Nintendo on the The State of Development

Wii U Deluxe Digital Promotion

There was much to discuss in Nintendo’s recent Investors Q&A. It’s probable that investors share the same frustrations and anxieties that everyday Nintendo fans do. Among those qualms are why Nintendo takes such a conservative approach to developing a high volume of games? Why not more television advertising? And what’s the state of Nintendo hardware development?

These questions were fielded by Satoru Iwata, Shigeru Miyamoto, and Genyo Takeda. Their answers revealed much and yet re-confirmed much of what we already suspected about Nintendo’s mind set. They believe in setting a value proposition through quality, not quantity, and that they are learning for the future of Nintendo hardware. For as Mr. Iwata explained, more games would be appreciated, but Nintendo doesn’t want to flood their own console.

…what our consumers are looking forward to is not merely a great number of games. What is critical to us is that each consumer feels that the content of the games he/she plays is sufficient, and when the player has completed one game, the next one is offered at the right time. We don’t believe that simply increasing the number of games or just containing the development costs per game are necessarily good for our company, because if we try to simply decrease the per-software development costs just for the sake of minimizing overall costs, the final product will become less-appealing and it will not sell over a long period after its release. On the other hand, when there is software that sells for a long period of time, or is talked about for a long time, this can increase consumers’ motivation to continue playing these games and invite new purchasers. Even if we increase the total number of games, it does not make sense if each one of them becomes less compelling for the consumer.

So, that may explain why you had a multi-month long gap between Mario Kart 8 and Hyrule Warriors, because Nintendo assumes you are going to play MK8 non-stop from late May until late-September. Iwata also reaffirmed that DLC is indeed a strategic plan to re-ignite interest in legacy, or recent, releases. The same logic applies to their upcoming amiibo figures.

Nintendo offers new downloadable content to increase the number of karts, courses and characters in “Mario Kart 8.”Our primary objective is to have “Mario Kart 8” played continually by consumers. Since many players have already played “Mario Kart 8” with energy and enthusiasm, we realized that we would need a certain level of reinforcement to make people want to play it again. Technologically speaking, this is now possible. When we compare making a new “Mario Kart” game and digitally distributing new courses and characters as add-on content, the required number of developers, development costs and development terms are very different. We believe it is important to create triggers for our consumers to frequently play their favorite games while minimizing development costs on our side. We can now include amiibo to our arsenal, which can also be a trigger to excite people to once again play games they might have already finished. All of these additions are crafted to extend the life of key software, which is very important to us.

As Mr. Takeda discussed, Nintendo’s research on their next hardware will have little restrictions in what technologies are canvassed, assuming the price is right for the consumer. Also of note is that smart devices, the things that every investor wants them to make games on, are being considered as a role model for how to design new hardware.

The integration of architecture is our fundamental policy, and we have been making progress. Now that our new hardware systems are on the market, I would need to comment in terms of our next hardware, but I’m afraid I have to refrain from talking about that today. However, one thing I can confirm today, even though this is something relating more to the software side, is that we have not put any restrictions on the technological fields that we research. We have even been studying software development methods and technologies used for smart devices and other products from the viewpoint of how we may be able to establish applicable content to be programmed and produced efficiently at a low cost. Apart from the business models used by smart devices, we are actively researching and learning about a variety of different technological fields.

Mr. Miyamoto affirmed everything said above. As part of a longer spiel, he discussed the other ways Nintendo has been trying to engage consumer interest in their hardware: by offering promotions for free or discounted software. Hence the recent Mario Kart 8 Club Nintendo promotion, which offered (in North America) one of four free Wii U titles.

As for the number of software titles, as Mr. Iwata said, the more important thing is how many of them are interesting to consumers. The current situation concerning Wii U is that more and more people are purchasing the hardware. The company has deployed a number of campaigns inside and outside of Japan, such as offering consumers free demos of Wii U games for a limited time period or a free download codes for a Wii U game after purchasing “Mario Kart 8.” As we continually promote Wii U through a variety of different campaigns, we are increasing the number of opportunities for potential Wii U hardware and software consumers to experience different Wii U software. Throughout our history, Nintendo has offered consumers games that they can continually play over long periods. This has helped maintain hardware value at a high level for consumers, and we will not deviate from our efforts in this endeavor. One of these efforts is downloadable add-on content for already-released software. As a part of that effort, the main staff members who created “Mario Kart 8” formed an expert team to develop downloadable add-on content with a lot of energy and enthusiasm even after completion of the game.

It’s a lot to absorb, but the entire set of answers is definitely worth a read. What are your thoughts on Nintendo’s recent efforts to ignite interest in Wii U and beyond?

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A man with a plan. My favorite video game franchise is Pokemon, but his favorite video game is Resident Evil 4. I can also tell you trivial cartoon factoids.