Financial Results Briefing for Fiscal Year Ended March 2016

Financial Results Briefing
for Fiscal Year Ended March 2016

Outline | Presentation by the President | Q & A

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4	I would like to reconfirm how serious your company is about your initiative on games for smart devices. How much management resources are you intending to shift over to this business in the future? The company has extremely able, world-class creators, and I think they could create hits in games for smart devices. In that sense, I think the best scenario would be to have the legendary Mr. Miyamoto take up the challenge of games for smart devices, and have him create something that would make people think, "This is truly Nintendo's smart device game." Mr. Kimishima, what do you think about that?
4	Kimishima: If people are "not sure about how serious we are" about smart devices, it means that information issued from our company is not accurately conveyed, and I have to reflect on that. As we have reiterated, we want to grow smart device gaming as one of the pillars of Nintendo's revenue stream. As for shifting managerial resources in that direction, we have very capable developers who are working on development of games for smart devices, as you already know. Of course, Mr. Miyamoto, our Creative Fellow, is also supporting the business for smart devices from a company-wide perspective. To explain the level of engagement of Mr. Miyamoto, he is having specific talks with developers of games for smart devices on what would be desirable overall. In that sense, what you see from the outside may be markedly different from what we see on the inside. As I have said, we want this to be one of the pillars of our business. Our level of engagement has not lessened, so I hope you will understand that.

I would like to reconfirm how serious your company is about your initiative on games for smart devices. How much management resources are you intending to shift over to this business in the future? The company has extremely able, world-class creators, and I think they could create hits in games for smart devices. In that sense, I think the best scenario would be to have the legendary Mr. Miyamoto take up the challenge of games for smart devices, and have him create something that would make people think, "This is truly Nintendo's smart device game." Mr. Kimishima, what do you think about that?

Kimishima:

If people are "not sure about how serious we are" about smart devices, it means that information issued from our company is not accurately conveyed, and I have to reflect on that. As we have reiterated, we want to grow smart device gaming as one of the pillars of Nintendo's revenue stream. As for shifting managerial resources in that direction, we have very capable developers who are working on development of games for smart devices, as you already know. Of course, Mr. Miyamoto, our Creative Fellow, is also supporting the business for smart devices from a company-wide perspective. To explain the level of engagement of Mr. Miyamoto, he is having specific talks with developers of games for smart devices on what would be desirable overall. In that sense, what you see from the outside may be markedly different from what we see on the inside. As I have said, we want this to be one of the pillars of our business. Our level of engagement has not lessened, so I hope you will understand that.

5	I understand that details of NX will not be announced today. However, I would like to ask about the effect of NX in terms of performance in the fiscal year ending in March 2017. There were times in the past when sale of hardware at launch suffered due to the lack of a sufficient number of titles. Can you promise that the launch of NX will be accompanied by a solid lineup of games? We also have the case of Wii U hardware, which was sold at a loss at launch. I would like to know what you are thinking about the cost of NX in terms of analyzing performance for the fiscal year in which NX is launched.
5	Kimishima: We will introduce NX concepts and details at another time, so I will restrict my answer to the question asked. You are correct about needing a solid lineup of software. One of the reasons for choosing the launch timing that we did is so that the software lineup will be ready in time for the hardware launch. Not only at launch, but we also need to be able to continuously release titles after launch. We are planning for this to be a platform that consumers can enjoy for a long time. Next, about how we are looking at cost, we are not thinking of launching the hardware at a loss. When Wii U was launched, the yen was very strong. I am assuming that situation will not repeat itself. Selling at a loss at launch would not support the business, so we are keeping that mind in developing NX.

I understand that details of NX will not be announced today. However, I would like to ask about the effect of NX in terms of performance in the fiscal year ending in March 2017. There were times in the past when sale of hardware at launch suffered due to the lack of a sufficient number of titles. Can you promise that the launch of NX will be accompanied by a solid lineup of games? We also have the case of Wii U hardware, which was sold at a loss at launch. I would like to know what you are thinking about the cost of NX in terms of analyzing performance for the fiscal year in which NX is launched.

Kimishima:

We will introduce NX concepts and details at another time, so I will restrict my answer to the question asked. You are correct about needing a solid lineup of software. One of the reasons for choosing the launch timing that we did is so that the software lineup will be ready in time for the hardware launch. Not only at launch, but we also need to be able to continuously release titles after launch. We are planning for this to be a platform that consumers can enjoy for a long time.

Next, about how we are looking at cost, we are not thinking of launching the hardware at a loss. When Wii U was launched, the yen was very strong. I am assuming that situation will not repeat itself. Selling at a loss at launch would not support the business, so we are keeping that mind in developing NX.

6	I'm sure that there were many things with Miitomo that Nintendo expected, as well as many that were unexpected, that provided learning experiences. I would like to hear as much as possible about what was learned from the experience. Nintendo's value comes from its strong IP, and using that IP comes with the risk that if the IP is not successful, its value will decrease. In that sense, Miitomo and future titles need to get results in the smart device application market. It may still be too early to generalize, but I would like to know how the response to Miitomo has been in comparison with your expectations.
6	Kimishima: I believe that Miitomo reaching 10 million unique users in the short time since its release shows that it has achieved the level we had planned. At the same time, this system lets us hear the consumers' opinions. I believe this business requires us to continue to update to respond to these opinions in various ways, so we knew from the beginning that we would not be able to satisfy everyone right away. We believe that it is important to continue to revitalize the applications by quickly implementing feedback from consumers. Only one month has passed since distribution began. Our goals are to act on the feedback we received during this period quickly and increase the amount of consumers who are playing daily.

I'm sure that there were many things with Miitomo that Nintendo expected, as well as many that were unexpected, that provided learning experiences. I would like to hear as much as possible about what was learned from the experience. Nintendo's value comes from its strong IP, and using that IP comes with the risk that if the IP is not successful, its value will decrease. In that sense, Miitomo and future titles need to get results in the smart device application market. It may still be too early to generalize, but I would like to know how the response to Miitomo has been in comparison with your expectations.

Kimishima:

I believe that Miitomo reaching 10 million unique users in the short time since its release shows that it has achieved the level we had planned. At the same time, this system lets us hear the consumers' opinions. I believe this business requires us to continue to update to respond to these opinions in various ways, so we knew from the beginning that we would not be able to satisfy everyone right away. We believe that it is important to continue to revitalize the applications by quickly implementing feedback from consumers. Only one month has passed since distribution began. Our goals are to act on the feedback we received during this period quickly and increase the amount of consumers who are playing daily.

Outline | Presentation by the President | Q & A

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