Iwata on Nintendo's digital sales, success of Animal Crossing: New Leaf

This graph shows the transitions of download sales until the last fiscal year. They were soaring up until three years ago, but were not able to rise for the past two years.
As you can see, however, the sales in the last fiscal year more than doubled from the previous year and became the highest ever, surpassing the record high three years ago.
The record-high fiscal year, ended in March 2010, was the time when both the Wii and Nintendo DSi systems were actively used. You can see our digital business has stronger momentum than at that time.

The deployment of add-on content last year and the digital download sales of packaged software we started last July are contributing to the current sales growth. Among other things, with regard to "Animal Crossing: New Leaf" we released in Japan last November, many consumers have chosen its download version partly because the game is one that you can enjoy every day over a long period of time. The other reason is the short supply of the packaged version of the game for a long time as its sales pace was unexpectedly high, but we could not increase production due to its special memory chip. We are very sorry about this, but we think a considerable number of consumers chose the download version as an alternative to the packaged version.

"Animal Crossing: New Leaf" is now available only in Japan and South Korea, and has not been released in the U.S. or Europe yet. We shipped 3.86 million units of the game in Japan and South Korea in the last fiscal year and approximately one quarter of the total number of sales accounted for its download version, including the number of sales of "Animal Crossing Pack" of the Nintendo 3DS XL hardware with the download version installed in it.

Since last July, we have been continuing to make both packaged and download versions available. A characteristic of our digital business is that we have also sold download versions at retailers in the form of POSA (Point Of Sales Activation) cards on the shelves, as you can see. Thanks to the fact that retailers do not have to stock actual inventory, some convenience stores, including 7-Eleven, have made POSA cards available.
Furthermore, we have tried to have retailers sell 16-digit download codes, with which consumers can download software by entering the codes on our hardware, at their e-commerce sites.



Although disintermediation is a common purpose of digital business, we intentionally adopted different methods because, as we mentioned before, we thought that one of the biggest hurdles is the limited exposure of the digital download products. If only the consumers who proactively visited the Nintendo eShop were aware of the digital download software that we deployed, there would be no chance that our digital business would dramatically expand. Some might be skeptical about how much downloadable software would be sold at retail stores without any discounts from the suggested retail price of the packaged counterpart. Actually, however, as you can see, more than two-thirds of the download version of "Animal Crossing: New Leaf" has been sold through retailers.

You can see from this chart that it is not necessarily correct to stereotypically position digital business as an enemy to retailers. Some of the consumers who bought the download version at a retail outlet might have had no knowledge of the Nintendo eShop before. Others might have had some psychological barrier to making online purchases, but chose the download version because they were able to make a payment at a retail store.
In addition, we have recently started trying to have retailers put download-only software, not the download version of packaged software, on their shelves. I will keep you updated on our progress in future presentations.

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