Nintendo Conference Q & A Session

Nintendo Conference Q & A Session - September 29, 2010

9	My question is also relating to SNS. You talked about StreetPass communications, but I think there is a limit as to how many people one can pass by in real life. Will you think about some mechanism with which Mii characters could communicate with others around the world through SpotPass? It would enable people around the world to play the same game or share something for which they have a common interest. What is your opinion on this idea?
9	Iwata: Mii characters can be created and used for Nintendo 3DS too. Including this function and the availability of StreetPass Mii Plaza (temp), the fact that the players are interacting in one way or the other with other human beings, not a machine, has always been one of the most important elements. Be it "Tomodachi Collection (temp; direct translation from the Japanese)" or the trades and competitions of "Pokémon", what Nintendo has always been tackling can be considered as social entertainment. For that matter, "Wii Sports" and "Wii Fit" too have aspects of social play. It was quite recently, when the term "social games" suddenly started to be used in public. When it comes to integrating social elements to video games, Nintendo has been doing so for a long time. When new technologies emerge, what we can do in this regard naturally expands. That the interactions between human beings are fun is the belief we have been holding, and we will simply expand what we can do with such a belief by taking advantage of the circumstances that we newly create. It is not something that we hastily have to deal with to catch up with the age of social gaming. I said earlier that one person had experienced Tag Mode with more than 100 people today with Pokémon Black and Pokémon White. Isn't this single experience demonstrating that we are dealing with sufficiently social play already?

My question is also relating to SNS. You talked about StreetPass communications, but I think there is a limit as to how many people one can pass by in real life. Will you think about some mechanism with which Mii characters could communicate with others around the world through SpotPass? It would enable people around the world to play the same game or share something for which they have a common interest. What is your opinion on this idea?

Iwata:

Mii characters can be created and used for Nintendo 3DS too. Including this function and the availability of StreetPass Mii Plaza (temp), the fact that the players are interacting in one way or the other with other human beings, not a machine, has always been one of the most important elements. Be it "Tomodachi Collection (temp; direct translation from the Japanese)" or the trades and competitions of "Pokémon", what Nintendo has always been tackling can be considered as social entertainment. For that matter, "Wii Sports" and "Wii Fit" too have aspects of social play.

It was quite recently, when the term "social games" suddenly started to be used in public. When it comes to integrating social elements to video games, Nintendo has been doing so for a long time. When new technologies emerge, what we can do in this regard naturally expands. That the interactions between human beings are fun is the belief we have been holding, and we will simply expand what we can do with such a belief by taking advantage of the circumstances that we newly create. It is not something that we hastily have to deal with to catch up with the age of social gaming.

I said earlier that one person had experienced Tag Mode with more than 100 people today with Pokémon Black and Pokémon White. Isn't this single experience demonstrating that we are dealing with sufficiently social play already?

10	With the SpotPass of Nintendo 3DS, as we can expect to see an increase in the access points, I can see the potential for the expansion in your business model. I think the company can expect to receive profits from other companies who do not belong to this industry, and I would like to know Mr. Iwata's opinion on this. For example, will it be possible for companies other than NTT and McDonald's to advertise?
10	Iwata: We have just announced that in our collaborations with TV broadcasters, they will distribute their 3D videos to Nintendo 3DS on a trial basis. Since a private TV broadcaster's business is based upon ad income, they are going to investigate the potential of ad income which can be gained from short but attractive 3D images. One thing which we are extremely careful about is that with SpotPass, while it is a new mechanism with the potential to explore an attractive future, Nintendo 3DS could become a platform which users consider as one for myriads of spam-like ads to arrive if we were to handle it poorly. In other words, if our consumers think that the content delivered to Nintendo 3DS is unnecessary or even upsetting, SpotPass will lose its potential value. So, we must create a perfect balance between the value of the information to be delivered and whether or not our consumers will welcome this information. Once we can do so, and if we can establish a situation where our consumers can receive a variety of valuable information which is in line with their tastes, and without the need to proactively do anything in this busy world, SpotPass will be able to show its great potential. We'd like to pursue various possibilities with many companies. Spam: Electronic ads which are indiscriminately distributed in massive volumes for certain business purposes.

With the SpotPass of Nintendo 3DS, as we can expect to see an increase in the access points, I can see the potential for the expansion in your business model. I think the company can expect to receive profits from other companies who do not belong to this industry, and I would like to know Mr. Iwata's opinion on this. For example, will it be possible for companies other than NTT and McDonald's to advertise?

Iwata:

We have just announced that in our collaborations with TV broadcasters, they will distribute their 3D videos to Nintendo 3DS on a trial basis. Since a private TV broadcaster's business is based upon ad income, they are going to investigate the potential of ad income which can be gained from short but attractive 3D images.

One thing which we are extremely careful about is that with SpotPass, while it is a new mechanism with the potential to explore an attractive future, Nintendo 3DS could become a platform which users consider as one for myriads of spam*-like ads to arrive if we were to handle it poorly. In other words, if our consumers think that the content delivered to Nintendo 3DS is unnecessary or even upsetting, SpotPass will lose its potential value. So, we must create a perfect balance between the value of the information to be delivered and whether or not our consumers will welcome this information. Once we can do so, and if we can establish a situation where our consumers can receive a variety of valuable information which is in line with their tastes, and without the need to proactively do anything in this busy world, SpotPass will be able to show its great potential. We'd like to pursue various possibilities with many companies.

*Spam: Electronic ads which are indiscriminately distributed in massive volumes for certain business purposes.

11	Now that you are intensifying the Internet connection environment, will you be able to beef up your countermeasures against piracy? For example, can you automatically update the hardware's firmware when you think it is necessary?
11	Iwata: As one of the functions of SpotPass, we are considering to automatically update the hardware through the network. Countermeasures against piracy are not the only purpose, of course. For example, so far, when we try to offer some new attractive function, our consumers first have to turn on the subject game system and go through a manual procedure in order to download and install the system update. As a result, not so many people were willing to update their hardware. This is the actual experience we have had. So, we want to make it so that Nintendo 3DS hardware shall be (automatically) updated through the network, but the prevention of piracy is a secondary effect. The primary purpose is for as many consumers as possible to be able to make use of the new functions that we propose. For your information, Nintendo 3DS will also have a function so that, when a consumer purchases new (packaged) software, that software ROM card will be able to initiate the device's system update. We expect a significant increase in the ROM memory capacity for Nintendo 3DS software, so much so that such programs can be added. With that, we can offer some new proposals to users and, at the same time, it can be used to prevent piracy.

Now that you are intensifying the Internet connection environment, will you be able to beef up your countermeasures against piracy? For example, can you automatically update the hardware's firmware when you think it is necessary?

Iwata:

As one of the functions of SpotPass, we are considering to automatically update the hardware through the network. Countermeasures against piracy are not the only purpose, of course. For example, so far, when we try to offer some new attractive function, our consumers first have to turn on the subject game system and go through a manual procedure in order to download and install the system update. As a result, not so many people were willing to update their hardware. This is the actual experience we have had. So, we want to make it so that Nintendo 3DS hardware shall be (automatically) updated through the network, but the prevention of piracy is a secondary effect. The primary purpose is for as many consumers as possible to be able to make use of the new functions that we propose.

For your information, Nintendo 3DS will also have a function so that, when a consumer purchases new (packaged) software, that software ROM card will be able to initiate the device's system update. We expect a significant increase in the ROM memory capacity for Nintendo 3DS software, so much so that such programs can be added. With that, we can offer some new proposals to users and, at the same time, it can be used to prevent piracy.

12	I think that StreetPass and SpotPass are the best solutions among what you can realistically do today. Last time, I recall you mentioned, something like, that in order to be able to use the 3G network cheaply, some really big innovation is required. Perhaps, you are yet to find such a solution. Are you still exploring such a possibility? Will you be dependent upon what others are doing? Or, are you using a more proactive approach to increase the possibilities? Another question is about profitability. I understand that the profitability can be determined by the combination of development costs, price, and the number of units sold. You explained today that you have come to the price of Nintendo 3DS by comprehensively taking into consideration such factors as costs, the value of Nintendo 3DS and the reactions of the people who have actually had hands-on experience with Nintendo 3DS since E3. About the software, in the brochures you have distributed today, there were no suggested retail prices included at all. So, I'd like to know your current opinion on what the software prices will be like.
12	Iwata: I explained today that we will construct a new infrastructure for Nintendo 3DS by using its SpotPass communication. I believe that this is a realistic solution which does not require further economical burden on our consumers and which can be executed by Nintendo with reasonable expenditure. I do not know if it will use the 3G network or not, but we are always exploring the possibility to provide new useful proposals in many different ways. Just as we always answer that we are making new game hardware all the time, we are always thinking about ways to make advancements in this endeavor. The big premise here is, how we can improve the circumstances for providing valuable offers to our consumers without asking them to pay monthly fees. About the software development costs for Nintendo 3DS, I am expecting the dynamic range (the gap between the lower and upper limits) to expand, from similar development costs with Nintendo DS to far more expensive development costs in order to make very rich content. As the dynamic range (of the development costs) expands, so will software retail prices to some extent. Having said that, however, we do not believe that today's market can accept a large number of expensive software titles. Accordingly, I do not have the perception that Nintendo 3DS software shall be retailed at very different price points with that of Nintendo DS.

I think that StreetPass and SpotPass are the best solutions among what you can realistically do today. Last time, I recall you mentioned, something like, that in order to be able to use the 3G network cheaply, some really big innovation is required. Perhaps, you are yet to find such a solution. Are you still exploring such a possibility? Will you be dependent upon what others are doing? Or, are you using a more proactive approach to increase the possibilities?
Another question is about profitability. I understand that the profitability can be determined by the combination of development costs, price, and the number of units sold. You explained today that you have come to the price of Nintendo 3DS by comprehensively taking into consideration such factors as costs, the value of Nintendo 3DS and the reactions of the people who have actually had hands-on experience with Nintendo 3DS since E3. About the software, in the brochures you have distributed today, there were no suggested retail prices included at all. So, I'd like to know your current opinion on what the software prices will be like.

Iwata:

I explained today that we will construct a new infrastructure for Nintendo 3DS by using its SpotPass communication. I believe that this is a realistic solution which does not require further economical burden on our consumers and which can be executed by Nintendo with reasonable expenditure. I do not know if it will use the 3G network or not, but we are always exploring the possibility to provide new useful proposals in many different ways. Just as we always answer that we are making new game hardware all the time, we are always thinking about ways to make advancements in this endeavor. The big premise here is, how we can improve the circumstances for providing valuable offers to our consumers without asking them to pay monthly fees.

About the software development costs for Nintendo 3DS, I am expecting the dynamic range (the gap between the lower and upper limits) to expand, from similar development costs with Nintendo DS to far more expensive development costs in order to make very rich content. As the dynamic range (of the development costs) expands, so will software retail prices to some extent. Having said that, however, we do not believe that today's market can accept a large number of expensive software titles. Accordingly, I do not have the perception that Nintendo 3DS software shall be retailed at very different price points with that of Nintendo DS.

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