Presentation - 2012 E3 Analyst Q & A Session

2012 E3 Analyst Q & A Session - June 6, 2012

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11-1	I was hoping to get some more details about the hardware, so in other words, the processing power and the GPUs. There’s been a lot of speculation about the power of the Wii U relative to current generation consoles or what may be coming down the pipe. I don't know if you can comment on this, but I would appreciate any details you might be able to provide about the relative power to 360 or PS3, or some other benchmark, to give us a sense of its capabilities other than the HD graphics.
11-1	Iwata: Of course, because we have designed a new hardware system, we are using new technology and we are using new GPUs.　But as we have to devote significant costs to the Wii U GamePad, if we were to apply the same level of enhancement that other console manufacturers shoot for to the processing power component, the Wii U would become extremely high in price, and it would not be affordable.　In other words, we think that the way that the various console manufacturers are allocating their budgets to the hardware is different from the way that we allocate our budget to the hardware. Ultimately, we’re looking to maintain a price point for the Wii U that is reasonable in comparison to the value to be offered. There is also another differentiation point here. While existing platforms have engines that development teams have tuned and optimized for six to seven years after their respective launches, the Wii U is a new platform that has slightly different architecture and, since development teams have only just begun development on software for it, they are only at the halfway point to utilizing its full potential. Despite this fact, however, if you look at the game “Assassin’s Creed III,” which was recently announced or shown, you can’t see much difference when you compare it with games for other companies’ systems. I hope that helps you to understand a little bit better.

11-1

I was hoping to get some more details about the hardware, so in other words, the processing power and the GPUs. There’s been a lot of speculation about the power of the Wii U relative to current generation consoles or what may be coming down the pipe. I don't know if you can comment on this, but I would appreciate any details you might be able to provide about the relative power to 360 or PS3, or some other benchmark, to give us a sense of its capabilities other than the HD graphics.

11-1

Iwata:

Of course, because we have designed a new hardware system, we are using new technology and we are using new GPUs.　But as we have to devote significant costs to the Wii U GamePad, if we were to apply the same level of enhancement that other console manufacturers shoot for to the processing power component, the Wii U would become extremely high in price, and it would not be affordable.　In other words, we think that the way that the various console manufacturers are allocating their budgets to the hardware is different from the way that we allocate our budget to the hardware. Ultimately, we’re looking to maintain a price point for the Wii U that is reasonable in comparison to the value to be offered.

There is also another differentiation point here. While existing platforms have engines that development teams have tuned and optimized for six to seven years after their respective launches, the Wii U is a new platform that has slightly different architecture and, since development teams have only just begun development on software for it, they are only at the halfway point to utilizing its full potential. Despite this fact, however, if you look at the game “Assassin’s Creed III,” which was recently announced or shown, you can’t see much difference when you compare it with games for other companies’ systems. I hope that helps you to understand a little bit better.

11-2	Do you have any comments on how large the Wii U hard drive will be to accommodate all of these digital downloads?
11-2	Iwata: We haven’t said anything about the hard drive that we’ll be including with the system itself. But we have said, through the USB connection, consumers will be able to take advantage of a wide range of the hard drives that are available in the market, and for quite cheap now, to add memory to their system however they like.

11-2

Do you have any comments on how large the Wii U hard drive will be to accommodate all of these digital downloads?

11-2

Iwata:

We haven’t said anything about the hard drive that we’ll be including with the system itself. But we have said, through the USB connection, consumers will be able to take advantage of a wide range of the hard drives that are available in the market, and for quite cheap now, to add memory to their system however they like.

12	What’s your plan, and what’s your view on Nintendo’s prospects in emerging markets such as Latin America, China and Russia? Do you see significant opportunities in those markets?
12	Iwata: In these emerging markets, you do have a very large population base. In many of them, people have not been devoting as much money to entertainment in the past, but we are now starting to see them devote more of their income to entertainment, and we see that as particularly desirable. However, in many of these emerging markets, we see some cases that the accepted value for an individual piece of software may not be as high as we think it should be, and we also see, in some of these markets, some fairly significant piracy challenges. As a result, doing business that focuses on software is somewhat more challenging. I think the history up until now has shown that trying to sell software through physical media in some of these markets has not been very successful. But I do think that digital distribution (which means that it enables us to load software to hardware), will give us chances to sell hardware that has various market-specific software easily pre-installed. Or in other words, we think that finding ways to take advantage of the value proposition that people in those markets see for the hardware, rather than software whose value is not easily accepted, does open up opportunities through the different sales methods. In the near future, we do hope to execute some different trials in some of these different markets. So I hope that there will come a time where we’ll be able to do this, and I’ll be able to meet with you and talk about the proposition for us to see the fruits from some of those efforts. We are still in progress in that regard. Perhaps that will lead to a time where we think Nintendo will once again have an opportunity to truly grow the overall worldwide gaming population. If we’re able to do that, it would be particularly beneficial for Nintendo’s future. So we do hope in the near future to be able to talk to you about some of these activities.

What’s your plan, and what’s your view on Nintendo’s prospects in emerging markets such as Latin America, China and Russia? Do you see significant opportunities in those markets?

Iwata:

In these emerging markets, you do have a very large population base. In many of them, people have not been devoting as much money to entertainment in the past, but we are now starting to see them devote more of their income to entertainment, and we see that as particularly desirable. However, in many of these emerging markets, we see some cases that the accepted value for an individual piece of software may not be as high as we think it should be, and we also see, in some of these markets, some fairly significant piracy challenges. As a result, doing business that focuses on software is somewhat more challenging. I think the history up until now has shown that trying to sell software through physical media in some of these markets has not been very successful.

But I do think that digital distribution (which means that it enables us to load software to hardware), will give us chances to sell hardware that has various market-specific software easily pre-installed. Or in other words, we think that finding ways to take advantage of the value proposition that people in those markets see for the hardware, rather than software whose value is not easily accepted, does open up opportunities through the different sales methods. In the near future, we do hope to execute some different trials in some of these different markets. So I hope that there will come a time where we’ll be able to do this, and I’ll be able to meet with you and talk about the proposition for us to see the fruits from some of those efforts. We are still in progress in that regard. Perhaps that will lead to a time where we think Nintendo will once again have an opportunity to truly grow the overall worldwide gaming population. If we’re able to do that, it would be particularly beneficial for Nintendo’s future. So we do hope in the near future to be able to talk to you about some of these activities.

Presentation | Q & A

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