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Iwata on digital business ramping up, retail here to stay, not overcharging customers
We are anticipating our financial performance to recover in the next fiscal year and beyond, but we are not anticipating that the digital business will suddenly play the central role next year, and we are not anticipating the packaged business to go away anytime soon. On the contrary, as I explained with the chart, the sales of the applicable software can grow in the third fiscal year for the hardware, so the third year for the Nintendo 3DS will be the opportunity when we can expect to increase the software sales significantly. Therefore, if we will be able to sell the Nintendo 3DS hardware without losing money on the hardware sales and the software sales will largely increase, the company will be able to generate significant profit even if today’s severe foreign currency exchange situation continues. On the other hand, we cannot share with you the concrete figures (financial forecasts for the next fiscal year) in an environment like today where the level of the Euro, for example, that we thought as appropriate one week ago is totally wrong today. When we consider foreign currency fluctuations for no less than three months, it is almost impossible to predict accurately. Without knowing the foreign currency exchange rate situation, we need to refrain from picking up any concrete numbers today as doing so would not be an appropriate indicator for our actual performance forecast.
Regarding the add-on content, the revenue from the so-called digital business generated via the network, including the revenue from add-on content, will largely increase from now. There is no doubt that this is the area which has an overwhelmingly bigger growth potential than other business fields today. But if you ask me whether the level of the revenue will immediately match the ones currently generated through the existing hardware and packaged software sales, I do not think it is going to be that way anytime soon. Also, if we place too much focus upon that effort, we will end up focusing too much on increasing the just-mentioned ARPU, and it will result in negative side-effects. The important point for us to remember is how to maintain the situation where a wide variety of our consumers can readily appreciate our offers. In terms of that priority, we cannot, and should not, ask our consumers to embrace the situation where they are required to make excessive payments. Doing such things might be good for short-term profit, but it will not serve our mid-term and long-term business developments. So, while we believe that digital business revenue, such as revenue from add-on content, will grow to be an important resource, it will still take time before it can play the central role, or constitute the majority of our income. - Satoru Iwata
link
Regarding the add-on content, the revenue from the so-called digital business generated via the network, including the revenue from add-on content, will largely increase from now. There is no doubt that this is the area which has an overwhelmingly bigger growth potential than other business fields today. But if you ask me whether the level of the revenue will immediately match the ones currently generated through the existing hardware and packaged software sales, I do not think it is going to be that way anytime soon. Also, if we place too much focus upon that effort, we will end up focusing too much on increasing the just-mentioned ARPU, and it will result in negative side-effects. The important point for us to remember is how to maintain the situation where a wide variety of our consumers can readily appreciate our offers. In terms of that priority, we cannot, and should not, ask our consumers to embrace the situation where they are required to make excessive payments. Doing such things might be good for short-term profit, but it will not serve our mid-term and long-term business developments. So, while we believe that digital business revenue, such as revenue from add-on content, will grow to be an important resource, it will still take time before it can play the central role, or constitute the majority of our income. - Satoru Iwata
link