The 76th Annual General Meeting of Shareholders

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7	I would like to ask about Nintendo's marketing strategy. I see the value in reexamining advertising expenses to bring the operating income back into the black, but with the decrease in the advertising expenses, it looks like information on some software is only reaching committed gamers. I think there is a lot of hidden, interesting software for people who are about to start gaming, such as Tokyo Mirage Sessions #FE. I would really like to see an effort to make these widely known. What do you think about that?
7	Kimishima: We have been reviewing advertising expenses from the point of view of balancing revenue and expenses, and of whether the spending level is appropriate in proportion to our sales. As a result, we have reined in advertising expenses to a certain degree over the last few years, and this has helped to balance revenue and expenses. However, the whole point of advertising is to convey information appropriately to consumers, so we cannot simply cut spending. With the progress of technology, advertising media and methods now go beyond television ads to include many different options. Those who come into contact with games for the first time are not that interested to start with, so for those types of people, I agree with you that we need to carefully consider our timing and approach. We intend to come up with detailed plans on what message to convey to what type of consumers with what kind of timing, and push this forward with an eye to cost-effectiveness as well.

I would like to ask about Nintendo's marketing strategy. I see the value in reexamining advertising expenses to bring the operating income back into the black, but with the decrease in the advertising expenses, it looks like information on some software is only reaching committed gamers. I think there is a lot of hidden, interesting software for people who are about to start gaming, such as Tokyo Mirage Sessions #FE. I would really like to see an effort to make these widely known. What do you think about that?

Kimishima:

We have been reviewing advertising expenses from the point of view of balancing revenue and expenses, and of whether the spending level is appropriate in proportion to our sales. As a result, we have reined in advertising expenses to a certain degree over the last few years, and this has helped to balance revenue and expenses.

However, the whole point of advertising is to convey information appropriately to consumers, so we cannot simply cut spending. With the progress of technology, advertising media and methods now go beyond television ads to include many different options. Those who come into contact with games for the first time are not that interested to start with, so for those types of people, I agree with you that we need to carefully consider our timing and approach. We intend to come up with detailed plans on what message to convey to what type of consumers with what kind of timing, and push this forward with an eye to cost-effectiveness as well.

8	On the proposal to change the Articles of Incorporation (Proposal No. 2), I see in Article 2 (Purpose) item 9 the addition of the language: “Development, manufacturing and sale of medical devices and health devices.” Can you elaborate on this?
8	Kimishima: This is not solely in view of the QOL project. We made changes and additions to the Articles of Incorporation with a view to future diversification of our business. Of course we intend to carry on with the QOL project, and that is what we are doing at present. However, the thinking behind the proposed changes in the Articles was to deploy our assets and expertise to expand our business in many different areas.

On the proposal to change the Articles of Incorporation (Proposal No. 2), I see in Article 2 (Purpose) item 9 the addition of the language: “Development, manufacturing and sale of medical devices and health devices.” Can you elaborate on this?

Kimishima:

This is not solely in view of the QOL project. We made changes and additions to the Articles of Incorporation with a view to future diversification of our business. Of course we intend to carry on with the QOL project, and that is what we are doing at present. However, the thinking behind the proposed changes in the Articles was to deploy our assets and expertise to expand our business in many different areas.

9	Because of the many safety issues and restrictions in game development, I do not imagine VR to immediately become popular in homes, but I would like to see some serious research done on this. This also applies to technology such as AR (Augmented Reality) and MR (Mixed Reality). There needs to be the right development framework in place to make effective use of new technologies in products. Consider, for instance, some Nintendo 3DS software titles that did not look to me like they really implemented 3D appropriately, or when the Wii U with high-definition visual quality came out and there were not enough titles that supported the platform. I am not sure if this is related to that, but there is some report that Mr. Kimishima voiced concern before the release of Wii U, while I think Mr. Miyamoto was promoting Wii U with quite a lot of confidence. Compared to the situation prior to the Wii U launch, what is the feeling around NX at present?
9	Kimishima: I would first like to clarify my purported comments on Wii U. I do not wish to make excuses, but at the time of the Wii U launch, I was responsible for our sales base in the United States, and I never made any pessimistic comments. In an internal sales representative meeting, someone projected that we would sell close to 100 million Wii U systems worldwide. The thinking was that because Wii sold well, Wii U would follow suit. I said that, since the Wii had already sold so well, we need to clearly explain the attraction of the Wii U if we are to get beyond that and sell the new system, and that this would be no easy task. I was responsible for selling the Wii U, and I knew what was good about it, so I talked with those in charge of sales about the importance of conveying the attractiveness of Wii U to consumers. I am guessing that some of this communication may have come across in a negative tone. As for VR, I just mentioned that we continue to be interested, and we are continuing our research. Mr. Miyamoto will talk about VR and our level of confidence in Wii U from the software development viewpoint. Miyamoto: It is true that we are having a hard time with Wii U sales, due to its price and the added fact that tablets are distributed free of charge in the market. I do think Wii U continues to be attractive as a media device that changes life in the living room. A similar challenge continues with NX. As we had announced that the launch will be March of next year, we made no announcements about NX at E3, the world's largest game expo held in Los Angeles. Our exhibit at E3 focused on the Wii U version of The Legend of Zelda: Breath of the Wild game, for which the same experience will also be available on NX. We have a video that was used to introduce our presentation at this year's E3. Please take a look. Takahashi: The second half of the video is from Day 3 of E3. E3 shows generally have swarms of people and long lines for booths on the first day. This year, even on the third day, people were running in as soon as the venue opened, and lined up in front of our booth to play our game. What happened was the people who played on the first and second days spread the news by word of mouth, and those who heard about it came later, and that is how we ran out of booth access tickets in a very short span of time. I think we were able to introduce The Legend of Zelda: Breath of the Wild to our fans in North America in a way that met their expectations. We are simultaneously creating the NX version of this game, and are working hard to offer the same experience. I hope you all are looking forward to it. Miyamoto: Some of you may not know, but The Legend of Zelda is one of Nintendo's most popular game series, and it is celebrating its 30th anniversary this year. The Legend of Zelda: Ocarina of Time for Nintendo 64 sold nearly eight million copies worldwide. In this latest game, The Legend of Zelda: Breath of the Wild, we took a fresh look at elements that have been taken for granted over the long history of the Zelda series. We created a truly spacious open-air world where the player can move around freely to explore any part of it. The movements of everything in that world are calculated by our physics engine, in a way designed to give the player the feel of actually being there and having an adventure. I sometimes hear comments to the effect that Wii U hardware performance is inferior to the gaming systems of other companies, but at E3 where companies exhibit their latest games, we received very high praise for The Legend of Zelda: Breath of the Wild, including the "Game of the Show" type of award from the gaming media. I hope you are looking forward to the launch, which will be in 2017. As for VR, we are researching not just VR but AR and many other technologies. We have a range of core technology including 3D, and we are also considering the possibility of implementing these in our own hardware development. For VR in particular, we are continuing our research, and looking into development with a mind to how our current core products are meant to be played for a relatively long period of time. We are looking into the possibilities of providing an experience that gives value when played for a short time, and how to eliminate the concerns of long-duration use. We are also looking into how to make sure that a parent doesn't need to worry when their child puts on a VR device in their living room. At this year's E3, I was on the show floor, and it did not feel like VR was that big of a topic. This could be because VR is not that much to look at for the spectator, even while it might be highly appreciated for the person actually experiencing it. It might also not be clear how the experience can be made into a product.

Because of the many safety issues and restrictions in game development, I do not imagine VR to immediately become popular in homes, but I would like to see some serious research done on this. This also applies to technology such as AR (Augmented Reality) and MR (Mixed Reality). There needs to be the right development framework in place to make effective use of new technologies in products. Consider, for instance, some Nintendo 3DS software titles that did not look to me like they really implemented 3D appropriately, or when the Wii U with high-definition visual quality came out and there were not enough titles that supported the platform. I am not sure if this is related to that, but there is some report that Mr. Kimishima voiced concern before the release of Wii U, while I think Mr. Miyamoto was promoting Wii U with quite a lot of confidence. Compared to the situation prior to the Wii U launch, what is the feeling around NX at present?

Kimishima:

I would first like to clarify my purported comments on Wii U. I do not wish to make excuses, but at the time of the Wii U launch, I was responsible for our sales base in the United States, and I never made any pessimistic comments. In an internal sales representative meeting, someone projected that we would sell close to 100 million Wii U systems worldwide. The thinking was that because Wii sold well, Wii U would follow suit. I said that, since the Wii had already sold so well, we need to clearly explain the attraction of the Wii U if we are to get beyond that and sell the new system, and that this would be no easy task. I was responsible for selling the Wii U, and I knew what was good about it, so I talked with those in charge of sales about the importance of conveying the attractiveness of Wii U to consumers. I am guessing that some of this communication may have come across in a negative tone.

As for VR, I just mentioned that we continue to be interested, and we are continuing our research. Mr. Miyamoto will talk about VR and our level of confidence in Wii U from the software development viewpoint.

Miyamoto:

It is true that we are having a hard time with Wii U sales, due to its price and the added fact that tablets are distributed free of charge in the market. I do think Wii U continues to be attractive as a media device that changes life in the living room. A similar challenge continues with NX. As we had announced that the launch will be March of next year, we made no announcements about NX at E3, the world's largest game expo held in Los Angeles. Our exhibit at E3 focused on the Wii U version of The Legend of Zelda: Breath of the Wild game, for which the same experience will also be available on NX. We have a video that was used to introduce our presentation at this year's E3. Please take a look.

Takahashi:

The second half of the video is from Day 3 of E3. E3 shows generally have swarms of people and long lines for booths on the first day. This year, even on the third day, people were running in as soon as the venue opened, and lined up in front of our booth to play our game. What happened was the people who played on the first and second days spread the news by word of mouth, and those who heard about it came later, and that is how we ran out of booth access tickets in a very short span of time. I think we were able to introduce The Legend of Zelda: Breath of the Wild to our fans in North America in a way that met their expectations. We are simultaneously creating the NX version of this game, and are working hard to offer the same experience. I hope you all are looking forward to it.

Miyamoto:

Some of you may not know, but The Legend of Zelda is one of Nintendo's most popular game series, and it is celebrating its 30th anniversary this year. The Legend of Zelda: Ocarina of Time for Nintendo 64 sold nearly eight million copies worldwide. In this latest game, The Legend of Zelda: Breath of the Wild, we took a fresh look at elements that have been taken for granted over the long history of the Zelda series. We created a truly spacious open-air world where the player can move around freely to explore any part of it. The movements of everything in that world are calculated by our physics engine, in a way designed to give the player the feel of actually being there and having an adventure. I sometimes hear comments to the effect that Wii U hardware performance is inferior to the gaming systems of other companies, but at E3 where companies exhibit their latest games, we received very high praise for The Legend of Zelda: Breath of the Wild, including the "Game of the Show" type of award from the gaming media. I hope you are looking forward to the launch, which will be in 2017.

As for VR, we are researching not just VR but AR and many other technologies. We have a range of core technology including 3D, and we are also considering the possibility of implementing these in our own hardware development. For VR in particular, we are continuing our research, and looking into development with a mind to how our current core products are meant to be played for a relatively long period of time. We are looking into the possibilities of providing an experience that gives value when played for a short time, and how to eliminate the concerns of long-duration use. We are also looking into how to make sure that a parent doesn't need to worry when their child puts on a VR device in their living room. At this year's E3, I was on the show floor, and it did not feel like VR was that big of a topic. This could be because VR is not that much to look at for the spectator, even while it might be highly appreciated for the person actually experiencing it. It might also not be clear how the experience can be made into a product.

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