Satoru Iwata (President):

  First, about the Nintendo 3DS software, you asked what the basis for our unit shipment forecast is. Please note that this forecast is Nintendo's shipment number, so not all the 4 million hardware units and the 15 million software units are expected to reach consumers' hands. Now that we are launching a new hardware device, for which people's anticipation is fortunately high, and in terms of the current circumstance where a number of software developers with strong will to make the software for it are wanting to launch their software on or close to the launch date of Nintendo 3DS, we think that the company will be able to make that size of software shipment from Nintendo. In addition, since the retailers also have high expectations for this new hardware, we are expecting them to offer sufficient shelf space to showcase and sell a certain good amount of the software from the beginning. These are the reasons as to how we have come up with that software shipment figure.
  I understand that your question was based upon a concern that the 3.75 tie ratio (software sales per hardware unit) will be too much for a period of just about one month from the hardware's launch, but please understand that there is certainly a small time gap between when Nintendo ships Nintendo 3DS software to the retailers or to the third-party publishers and when this software is actually sold at the retailers, and, by taking into consideration the high expectations for this product before the launch, we have concluded that we would be able to make that shipment figure (sell-in). I hope you will understand this point.
  About your question on Mr. Miyamoto's hobby, let me supplement this for other people. Nintendo posts interviews which are called, "Iwata Asks" (on its official website) from time to time. Commemorating the 25th anniversary of Super Mario Bros., we have opened a dedicated campaign website. Because I hear a lot of information from Mr. Miyamoto on a daily basis, I thought that we would be able to hear from him some interesting anecdotes about Mario if we changed the interviewer. So, we asked Mr. Shigesato Itoi to do "Shigesato Itoi Asks in Place of Iwata." The subject of Mr. Miyamoto's involvement with his neighborhood association happened to be included in this interview article.

Shigeru Miyamoto (Senior Managing Director of Nintendo and General Manager of Entertainment Analysis & Development Division):

  Well, I am asked about my hobbies all the time. But I have always been told not to answer because it could be a hint for our next project. It is true that some of my hobbies have turned out to be the themes in our games. You know, we sometimes see TV programs which introduce you to something successful, and when the programs look back on the journey to success, some unexpected facts are revealed. These TV programs conclude that these facts must be the reasons of success, so if we do something similar, we may be able to succeed in the same fashion. In my case, I would never start a new hobby with the hope to somehow make it into a Nintendo product in the future.
  Because some of my recent hobbies have actually turned out to become some of our products in the end, when I explained about the background of these software titles, some people start to suggest that my next hobby will become the next Nintendo product. However, it is not the case. I think I am not exceptional in this regard because many people make something from their own personal interests, but it is only after the product is finished when we can realize that our personal hobbies have turned out to be that way.
  Unfortunately, few people discuss Wii Music, but only after we completed this game, I realized that I had wanted to make that software because I personally love music. When it comes to my personal interests, and I wish more people were interested in this particular topic, we have been working on the voice guidance system that can be used in many places such as museums. All you need to do is bring your Nintendo DS (to museums and other places). You don't need to buy any dedicated software. The operators of the facilities transmit voice guidance, together with simple pictures, to your Nintendo DS. The visitors can enjoy the service free of charge as long as they bring their Nintendo DS with them. The service is already available at such places as "Kaiyukan " aquarium in Osaka and "Shin Enoshima Aquarium." We have upgraded this service, so what these venues can offer to your Nintendo DS has been improved.
  Also, we have just developed new software, which even individuals can make use of it. For example, neighborhoods in our community won't have to face so much trouble when they make and send out messages (for example, to make a message for neighbors to enjoy a stamp-rally event). We are planning to make this software available as one of the downloadable Nintendo DSiWare titles next month (November). Utilizing Nintendo DSi (it's camera and microphone), you can insert some simple sounds and pictures. Then, people who visit your place with their Nintendo DS can receive and enjoy that data. If an owner of a cafe in a neighborhood shopping arcade happens to like this kind of technology, he or she can make it so that the customers can open their Nintendo DS device to see the restaurant's menu and other things like a detailed introduction of the restaurant. Shop owners can also make it so that the customers at the tables can push a number on the screen to listen to some audio messages, just like the visitors to the museums can receive the audio guidance. We will soon make this software downloadable. This will not directly contribute to our sales, but we are hopeful that this type of service will greatly contribute to encouraging people to use and bring their Nintendo DS devices wherever they are and wherever they go, just like Mr. Iwata mentioned before (during his presentation). Overall, I do not have any new hobbies that I can disclose now.

Iwata:

  I explained this at Nintendo Conference 2010 a month ago, but I myself believe that the communication capability is one of the large strengths of Nintendo 3DS in addition to its ability to show 3D images without the need for special glasses.
  I've already expressed this idea often, but in the world of entertainment, and especially in the entertainment business of Nintendo, anyone regardless of age or gender can choose to play, so the need for monthly costs or monthly subscription fees are not well suited. If we should apply that business model, the sheer number of our consumers would be narrowed down to a certain limited group of people. By asking ourselves, "what can we do without asking our consumers to make monthly payments?", we came up with the structure of "SpotPass" communication. Ten years ago, something like this "SpotPass" was an impossible dream. Today, however, in densely-packed areas, we can see the spread of Wi-Fi access points that we can use with certain reasonable costs. This kind of change in the circumstances has enabled us to offer such functions as "SpotPass."
 You just mentioned the spread of such devices as portable Wi-Fi routers and the emerging new communication technologies such as LTE. They too will change the circumstances, I believe. Nintendo may be able to find a business model which does not require consumers to pay monthly communication fees, and we may be able to provide our consumers with a more convenient communication environment. Of course, even today, Wi-Fi routers and Nintendo DS or Nintendo 3DS devices can be used together, but doing so today must rely upon consumers to execute the relevant contracts and pay several thousands of yen monthly. In the future, when we may be able to find a different structure, we will be able to offer services to the real mass audiences.
  Be it "SpotPass" or "StreetPass" communications, how these new communication services can impact society varies depending on whether new hardware, like Nintendo 3DS, can show massive expansion in the market in a very short period of time or if it steadily but slowly penetrates into the market. In that sense, the launch sales will become critical. I have often talked about this, but any game platform needs the momentum in order to create a good sales cycle, so rapidly expanding new hardware will be important as a matter of course. For that matter, in addition to making the sufficient preparations ourselves, such as preparing for the applicable first-party software and services for the expansion of the hardware, Nintendo has been simultaneously considering how we can best collaborate with the software developers and publishers. Because a number of software creators are holding high expectations for Nintendo 3DS, more consumers will feel safe in deciding to purchase the hardware because they can expect a sound number of software titles to arrive at an early stage.

Iwata:

  First, about the Wii in this year-end, if my presentation left you with the impression that we are depending only on the evergreen titles (that we launched last year or before then), I should have explained it in a better way. As a matter of course, we have a number of new titles (that we will launch this year.) On the other hand, as many people say that each one of these new titles does not seem to sell in a volume that can be compared with the titles we launched a year ago, I wanted to explain in my presentation today that we want them to consider how the sales of such software a year ago are still continuing, without which the entire picture is hard to be seen. This is why I put a bit more emphasis on (the room for further sales of) the evergreen titles.
  When it comes to concrete campaign and promotional activities, we have to refrain from elaborating on them before we actually carry them out. However, it is true that a number of major retailers, not just in Japan but around the world, are expecting the demand to significantly grow in the year-end for such gaming systems as Wii and Nintendo DS that are enjoyed by families, so we are receiving a variety of proposals from these retailers.
  One reason why we are able to count on the year-end sales while the sales so far in this calendar year have not been so good is our review of the most recent situation. In October, certain retailers usually start their own, limited weekly-offer type of sales promotions, and they are starting such promotions in the U.S. and in Europe. Whether the consumers actually react to such limited weekly offers or not can tell us a lot and can be our sales indicator for the year-end. If they do not react with significant purchases, we will have to think that Wii and Nintendo DS have little more demand. On the other hand, if three times or even five times as much as the previous week's sales are made as a result of such limited offers, we can conclude that our consumers are actually waiting for some incentives.
  By now, we have come to notice that such special offers from retailers have prompted significant increases in the weekly sales, so we are interpreting the current situation as our consumers are patiently waiting, instead of interpreting it as diminishing demand (for Wii and Nintendo DS). I think this is how the difference in expectation can take place between when you estimate the November and December sales based upon the past years' sales trend and when we forecast our sales in this fashion.
  Next, let me address your question of whether or not we will be able to launch unique titles on Wii. Needless to say, Nintendo always wants to introduce you to unique titles and it has always been making efforts to create such titles. On the other hand, when it comes to unique titles, there is never 100% assurance that we can make software which will become the software which will receive massive support and appreciation from a wide range of our consumers. When we tackle with the actual development, many issues arise, which adds to the total development period. Also, when the software is unique, it is more challenging for us to communicate its appeal to consumers. Actually, the initial reaction to such titles should be, "Will it be really fun at all?" or "I just don't get it." So, we cannot afford to make the software too unique. Such titles as "nintendogs," "Brain Training," "Wii Fit" and "Wii Sports" were able to cross that hurdle in a short period of time. At Nintendo, we have not come to the stage where we need to give up on the developments of such unique titles at all. We do not feel that Wii has come to its limit.

  I showed you this graph before (during my presentation).
  This graph indicates the transitions of Nintendo DS and Wii users. As you can see, the number of DS users is not increasing significantly. Actually, it should be appropriate for me to say, "the number of Nintendo DS users is stable." On the other hand, the number of Wii users is still growing. As we have the Japanese counterpart graph for this, I'd like to show it to you.
  As we have been conducting the research for a longer period of time here, we have more graphs for the Japanese market. As you can see, Nintendo DS experienced explosive sales in the past, and since then, it has started to show decline but the actual number of Nintendo DS users is being maintained at a certain level. Having said that, in case of Wii, the number of users is constantly increasing. By looking at such graphs, we come to think, for example, we need to launch a device to succeed Nintendo DS in the near future while we have more room for expansion with Wii. We always look into how the number of our consumers is increasing, at which level it is being maintained and, because someday the number of consumers has to decline, how we can launch a successive system before the consumer base starts decreasing significantly. Having said that, however, we do not believe that we should apply any certain predetermined product lifecycle to this. When we conduct this type of survey semi-annually, we can clearly understand the fluctuations of our consumers' interest in our platforms, so this must be one of the criteria for us to judge the transition to the next product.