’s minds. This is the essence of entertainment. People have to feel that what they receive is much better than their expectation. Without this obvious difference, people will not appreciate our efforts. If the outcome is worse than expected, people will convey that experience to many other people, and such a bitter experience can solicit others’ sympathy, and becomes an interesting topic for many people. It has great negative word of mouth power. But, when the gap is a positive one, people are not willing to spread the news unless the degree of surprise must be large, because small surprise is hardly enough to move others’ minds. Without a great and positive gap, a good word of mouth reputation for video games can hardly spread. Nintendo has been tackling this problem every day and wants to realize that kind of gap with such seemingly utilitarian applications as the TV Program Schedule Channel. For our purposes, please take my explanation as the definition of Nintenod-esque.

Miyamoto:

  What Iwata told us now just reassured me that, at Nintendo, the president and the developers share the same opinion. If I may add, I am making it a point of not calling a video game, “a piece of work.” Of course, from the perspective that each individual is putting his or her personal hobby and interests and thoughts into it and delivering that outcome to customers, it can be categorized as a piece of work, but I am carefully refraining from calling them, “works”. The creator of a work creates the work by putting their thought into it, and those who will evaluate the piece of work are free to take any kind of emotion out of it. On the other hand, we are making commercial products and we want our customers to use them exactly as we want them to do. Especially the TV Program Schedule Channel, which is more of a utility product, we want to develop it so that users will use it as closely as possible to what we intended. In other words, we are feeling as if we are asking someone else to take care of our own babies. We want you to know more and more about the baby. If it is at all possible, we wish we could accompany the baby, but we cannot visit the million households who have our babies. Directors of games would like to explain a lot about their games to players who test these games while under development, but I have never allowed them to do so, because we can never do this same thing for actual purchasers of the games. Our philosophy is that we have to do our best so that our customers will eventually learn everything that the game developer could tell them if they were sitting next to them. I think such an attitude is very unique to Nintendo.

Iwata:

  As a basic premise, we are not operating our company based upon the assumption that the future of DS and Wii has already been assured, so that our cash flows for the next few years will certainly increase. It is the responsibility for those who run a company to prepare for any contingency in the next year, and keep available options open to pave a new future for the company whenever unexpected things may happen. So, even when we are enjoying good business temporarily, we will not change our capital policy. It is true that Nintendo holds a wealth of cash deposits. I also admit that Nintendo currently has the potential to generate further cash flows. We are making a return to our shareholders in a form of a 50% dividend payout ratio today, and if you ask me, “Won’t you still be able to increase cash deposits the way it is today?”, that is true. Because potential risks in this video game business have been increasing, and the pace of that increase has been accelerating, we have been asking our shareholders to allow us to prepare for the future, and to be able to choose from a number of different options. We ourselves cannot correctly predict how risks in video game business will change from now on. When we analyze what we are doing today, we are already deviating from the traditional game business. We are trying to expand the market and we are trying to expand the definition of video games. If I could go back 5 years ago with a time machine and declare at an event like this, “Nintendo’s main focus at E3 2007 will be a device that can measure your weight”, you would have called me a liar. However, today we are receiving appreciation from the public about this announcement. The world has changed that much. So, we can’t rely anymore on the past in order to predict future risks. Today, it is extremely difficult for anyone to say, “because it worked this way in the past in the game business, the future will develop in the same fashion, which will be require risk of this degree, and this amount of cash will be needed.” If our cash deposits simply keep increasing at the current pace, it is possible that we may be required to take a new step that we have never done nor announced before, but it is premature to comment on such a possibility today.

Iwata:

  We do not have any concrete examples to announce what kind of remote controller we are developing today. However, since it is our job to surprise our customers in meaningful ways, we are studying and discussing a variety of different possibilities and what kinds of things will be interesting to people. We are always looking at new technologies in terms of what kind of new entertainment might be realized by them. On the other hand, in terms of the cost for a peripheral which is not packed into the hardware box, we think what we are offering with WiiFit appears to be the upper limit. For its 8800yen suggested retail price point, we have two extreme opinions of it being either too expensive or too inexpensive. We understand that reactions will vary depending on people. From the maker’s viewpoint, any product with that kind of cost is always hard to sell to great numbers of consumers, and we cannot offer products with that price point one after another. To change the world, we have to sell our products to so many people around the world that we always want to offer something with affordable price points for the great majority of consumers. So WiiFit, in terms of its cost, cannot be a typical example of the products we will regularly offer. If one player has four Wii Remotes and the player attaches all four remotes to his or her body, we can think about many different possibilities. But the next question we have to answer is, “how much would such an application cost for a customer?” Without some technical breakthrough, it will be difficult to create entertainment which requires a player to manipulate two or 4 or 8 Wii Remotes at the same time. Of course, 10 years ago, even making a wireless game controller was regarded as impossible. So, anything can happen in the future.

Miyamoto:

  The Balance Wii Board for Wii is very unique as it has its own wireless communication capability, which works as an independent remote controller for Wii. We are introducing the Zapper attachment, and we will introduce a steering wheel attachment with new Mario Kart game for Wii, but they are housings or holders for Wii Remotes and Nunchucks. Also, the Wii Remote is designed so that a variety of attachments other than the NunChuck can be connected. These types of peripherals can be offered at relatively inexpensive cost, so that third party developers may also explore more possibilities in these directions.

Iwata:

  Eventually, both will be necessary, I think. Without the both of these approaches, DS’s sales rate will eventually slow down. 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.” We always believe that we need next steps and we are always looking for brand new themes. Not a long time ago, petting puppies, training your brain, studying English and cooking were not considered video games subjects but, today, people think they can be called video games. So, we have always been searching for the next themes that can be realized in a game format. Nintendo is now challenging people’s willingness to lead healthy lives with WiiFit, and there must be many other themes beyond health that people are interested in. At the same time, DS has become a platform with a single architecture which already has an installed base of 20million in Japan. DS has wireless communications capability and you can carry it around anywhere you go. DS is a single-architecture platform with this huge installed base that can be used by virtually anyone. This can be not compared with any other machine in the past, so it would be a shame if we could not use it as an infrastructure for something else. However, to do so means that Nintendo has to invent a new business model, which is different from the way Nintendo was selling ROM cartridges and asking our software makers to make software, and from how we were producing them and software publishers were selling them. So, we need some time before we move to that kind or development. We will definitely need to prepare for connection points and all that. So, I cannot dwell on the details today, but many people have already suggested such ideas, and if you can just imagine that something interesting might happen whenever you bring your DS to a train station or theme park or museum, you know that there are enormous possibilities here. We are hopeful that we will be able to show you some concrete examples next year.

Iwata:

  There are always chicken-or-egg debates in this platform business. If a number of different projects are started when not enough installed base of hardware is established, or when the size of the business to make use of the hardware is not established, it is possible that the objective of the project can not be appreciated by potential customers, or it is hard to realize appropriate returns due to the small size of the customer base. Also, when we offer, for example, free movies or TV programs, many customers would jump to join, but as soon as we start asking the users to pay money for these services, the hurdle immediately becomes higher. Everything you mentioned is technically feasible. They are all highly possible scenarios if Wii Channels is able to realize its inherit potential. However, we should not fully open up the door simply because scenarios are possible, as doing so could ruin all of our relevant efforts. So, we needed to set a specific order to start things. For now, we are trying to enrich the existing Channels, and that is why we would like to increase the number of Channels in November and December. However, in the next year, we are very hopeful of realizing something brand new so that people will be surprised and say, “I couldn’t imagine that Wii Channels could be used this way.” When we can get to the stage where we can publicly announce specifically what we will do next, we would then like to talk to you.