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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9	Please tell us about your approach to on-hand cash management. I recall that before the Wii U launch, former President Iwata could not exactly indicate how much of funds is considered as surplus funds for Nintendo. After that, a lot of new business strategies were disclosed, and I would like to know how the need to have funds on-hand is being considered as the future of the company is becoming more visible in a lot of areas, including NX.
9	Kimishima: Concerning our thoughts about the need for funds, as we get the business running smoothly and increase cash inflows, I think that we need to think very seriously about whether we are building on that progress. That is our approach to money balance. Right now we are proceeding with many projects that make use of our IP, and in those plans there are several projects that will require funds, so we want to use funds for those purposes first. The launch of NX is not the only project which requires funds, and we want to prioritize using it on projects that make use of our IP.

Please tell us about your approach to on-hand cash management. I recall that before the Wii U launch, former President Iwata could not exactly indicate how much of funds is considered as surplus funds for Nintendo. After that, a lot of new business strategies were disclosed, and I would like to know how the need to have funds on-hand is being considered as the future of the company is becoming more visible in a lot of areas, including NX.

Kimishima:

Concerning our thoughts about the need for funds, as we get the business running smoothly and increase cash inflows, I think that we need to think very seriously about whether we are building on that progress.

That is our approach to money balance. Right now we are proceeding with many projects that make use of our IP, and in those plans there are several projects that will require funds, so we want to use funds for those purposes first. The launch of NX is not the only project which requires funds, and we want to prioritize using it on projects that make use of our IP.

10	Roughly how much will smart device projects contribute of the company's overall revenue and profit in the fiscal year ending March 2017? Also, from a long-term perspective, how long can we assume it will take before this becomes hundreds of billions of yen business instead of a tens of billions of yen business?
10	Kimishima: We plan to have released about five titles (including Miitomo) by March 2017, but the next applications will release in the fall, so the latter half of the year will influence our results. In that sense, it is included in the 45 billion yen operating income and the expected 500 billion yen sales results predicted for the fiscal year ending March 2017, but its impact will not be on the level of the majority. However, (as of the second application) we will be putting out applications that use IP from actual games, so it will be a decent value for the fiscal year ending March 2017. In the mid-to-long term, of course we want to make the smart device business a pillar of profit, so hypothetically, if sales of around 500 billion yen continue in the future, the sales would not grow to the scale of hundreds of billions of yen as you just mentioned, but we believe that it will become a big volume in the future. It is still a little early to get into specific numbers at this point in time, so that is all I can say for now.

Roughly how much will smart device projects contribute of the company's overall revenue and profit in the fiscal year ending March 2017? Also, from a long-term perspective, how long can we assume it will take before this becomes hundreds of billions of yen business instead of a tens of billions of yen business?

Kimishima:

We plan to have released about five titles (including Miitomo) by March 2017, but the next applications will release in the fall, so the latter half of the year will influence our results. In that sense, it is included in the 45 billion yen operating income and the expected 500 billion yen sales results predicted for the fiscal year ending March 2017, but its impact will not be on the level of the majority. However, (as of the second application) we will be putting out applications that use IP from actual games, so it will be a decent value for the fiscal year ending March 2017. In the mid-to-long term, of course we want to make the smart device business a pillar of profit, so hypothetically, if sales of around 500 billion yen continue in the future, the sales would not grow to the scale of hundreds of billions of yen as you just mentioned, but we believe that it will become a big volume in the future. It is still a little early to get into specific numbers at this point in time, so that is all I can say for now.

11	While Wii U sales in the fiscal year ending March 2017 are predicted to be very weak, with NX sales and profit contributions included, looking at these predictions, the numbers look as if you are fairly confident in the NX and ready to take off running. Do you think you can cover the decline of the Wii U with the new NX?
11	Kimishima: We are predicting about 800,000 Wii U hardware sales in the fiscal year ending March 2017, which is a decrease of about 2.4 million units compared to the previous year. NX and smart device business will be essential to cover this gap, but we also expect download content business to play a role. However, we are planning with the expectation that NX sales will compensate for much of the impact on sales from reduced Wii U hardware sales.

While Wii U sales in the fiscal year ending March 2017 are predicted to be very weak, with NX sales and profit contributions included, looking at these predictions, the numbers look as if you are fairly confident in the NX and ready to take off running. Do you think you can cover the decline of the Wii U with the new NX?

Kimishima:

We are predicting about 800,000 Wii U hardware sales in the fiscal year ending March 2017, which is a decrease of about 2.4 million units compared to the previous year. NX and smart device business will be essential to cover this gap, but we also expect download content business to play a role. However, we are planning with the expectation that NX sales will compensate for much of the impact on sales from reduced Wii U hardware sales.

Outline | Presentation by the President | Q & A

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