I would like to explain about it in an organized way. First, in the first half of 2009, when the Wii lost its momentum, we could not offer new titles for a certain period of time. We ourselves have to reflect on this situation. We usually plan to release software in a way like, first we release this, then this and then that. But the development does not always proceed as it is planned. For example, if we feel that certain software will end up being boring if we continue to develop it in the same way, we will have to polish it. We sometimes change the content substantially, and in that case, the date of the release schedule has to be significantly changed.

In order to avoid such a situation, there are two points. One is "how to develop a steady stream of software internally at Nintendo," and the other is "how to ask for the cooperation of other companies."

As a matter of fact, at the times the Nintendo DS and the Wii were released, we could not make the software publishers appreciate our systems highly and count on them. At the time, Nintendo was driven to the edge of the ring, and it was said (in the industry), "It is a question of how long Nintendo can remain a hardware provider." Regarding home video game consoles, the Wii was referred to by its development codename "Revolution" at that time, but it was openly written in articles that "Revolution will be the very last home video game system for Nintendo," and reporters and analysts also said similar things to me directly. In such a situation, it is a fact that there were few developers outside of the company who were thinking "Let's bet our business on it." Both the Nintendo DS and the Wii were in such situations at the beginning, and the spread of the hardware proceeded mainly because of Nintendo software. After the hardware spread, in the case of the Nintendo DS, the software publishers started to move and said, "The Nintendo DS is selling well," and "Let's us join this stream," which lead to several hits in the relatively early stages of the Nintendo DS. This made the software publishers believe that they could do business on the Nintendo DS, and good teams from each company started to work on Nintendo DS software. Because of this, many titles from third-party software publishers could be seen for Nintendo DS software.

Regarding the Wii, the lack of software was extreme only in Japan, and the situation is a little different in the overseas markets but, at first, we thought that time would solve the issues for the Wii just as it had done for the Nintendo DS, but this was not the case. As a result, the software publishers put some effort into creating some titles, but the sales did not reach their expectations on the Wii, which made them think that they could not have high expectations for business on the Wii. At that time, a title called "Monster Hunter Portable" was selling well on Sony's handheld gaming device, PlayStation Portable. Only one title changed the whole momentum of that hardware, and because this all happened at the same time, the software publishers who were considering developing software for the Wii changed their minds and decided to make it for the PlayStation Portable. Because of this, when Nintendo failed to seamlessly provide software, there were no other titles to fill up the gaps.

In that sense, and this is common to both the Nintendo 3DS and the Wii U, we think that it is important to encourage the software publishers to think "This is a platform on which we can perform our business" in the very first stage of the platform. We think it very important to make several hits from the third-party software publishers within the first year from the release of the platform, while offering Nintendo software seamlessly. In order to achieve this goal, we have shared information about the new hardware with the software publishers earlier than we did previously and built a cooperative structure, and we are developing several titles in collaboration with these publishers. I cannot talk in detail about the names of the titles, or with which publishers we are currently collaborating, because we have not announced this information yet, but what we are aiming for with the Nintendo 3DS and the Wii U is, platforms which have much more software and a wider variety of software than the former Nintendo DS or Wii. Therefore, we are thinking of creating an environment where software from other companies will become hits. Please understand that Nintendo is prepared to invest in order to make this a reality.

Source

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Droughts have been popping up every now and then, but the holiday season always has something

This was a good read. Thanks for posting it.

If third parties were so unreliable in the last gen, changing their plans at the last moment, why does Iwata assume they will persevere with the Wii U or 3DS?

GC had an amazing planned third-party launch lineup too and third parties all immediately jumped ship within a year too. That system had comparable graphics to the Xbox and a 'core' market focus same as both the new systems. How will Wii U be more attractive than GC to third parties.

Nintendo has plenty of internal development capacity, they just need to use it for SYSTEM SELLING games. SMG2, Metroid Other M, Wii Sports Resort, the new Kirby platformer after Epic Yarn, and Skyward Sword are all selling to people who already own Wiis for the prequel, they are not expanding the audience.

What the hell Iwata??
Is there some kind of image of American gamers as people who only play 2-3 games a year extensively, and have no desire for anything else?

I remember when your avatar was a bunch of orange arrows that made a circle.....ahh, memories.

Anyway, I think Nintendo changed things up with the Wii because, according to them, the market during the time of the GC/Xbox/PS2 featured nothing but "carnivorous dinosaurs".  In an environment where every console was the same, none of them could survive.  The GC and Xbox didn't really offer anything different from the PS2 so there was really no reason to buy the Gamecube/Xbox.  And for that reason, there was really no reason for third parties to really support the GC/Xbox to the degree that they supported the PS2.

I think Nintendo is going to let the Wii die out in favor of the Wii U.  All they're doing is sustaining the population until then.  When the Wii U launches, I'm sure we're going to get new franchises (every Nintendo console is home to new franchises, be it Wii Sports, Animal Crossing, Wave Race, or whatever).  I've seen it written that the best time to release new franchises is when a console launches.  People seem to be more open to new franchises, then.  Towards the end of a console's life, it's harder for a new IP to break in (even though companies like Rockstar seem to break the mold in that area).

I just don't expect anything new and creative from the Wii for the remainder of its life.  I also expect big things from the Wii U when it launches.  I don't know what to make of third party support.  I do have hope since, for the first time in as long as I can remember, Nintendo is actually launching their console FIRST.  If the timing is right (meaning: not TOO EARLY *cough* Dreamcast *cough*), then third parties should support them.

Great read. I love how Iwata can be honest about past mistake, it's refreshing.

Now that the financial situation has flipped in favor of the console makers and against third parties, they will be more reliable by default. Even the Japanese third parties (as Rol mentioned) now need the "port everywhere" mentality to profit, so Nintendo could build a better balanced schedule knowing when the big third party titles are supposed to drop

Forget the second part for a moment. The main part of the statement: "the lack of software was extreme only in Japan" is what mostly bothered me. This is not true, and has never been true as far as I can remember.
I understand that Japan doesn't get FIFA and Tiger Woods and Guitar Hero and maybe also Lego games etc. but there are dozens of Japanese games that never saw release in the west, as well as games that were only released much much later, usually by a different company than the one publishing in Japan. Examples of these are Sky Crawlers, Fragile Dreams, Tatsunoko Vs. Capcom, OnePiece Unlimited Cruise and more. Just look at a list of Namco-Bandai games that never made it to the west for starters... There are also many games from other third party publishers, not to mention the infamous long list of Nintendo games everybody knows by heart already. And don't even get me started on WiiWare and VC in Japan...

Iwata probably means "lack of system sellers" or "lack of million sellers" or something similar when he refers to software, and the way it is explained here doesn't convince me that he believes niche games have a place in the west. This is why I referred to the perception of western gamers as people who only buy Madden or COD...  This line of thinking pisses me off because it gives me less confidence in Nintendo understanding what it means to provide a "Deeper and Wider experience" in the future.

The fact that earlier this year Iwata made a statement about Wii not seeing enough high-profile releases in Japan, and making a commitment to release at least one high quality retail game a month every month until the end of the year, while in the west I can't even think of a time where Wii had such consistent support from Nintendo, leads me to believe they are still as Japanese-centric as ever, and that they still believe western gamers can be satisfied with fewer games, as long as they are "blockbusters".

1) This is ofcourse not true, and you admit as much yourself in point #2). Japan is Nintendo's weakest region by far, and yet globally they are wildly successful. I would go as far as saying that success in Japan has become as insignificant today as it has ever been, and may likely continue in this direction in the near future. Meanwhile the western market is growing rapidly and on multiple fronts, many of them having no representation from Nintendo at all.

3)It seems more sensible to a layman like me to have the expanding market be the one exposed to more types of games, and more frequent releases, and having the few and far between sure sellers (like Monster Hunter and DQ) being the focus of the shrinking market. Or in other words, invest more heavily where there is more money to be gained. Besides being conservative and slow to adapt, I see no reason why Nintendo should be investing so heavily in trying to win back such a small percent of its audience, instead of learning its much bigger audience and building a successful relationship with it.

Looking at other Japanese publishers like Square-Enix and Capcom, it seems they also feel this way, with the purchase of Eidos and the (occasionally successful, occasionally not) focus on more "western-styled" games by Capcom. This is also true for every publisher to release a JRPG on the 360 this gen. Besides the ones that were money-hatted obviously, they certainly didn't make it their choice of platform because of its large install base in the homeland.
Another example is the many English blogs held by Japanese companies or their American divisions, such as Capcom, Sega, etc.

Once more regarding point #3) I find it difficult to understand why you wouldn't fault this kind of practice from Nintendo, either as a share-holder or as a consumer..

You bring up some good points, but allow me to ask some difficult questions:

Why is success in Japan important to begin with?
I realize that for many years the industry operated under the assumption that the Japanese market was a good model for the global one, as far as demand goes. I also understand there was an assumption that western gamers needed time to adapt to the "more sophisticated" tastes of the Japanese gamer. During the past fifteen years I think these assumptions have out-stayed their welcome, to the point that the opposite is becoming closer to the truth.

Why is it important to have many releases that are exclusive to Japan?
Nintendo's support of Wii in Japan is in accordance with Japan's failure to adapt to the western market, IMO, but two wrongs don't make a right. Ideally Japanese developers and publishers would realize this and go after the biggest global market, and stop treating Japan as a bubble. If that were the case (as it should be) Wii would receive plentiful support in Japan as part of its support worldwide! Games like ToG or TvC or whatnot would be planned as multi-region releases from day one, and not as an afterthought.
The idea that such games are more successful in Japan and therefor more suited to it has also been proven wrong with almost every single Japanese game to make it to Europe and America. The cost of localization, as high is it may be, does not compare to the cost of developing the game to begin with. Furthermore, if games were treated like this from the start, you wouldn't need to waste so much time ridiculously hacking away at a Japanese ROM in order to replace textures and dialogs, since you would be working with the original development tools and not like some amateur modder, thus making localization even more worthwhile financially.

Final question (this one is rhetorical since it logically follows from the other two)
What is the price you pay for losing ground on the Japanese front vs. losing ground on the global front?