Here ya go.
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As a platform in its second year, Wii U is currently in a very difficult position. I would like to begin with what we are going to do with Wii U.
Obviously, under the current situation where the company has to report an operating loss, simply executing a price reduction as a way to defuse the situation is not an option. In the short-term, Nintendo will focus on thoroughly enriching the value of the most significant feature of Wii U, the Wii U GamePad.
Unfortunately, as the current situation of Wii U shows, we have not been able to fully communicate the value of the GamePad. We also realize that we have not been successful in answering consumers’ questions such as, “What is the difference between Wii U and the previous platform, Wii, and what is the benefit of upgrading it?” By looking at the current sales situation, I am aware that this is due to our lack of effort. What’s even worse is that there even appear to be not a small number of consumers who think the GamePad is one of the accessories for the previous platform, Wii.
It is more challenging to convey the appeal of the GamePad to consumers who do not engage with video games that often since they do not actively gather information about video games. Therefore, we intend to take on this challenge, and I would like to have this solved before the year-end sales season.
In order to do this, it is obvious that Our top priority task this year is to offer software titles that are made possible because of the GamePad. We have managed to offer several of such software titles for occasions when many people gather in one place to play, but we have not been able to offer a decisive software title that enriches the user’s gameplay experience when playing alone with the GamePad. This will be one of the top priorities of Mr. Miyamoto’s software development department this year.
In addition, the GamePad is the only video game platform with an NFC (near-field communication) reader/writer function. “Pokémon Rumble U” has already taken advantage of this function, but aside from this title, Wii U has failed to make use of the full potential of this function so far, despite it being a built-in feature. This year, we will make full use of this function by preparing multiple proposals, including the implementation of NFC payments with JR East’s “Suica,” which we announced on a previous occasion. We will showcase our detailed propositions for utilizing the NFC functionality at E3 in Los Angeles in June.
We are now sure that we can solve the technical problem of displaying Virtual Console software from Nintendo DS on the GamePad.
The dual-screen Nintendo DS, one of which is a touch screen, has a very strong software lineup, and so we plan to add the Virtual Console titles from Nintendo DS software to the future Virtual Console lineup for Wii U.
On Wii U, we launched Nintendo Network IDs, which are abbreviated as NNIDs. This is the first step of our efforts to transform customer relationship management from device-based to account-based, namely, consumer-based, through which we aim to establish long-term relationships with individual consumers, unaffected by the lifespans of our systems. Our future platform will connect with our consumers based on accounts, not devices.
As a second step, Nintendo 3DS became compatible with NNIDs in December 2013. Nintendo 3DS was originally designed for a device-based management system, so making it account-compatible at a later time meant that not all of its features were perfect. However, we feel that we have taken a step in the right direction as we now have a uniformly managed system in which we are connected with our consumers on both handheld devices and consoles.
Of course, when we do launch new hardware in the future, rather than re-creating an installed base from scratch as we did in the past, we wish to build on our existing connections with our consumers through NNIDs and continue to maintain them.
The way in which dedicated video game systems and their software are sold has not changed significantly since the business model of dedicated video game platforms was first established 30 years ago. Dedicated video game systems are sold for two hundred or three hundred dollars, on which standalone software titles are distributed for 30 or 50 dollars. This simple model received widespread support from consumers that enabled us to create today’s market. The decision to change it is the manifestation of our recognition that we cannot expect this model to work forever amid dynamic changes in people’s lifestyles.
If we succeed in the redefinition of video game platforms that I speak of today, our account-based connections with consumers will become very clear. For example, until now it has been taken for granted that software is offered to users at the same price regardless of how many titles they purchase in a year, be it one, five or even ten titles. Based on our account system, if we can offer flexible price points to consumers who meet certain conditions, we can create a situation where these consumers can enjoy our software at cheaper price points when they purchase more. Here, we do not need to limit the condition to the number of software titles they purchase. Inviting friends to start playing a particular software title is also an example of a possible condition. If we can achieve such a sales mechanism, we can expect to increase the number of players per title, and the players will play our games with more friends. This can help maintain the high usage ratio of a platform. When one platform maintains a high active use ratio, the software titles which run on it have a higher potential to be noticed by many, which leads to more people playing with more titles. When we see our overall consumers, they generally play two or three titles per year. We aim to establish a new sales mechanism that will be beneficial to both consumers and software creators by encouraging our consumers to play more titles and increasing a platform’s active use ratio without largely increasing our consumers’ expenditures.
Nintendo aims to work on this brand-new sales mechanism in the medium term, but we would like to start experimenting with Wii U at an early stage.
We will definitely maintain dedicated video game platforms as our core business, but we will also take on the challenge of expanding into a new business area. We will attempt to establish a new platform business with which we can leverage our strengths, but which is independent from our video game platform business.
What Nintendo will try to achieve in the next 10 years is a platform business that improves people’s QOL in enjoyable ways. This definition includes, of course, dedicated video game platforms. While we will continue to devote our energy to dedicated video game platforms, what I see as our first step into a new business area in our endeavor to improve QOL is, the theme of “health.” Of course, defining a new entertainment business that seeks to improve QOL creates various possibilities for the future such as “learning” and “lifestyle,” but it is our intention to take “health” as our first step. Please note, however, that rather than simply setting health as our theme, Nintendo will also try to expand it in a new blue ocean.
