Dear Reader:
You are viewing
a story from GN Version 4.0.
Time may not have been kind to formatting, integrity of links, images, information, etc.
Iwata on reaching 'Nintendo-like' profits, says 3DS needs a boost in Europe and US
When I was asked at the press conference for earnings releases held in Kitahama, Osaka yesterday if the forecasted operating income the company announced should be considered “Nintendo-like” profits, I replied that 35 billion yen of operating income was not what we consider “Nintendo-like” profits. I don’t think I should simply put a specific numerical figure on what we do consider “Nintendo-like” profits and let that number spread as if it has taken on a life of its own, but I can say that 35 billion yen is not good enough for us. The company set a minimum level of dividend per share for this fiscal year, but doing so to alleviate our shareholders’ and investors’ concerns, or causing you to share your concern on the possibility of the 35 billion yen operating income disappearing if the actual software sales end up being 20% lower than the forecast are both undesirable situations for Nintendo in the first place. On the other hand, setting a financial goal without having any concrete grounds is not an appropriate way to establish financial forecasts. We consider them by closely looking at the current and future conditions.
This slide shows an update of the chart, which we showed at the Corporate Management Policy Briefing this January, that represents unit sales trends of each hardware system. The sales in the second year of the Nintendo DS grew drastically thanks to the sales of the combination of both “Brain Age” and “Brain Age 2.” And, “Animal Crossing: Wild World” and “Mario Kart DS” contributed to the growth as well. The sales trend of the Nintendo 3DS after the turn of the year clearly surpassed those of the past hardware systems that sold very well although they were slightly lower than the level of the Nintendo DS, which grew explosively.
The sales trend of the Nintendo 3DS in the Japanese market has been within my expectation, but, the U.S. and European sales trends have not. The start of the year-end sales season was slower than the last few years although the sales did pick up at the year-end, and the sales after the turn of the year did not meet my expectations. This is the comparison data in the U.S. market. The sales of the Nintendo 3DS have been much better than those of the Nintendo DS, which were boosted very slowly, but I am not satisfied with the actual sales of the Nintendo 3DS because the trend since the start of this calendar year has not been good enough.
In the Japanese market, the weekly sales of the Nintendo 3DS continue to be more than 60 thousand units recently and, in some weeks, they have recorded 80 thousand or 100 thousand units. Since the U.S. market is two or three times bigger than that of Japan, I am not satisfied with the current level of the Nintendo 3DS sales in the U.S. market. I don’t think the current sales momentum in the U.S. is very strong. In the European market, the sales of the Nintendo 3DS have been better than those of the Nintendo DS in its early stages, which were better than those in the U.S. However, I am not satisfied with the European sales either. Considering these circumstances, I don’t think we can make an aggressive sales forecast for the Nintendo 3DS software.
This slide shows how the software sales of the Nintendo DS and the Nintendo 3DS have changed year on year. A big leap in sales usually occurs in the third year after the hardware launch, and the third or fourth year becomes a harvest season to sell a lot of software. However, (when we consider the situation in the overseas markets,) we can’t help making the forecast not so aggressive in comparison to the corresponding years for the Nintendo DS. Of course, we are aiming to create good momentum in the (overseas) market after summer and make an explosive increase in sales during the year-end sales season, but since we couldn’t make aggressive forecasts of the sales early in this fiscal year, the software sales forecast for the full year became a little bit modest compared to how the software sales are generally expected to increase in the hardware’s third year on the market. When we can make the improvements in the software sales, they will further gain momentum and contribute to the business performance during the full year, the next fiscal year and beyond. In addition, the Wii U in the second year of its launch will contribute to the business performance over the full fiscal year (ending March 31, 2014). Considering these situations, the overall profitability of the software business will gradually improve and, in that sense, we expect people will say, “You have ‘Nintendo-like’ profits again,” and we would like to realize this situation as soon as possible. - Satoru Iwata
Link
This slide shows an update of the chart, which we showed at the Corporate Management Policy Briefing this January, that represents unit sales trends of each hardware system. The sales in the second year of the Nintendo DS grew drastically thanks to the sales of the combination of both “Brain Age” and “Brain Age 2.” And, “Animal Crossing: Wild World” and “Mario Kart DS” contributed to the growth as well. The sales trend of the Nintendo 3DS after the turn of the year clearly surpassed those of the past hardware systems that sold very well although they were slightly lower than the level of the Nintendo DS, which grew explosively.
The sales trend of the Nintendo 3DS in the Japanese market has been within my expectation, but, the U.S. and European sales trends have not. The start of the year-end sales season was slower than the last few years although the sales did pick up at the year-end, and the sales after the turn of the year did not meet my expectations. This is the comparison data in the U.S. market. The sales of the Nintendo 3DS have been much better than those of the Nintendo DS, which were boosted very slowly, but I am not satisfied with the actual sales of the Nintendo 3DS because the trend since the start of this calendar year has not been good enough.
In the Japanese market, the weekly sales of the Nintendo 3DS continue to be more than 60 thousand units recently and, in some weeks, they have recorded 80 thousand or 100 thousand units. Since the U.S. market is two or three times bigger than that of Japan, I am not satisfied with the current level of the Nintendo 3DS sales in the U.S. market. I don’t think the current sales momentum in the U.S. is very strong. In the European market, the sales of the Nintendo 3DS have been better than those of the Nintendo DS in its early stages, which were better than those in the U.S. However, I am not satisfied with the European sales either. Considering these circumstances, I don’t think we can make an aggressive sales forecast for the Nintendo 3DS software.
This slide shows how the software sales of the Nintendo DS and the Nintendo 3DS have changed year on year. A big leap in sales usually occurs in the third year after the hardware launch, and the third or fourth year becomes a harvest season to sell a lot of software. However, (when we consider the situation in the overseas markets,) we can’t help making the forecast not so aggressive in comparison to the corresponding years for the Nintendo DS. Of course, we are aiming to create good momentum in the (overseas) market after summer and make an explosive increase in sales during the year-end sales season, but since we couldn’t make aggressive forecasts of the sales early in this fiscal year, the software sales forecast for the full year became a little bit modest compared to how the software sales are generally expected to increase in the hardware’s third year on the market. When we can make the improvements in the software sales, they will further gain momentum and contribute to the business performance during the full year, the next fiscal year and beyond. In addition, the Wii U in the second year of its launch will contribute to the business performance over the full fiscal year (ending March 31, 2014). Considering these situations, the overall profitability of the software business will gradually improve and, in that sense, we expect people will say, “You have ‘Nintendo-like’ profits again,” and we would like to realize this situation as soon as possible. - Satoru Iwata
Link