Corporate Management Policy Briefing / Semi-Annual Financial Results Briefing for the 76th Fiscal Term Ending March 2016

Corporate Management Policy Briefing /
Semi-Annual Financial Results Briefing
for the 76th Fiscal Term Ending March 2016

Outline | Presentation by the President | Q & A

BACK |

4	What is the reason behind the smart device application that was scheduled to be released within this calendar year being delayed to March 2016 and what impact will it have on your financial performance with it missing the year-end sales season?
4	Kimishima: 　Until now, we had been communicating that we would begin digitally distributing the smart device application within this calendar year. After reconsideration on when the appropriate timing of the release would be, we have now rescheduled the release to March 2016. Upon releasing an application, we believe it is necessary to communicate about the application at least about two months before its release in one way or another. If the application were to be released in December, it would already be the time to start communicating about the application. Considering our entire business, we have decided to focus our efforts in the dedicated video game business for our largest sales season coming up in December and then inform the public about our first application early in the New Year and release it in March 2016. 　As for the impact on our financial performance for the fiscal year ending March 2016, as we previously confirmed when the initial forecast was released (in May this year), we were not expecting a large impact if the application were to be released in December, since it is a free-to-start type application. Therefore, we expect the impact to be minimal due to rescheduling the release timing of our first application to March 2016.

What is the reason behind the smart device application that was scheduled to be released within this calendar year being delayed to March 2016 and what impact will it have on your financial performance with it missing the year-end sales season?

Kimishima:

　Until now, we had been communicating that we would begin digitally distributing the smart device application within this calendar year. After reconsideration on when the appropriate timing of the release would be, we have now rescheduled the release to March 2016. Upon releasing an application, we believe it is necessary to communicate about the application at least about two months before its release in one way or another. If the application were to be released in December, it would already be the time to start communicating about the application. Considering our entire business, we have decided to focus our efforts in the dedicated video game business for our largest sales season coming up in December and then inform the public about our first application early in the New Year and release it in March 2016.
　As for the impact on our financial performance for the fiscal year ending March 2016, as we previously confirmed when the initial forecast was released (in May this year), we were not expecting a large impact if the application were to be released in December, since it is a free-to-start type application. Therefore, we expect the impact to be minimal due to rescheduling the release timing of our first application to March 2016.

5	You have already announced your plan to integrate the architectures of your dedicated game systems. Now that you will release your software on smart devices as well, I would like to hear what kind of challenges Nintendo will need to cope with in this regard. May I ask this question to Mr. Takahashi and Mr. Miyamoto from the software perspective and to Mr. Takeda from the hardware perspective?
5	Takahashi: 　For more than 10 years after joining Nintendo I was engaged in software development under Mr. Miyamoto. And under late Mr. Iwata’s directions, I was making development environments at a department called the Software Development & Design Department. As a result, I always think in terms of what would be the most appropriate development environment not only for Nintendo’s own software but also for third-party developers. As our former president told you before, Nintendo has been internally pushing forward with the project to integrate the development environments in recent years so that it can cater to the needs of the new age. It is by no means an easy task, but I believe that we are now working in the direction of easier software development by means of this integration. Miyamoto: 　Since the Famicom age, it had often been the case that the software developers who were able to thoroughly comprehend the unique techniques to develop software on unique hardware environments were able to create quality software. Now that anyone with a certain level of knowledge can create applications and especially those for smart devices, we would like to deploy a development environment that eliminates waste as much as possible and is applicable to a variety of devices. Genyo Takeda (Senior Managing Director, Technology Fellow): 　I understand that, thanks to the evolution of computer technology, aiming to realize a virtualized software development environment that does not depend on specific hardware is becoming the technological norm today. Simultaneously, regarding input and output technologies, I believe that it is also in line with the current technological trend that Nintendo should challenge itself with the creation of a unique user interface.

You have already announced your plan to integrate the architectures of your dedicated game systems. Now that you will release your software on smart devices as well, I would like to hear what kind of challenges Nintendo will need to cope with in this regard. May I ask this question to Mr. Takahashi and Mr. Miyamoto from the software perspective and to Mr. Takeda from the hardware perspective?

Takahashi:

　For more than 10 years after joining Nintendo I was engaged in software development under Mr. Miyamoto. And under late Mr. Iwata’s directions, I was making development environments at a department called the Software Development & Design Department. As a result, I always think in terms of what would be the most appropriate development environment not only for Nintendo’s own software but also for third-party developers. As our former president told you before, Nintendo has been internally pushing forward with the project to integrate the development environments in recent years so that it can cater to the needs of the new age. It is by no means an easy task, but I believe that we are now working in the direction of easier software development by means of this integration.

Miyamoto:

　Since the Famicom age, it had often been the case that the software developers who were able to thoroughly comprehend the unique techniques to develop software on unique hardware environments were able to create quality software. Now that anyone with a certain level of knowledge can create applications and especially those for smart devices, we would like to deploy a development environment that eliminates waste as much as possible and is applicable to a variety of devices.

Genyo Takeda (Senior Managing Director, Technology Fellow):

　I understand that, thanks to the evolution of computer technology, aiming to realize a virtualized software development environment that does not depend on specific hardware is becoming the technological norm today. Simultaneously, regarding input and output technologies, I believe that it is also in line with the current technological trend that Nintendo should challenge itself with the creation of a unique user interface.

6	Am I correct in thinking that NX will be the most important business for Nintendo in your attempt to further improve your sales and profits from now on and that, accordingly, the NX business will be your main focus? Can I understand that even your policy to aggressively take advantage of Nintendo IP is one of your tactics to energize such core Nintendo businesses as NX, that the company does not intend to significantly increase the revenue from IP licenses themselves and that it does not plan to advance into such businesses as movie productions?
6	Kimishima: 　We have been making various preparations for NX so that it can grow into our core business after its launch. However, as we have been repeatedly saying, we will talk about NX next year, so I would like to refrain from making any further comments today. Miyamoto: 　As the “Fellow” who oversees the Nintendo’s entire software production, while working on unique game software developments, I am also in a position to conceive and execute unique plans that uses Nintendo IP, and I have always been hoping to maximize the company’s profits by proactively using this IP. As the first tangible example of our proactive use of IP, we released amiibo last year, and as Mr. Kimishima explained during his presentation today, amiibo has already been contributing to the company’s financial performance. Just as this amiibo example shows, Nintendo’s proactive use of its IP is to improve its business performance by taking advantage of Nintendo IP in a variety of ways, not by limiting use to merchandise licensing activities. For example, this is one of the objectives of deploying our IP on smart devices but it includes our attempt to increase the awareness of Nintendo by delivering our messages to people whom we have not been able to communicate with when deploying our IP on dedicated game systems.

Am I correct in thinking that NX will be the most important business for Nintendo in your attempt to further improve your sales and profits from now on and that, accordingly, the NX business will be your main focus? Can I understand that even your policy to aggressively take advantage of Nintendo IP is one of your tactics to energize such core Nintendo businesses as NX, that the company does not intend to significantly increase the revenue from IP licenses themselves and that it does not plan to advance into such businesses as movie productions?

Kimishima:

　We have been making various preparations for NX so that it can grow into our core business after its launch. However, as we have been repeatedly saying, we will talk about NX next year, so I would like to refrain from making any further comments today.

Miyamoto:

　As the “Fellow” who oversees the Nintendo’s entire software production, while working on unique game software developments, I am also in a position to conceive and execute unique plans that uses Nintendo IP, and I have always been hoping to maximize the company’s profits by proactively using this IP. As the first tangible example of our proactive use of IP, we released amiibo last year, and as Mr. Kimishima explained during his presentation today, amiibo has already been contributing to the company’s financial performance. Just as this amiibo example shows, Nintendo’s proactive use of its IP is to improve its business performance by taking advantage of Nintendo IP in a variety of ways, not by limiting use to merchandise licensing activities. For example, this is one of the objectives of deploying our IP on smart devices but it includes our attempt to increase the awareness of Nintendo by delivering our messages to people whom we have not been able to communicate with when deploying our IP on dedicated game systems.

Outline | Presentation by the President | Q & A

BACK |