What is unfortunate is that most of these Q/A sessions has Iwata shooting down incorrect perceptions about the company. For example, the Q/A starts off with Iwata saying Nintendo is interested in cutting edge technology. But Nintendo is not interested in cutting edge technology that doesn’t make consumers excited or costs countless billions (such as the PS3). Gunpei Yokoi’s ‘lateral thinking of matured technologies’ is another way of saying disruptive technologies. When eBay came around, the Internet was a mature technology that was getting mainstream. But eBay put the technology of the Internet in a new context of use.

Interactive entertainment is putting technology in a certain context of use. An example would be touch screens. Or accelerometers. Or gyroscopes.

Now, listen to the Iwata:

Next, regarding your question of whether Nintendo is interested in the entertainment formats other than video games (such as music, videos, e-book, and SNS), I believe that Nintendo’s business field shall expand as the definition of video game expands. Nintendo has actually been expanding the definition of video games. We have been adopting a variety of different themes, some of which were said to be unthinkable as video games. During the course, these unthinkable themes have gradually been conceived as video game themes. One of the strengths of Nintendo lies in interactivity, namely when our consumer makes some input, they can receive some response which can positively surprise them. And, more specifically, we have the advantage to realize a situation where consumers can easily and comfortably use our products without consulting the instruction manuals at all. It is possible that, as a result of our natural course of expanding the definition of video games, we may have some contact with music, videos and SNS. However, we will not do so simply because others are doing fine in that business field as we will not effectively utilize our strength that way. We would like everyone to understand that Nintendo’s strength is in interactive entertainment and that it aims to focus on that.

The investor dumbly asked about convergence. Iwata gave the answer of ‘Revolution’ instead. Here’s what he means:

Gaming IS the revolution. We keep hearing about a game that says it is going to ‘revolutionize gaming’ but that is poppycock. To the contrary, it is gaming, itself, is the revolution. Back in the 70s and 80s, this was understood. Atari was the fastest growing company, at the time, in all of the history of the United States. And that includes the entire Industrial Revolution (companies like Microsoft or Google have certainly overtaken that record, of course).

The fact is that the masses first touched a computer through video games. That would be PONG.  Sure, computers would grow up to find other roles. But most of the programmers and engineers today became fascinated through computers and software because of video games. All those personal computers like the Commodore 64 in the 1980s were bought primarily for games. Many of former Atari employees ended up being executives in major software companies such as Microsoft. The most famous former Atari employee is Steve Jobs.

So gaming is not just a carnival of electrons, gaming is the heartbeat of the entire silicon revolution. It was gaming, not movies, that revolutionized 3d graphics and really made them mainstream into computers. It was gaming, not scientists, that explored the Internet into completely new forms of use. If gaming wasn’t constantly pushing the limits, would computers have grown like they did? I do not think so. Without gaming, we’d probably still be using 386s today and it could even be monochrome displays. Steve Wozniak put color into the Apple II because he designed the Apple II to be a video game machine (Woz loved gaming).

The ‘Revolution’ was going on in the arcades, in personal computers, and even consoles back in the early 1980s. Atari crashed not because of disinterest of games but because of the “Industry” being greedy and stupid. (I actually believe the arcades died away for the same reasons. Arcades became more about the Industry interests than about gaming interests.) NES continued this ‘Revolution’ with its spectacular exploration of gaming from the sheer amount of peripherals the NES had to the very different type of games. The NES was a rollercoaster ride when you looked at where games were when the NES began and where they were when the NES ended. (For example, games couldn’t even save! Or they could only scroll in one way.)

For some reason during the 16-bit Era (early 90s), gaming jumped into the ‘Red Ocean’ with the era of Console Wars. Gaming grew only due to population growth and companies like Sony adding additional territories. As a medium, gaming was not growing in popularity. With population decline in Japan and Europe, with gaming already global, it was clear gaming could not depend on demographic trends anymore. Gaming had to grow or die. And it is that sentiment that caused Nintendo to create the DS and Wii.

But Iwata’s answer is not the answer of a marketer who dully says, “Got to sell to new demographics!” Iwata’s reply is that of the Revolution. The Revolution is literally exploring a New World. This is why Wii was so wildly received. Wii matched the spirit of Revolution. People anxiously want to explore gaming. PS3 and Xbox 360 did not offer that. All they offered was ‘Industry games’.

One of the ‘revolutionary’ moments came with Wii Fit. No one ever dreamed that gaming could re-define how to do fitness. When Wii Fit came out, gaming enthusiasts panned it and said it was the ‘End of Gaming’. But Wii Fit matches the spirit of Revolution in that gaming is exploring a new frontier. For almost twenty years I have seen gaming confined and stuck inside frontiers established in the 1980s. The only new things discovered for gaming occurred on the PCs which were using networks and the Internet. Apply these things to consoles is not exactly ‘new’. It is still stuck in the confines of the past.

But the Wii was really new. And people are responding very well when Nintendo explores new frontiers. What Iwata is saying is that gaming may, indeed, bump into other mediums as it continues its expansion, its exploration.

But the context in how the investor was talking was of someone who does not understand the Revolution. The investor sees the mediums as static, as already defined, and never changing. And the investor probably thinks movies and music are sexier so he wants Nintendo to do things there instead of being a ‘video game company’.

But gaming is the most radical entertainment medium ever created. And the Revolution, while it has been in a coma for twenty years, is back.

Imagine a settler on the New World and being stunned at how unexplored the continent is. An investor pops up and says to the settler, “Why explore this continent? Why not adopt part of the Old World?” The settler would laugh and say, “This is the New World. Your imagination cannot comprehend what is to be discovered.” No one, not even Nintendo, expected games like Wii Fit to be so big.

There are things about gaming that even Miyamoto does not understand. This is because gaming is unexplored. How absurd it is for game makers to compete against one another’s plots of land when there is an entirely new continent to discover!
Regarding the specific media report to which you referred, let me share with you some background information in order to solve any misunderstandings. The reporter during the interview asked me, “Isn’t it true that the next generation DS will realize highly-sophisticated graphics and incorporate motion-sensing technologies?” And, I responded by saying that, “These things may naturally become necessary, but do you think these features alone can sell a product?” I guess there were restrictions for the total coverage the reporter can write, and my latter half of the comment, “but do you think these features alone can sell a product?” was not included in the article, which may have changed the meaning of the article a bit. What was written in the article was not wrong because I did say, “These things may naturally become necessary”. Total context is not easily grasped, is it? When my messages are delivered indirectly in this manner, misunderstandings may take place, so this article reminded me that I have to be very careful about how I say things. We are aware that, as technologies advance, what can be done naturally changes. We are not trying to avoid high functionalities at all. It’s the issue of balance, once again, because we know higher performances and functionalities alone are not good enough reasons for potential consumers to want to buy the resulting new product.

The same thing can be applied to what they call “Wii HD.” Though I don’t know where this story came from because I have never said anything like it, if I am asked about this, I will probably wonder about the ability of high-definition or highly-sophisticated graphics to be able to sell Wii and ask the reporter, “Will such a feature alone can make a product that can sell?” and add that “we will need something new.”

What Iwata is saying is that the press are intentionally doing complete distortions on what he says (Iwata, very diplomatically, does not use the bluntness that I am).

Iwata is correct that he has never, ever said “Wii HD”. Yet, it continues to be used in a concerted effort. The person responsible for legitimizing “Wii HD” as a business possibility would be analyst ‘Michael Pachter’ whose erratic behavior shows that we must question his behavior and intentions instead of his comments. Pachter is a very intelligent person and he knows how to work the press. He wouldn’t have started or continued his ‘Wii HD’ broken record routine unless it was intentional.

Note that the press reports on this Iwata Q/A only quotes Iwata on the ‘Wii HD’. Now, why is that? Why not report on other things that are being said?

If it weren’t for competition and competitors, I might be willing to share with you some of the ideas about which I have been thinking. However, I have to think in terms of competitive reasons and refrain from saying anything in detail today.

Note that Iwata is saying ideas. In other words, no new Wii hardware anytime soon. Hell, it is sold out in America again!

To begin with, we have come to understand that many of our consumers did not understand the perks of when Wii is connected to the Internet. So, when you purchase a Wii console today, there is a preinstalled video that shows what you can do when you connect your Wii to the Internet. We have done the same thing on Nintendo DSi after we had launched it. When they are shipped, Wii and Nintendo DSi include the Wii Channel and preinstalled Nintendo DSi software, respectively, that show videos that explain what players can do when these systems are connected to the Internet. We thought that we should make this explanation visually, so we incorporated the video. Once the device is connected to the Internet, the video is of no use any more, so it is set up so that it can be deleted. We are also engaging in other activities to promote net connection, such as by collaborating with NTT East and NTT West to set up telephone support service for those who do not understand how to connect their Wii to the Internet.

Furthermore, we have also come to realize that even though we have a number of new downloadable Wii Channels, many people have no knowledge about them at all and that, even when they are aware of these Wii Channels, it is a very high hurdle for them to clear to actually visit the Wii Shopping Channel and download the Wii Channel(s) they want. Therefore, we are pre-installing small (sized) Wii Channels (that can be “seeds” for actual ones) – a demo if you will – for the Wii consoles we started shipping from the end of last year. When you click on one of these Wii Channels, for example, you will receive an explanation about what the Wii-no-ma Channel can offer you. When you select, “I’d like to download it”, you will be directed to “Wii-no-ma download page” of Wii Shopping Channel. We are doing this in order to make it as easy as possible for the consumers to be able to select and download the Wii Channels that they want.

Through these efforts, against the natural current, the Internet connection ratio of Wii has gradually been increasing. However, the current net connection ratio has not reached the point that we wanted it to be. Of course, there are people who have comprehended our messages and are enjoying Wii with the Internet 100% or even 120%, but there are many people who do not know what they can do when their Wii consoles are connected to the Internet. Right now, we are implementing these explanations only on the Wii hardware that we are shipping today. We are reviewing the possibility of doing similar things on Wii software in the future for consumers who have not connected their Wii to the Internet so that a message may appear to show what can be done when Wii is connected with the net or how to download Wii Channel(s). It might be possible to lower the hurdle even further when we can dispatch such messages with the software, and we are reviewing such possibilities today.

Today, the value of Wii and Nintendo DSi that are felt and appreciated by many owners who have connected their systems to the Internet have not been shared at all by the owners of Wii and Nintendo DSi without the net connections. The fact is, as I showed you the leaflets for the first timers today, there are even so many potential consumers who do not understand such first steps as how to start playing with Nintendo DS and where the Nintendo DS game card should be inserted, or how Wii can be played by utilizing Wii Remote, what kind of software are available and which components are included in the Wii hardware package. It is not an easy job to expand the net connection ratio as there are still many consumers to whom we need to convey these steps. However, if we can take it one step at a time, I feel that Nintendo, more than other devices, will be able to contribute to narrowing down the “digital divide” among people, including those who appear to be farthest away from the Internet world. Some may see what we are doing about the Internet and think that we have been doing rather primitive things. However, if we can thoroughly do the fundamentals and can invite consumers to the world of the Internet that any other devices cannot do, we will be able to create an enormous value. We’d like to remain tenacious in continuing our efforts.

Iwata is explaining Nintendo’s online strategy here. Nintendo’s effort is to get the masses onto the Internet. And this is a pretty difficult task. This is not PC gaming or an Xbox where a few enthusiast gamers are gung-ho about Internet. Nintendo is trying to get the untraditional gamers to get onto the Internet. Why would Grandma need to plug her Wii to the Internet? Nintendo is trying to give Grandma reasons to plug her Wii into the Internet. This has to be a difficult and costly task.

As a matter of fact, I myself was worried in October and November. Any corporate president must be concerned in a situation like that. Originally, we had expected that from around mid-November, the market would respond more strongly. We had done whatever we needed to do, and we knew that our consumers’ satisfaction levels of our products were not bad at all. On the contrary, weekly sales did not show the usual increase of an annual sales pattern. I do not intend to pretend like an arrogant person and say that everything was just as I had expected. The fact is, we were concerned.

Straight from the horse’s mouth! Iwata admits he was worried.

I did notice a big change in Reggie. Everyone noticed that Reggie acted like he was walking on a cloud in 2008/2009. People said that Reggie had gotten arrogant. When the Wii got in stock in 2009 and began slowing down, the ever optimistic Reggie said, “No problem. Sales will pick up once we get our big software in a few months.” That did not occur, and we found Wii getting its price cut (!). And the price cut didn’t translate to anything longterm of a sales boost.

Then came a market research report (internal to NOA of course) and Reggie was no longer on a cloud. He had a more serious tone and was not very relaxed. This was around October or September. During the holidays, Reggie seemed more relaxed and especially now. NSMB Wii was literally flying off the shelves.

I am sure the Nintendo guys are much more relaxed now then they were prior to December.

Interestingly, I got worried about Wii sales not soon after Wii got back in stock in America. Remember my tirades against User Generated Content? hahaha. I remember saying frequently, “Stop this User Generated Content! You want sales? Go make Mario 5 and you will have sales.” And Nintendo did that! They stopped the UGC and made Mario 5. Now Wii is sold out again!

I think Nintendo may have been too rash in cutting the price of the Wii. If Wii was still $250, the shortages probably wouldn’t be as severe as they are today. (But with the piss poor economy, a price cut might have to have been done.)

We were able to observe how consumers react to our offers when there is no rush. More specifically, what probably happened in the U.S. and in Europe in 2007 and 2008 was that many consumers thought that if they did not purchase a Nintendo DS and/or Wii early enough, they will run out when they really need to buy them. Also, the economic environment was not this bad at that time, so they could afford to make a purchase decision early on. In case of 2009, their sentiment must have been that, because there were no dangers of the inventory shortage, they should wait to choose the best deals (from the retailers.) Fortunately, many consumers kindly chose Nintendo products in the end. We can either say that this was because Nintendo had been making efforts so that consumers would choose our products or because we were blessed by a tail wind at the very final stage.

This is what happened:

Wii was selling mostly due to potential. Wii Sports promised a new type of video game. Wii Fit continued this promise.

User Generated Content killed the potential. What also killed the potential, in consumer’s minds, were the core Nintendo games continuing to neglect the Wii’s special features. Now, consumers did not think “User Generated Content!” They just played games like Wii Music and thought, “This sucks.” People were waiting for Nintendo to deliver on the potential of the Wii. User Generated Games were not what they wanted.

When the potential of the Wii was gone from the consumers’ minds, the Wii just began to deflate like a balloon.

But Wii sales are shooting up again because of hopes in the system’s potential. Games like Wii Fit Plus and Wii Sports Resort rekindled the potential began in Wii Fit and Wii Sports. But games like Mario 5 really was a bolt of lightning. I wasn’t saying “Make Mario 5!” because I am a retro-fanboy. I was saying “Make Mario 5!” because I knew there was a huge market waiting for the next 2d Mario game in order to buy a console. I, myself, bought a DS only because of NSMB DS. And the DS sales exploded in America right when NSMB DS came out.

Nintendo can have their consoles sold out almost all the time if they want it. The key to do so is keep following the Revolution. People want to see games explore new things. This is why they are responding so strongly to games like Wii Sports or Wii Fit. They want to see motion controls applied to arenas that are not sports or fitness based as an example. Remember, all the people who bought the Wii were not crazy about Wii Sports. They were crazy, however, in the potential that Wii Sports promised.

Having said that, however, we have not thought of it as the final glow of a candle light at all. Now that we have been able to once again learn about under which conditions consumers make their final purchase decision and make an actual purchase, we would like to continue our efforts while there is still momentum. Also, as I said earlier today, the situation of the Wii software market today is completely different from what it was a year ago. New Super Mario Bros. Wii was able to sell more than 10 million units in such a short period of time but the sales pace has not significantly slowed from the beginning of the New Year. It is still selling at a pretty good pace today and is the trend across Japan, the U.S. and Europe, so the software must have the potential to appeal to even more people as long as we can drag out its real potential. For example, New Super Mario Bros. Wii has sold more than 3 million units in the Japanese market where little less than 10 million Wii hardware units have sold. In comparison, if I remember correctly, NPD reported New Super Mario Bros. Wii’s U.S. sales at the end of 2009 as approximately 4.2 million units. Because Wii’s installed base there is about 27 million, about three times as much as in Japan, when we compare the U.S. software sales ratio to the hardware, even though 4.2 million unit software sales is nothing to be sneezed at, it has a long way to reach the level in Japan. Looking from such a perspective, we see further room for sales expansion. When a game can be discussed as a social topic, and when potential consumers can often hear positive comments on the game from people, the little interest they may have today can be peaked, and they may become willing to buy one for themselves. The important thing for us is to create such an environment.

How about making a Super Mario Brothers game more often than eighteen years? Just think of it, reader, all these people buying a Wii for Mario 5 are people like me, Malstrom gamers! Otherwise known as the Old School.

Have you noticed how all these Expanded Audience games are really a renaissance in the Old School? The Old School are returning home…

About the book Free, I happened to read it myself. While many things are coming closer to free-of-costs in the digital world, there are pros and cons on the contents of Free. As Malcom Gladwell, author of The Tipping Point, posted his counterarguments to Free on the Internet, there are skeptical opinions about the future direction described in the book but, at least, I acknowledged that many things can easily lose their values in the digital world so we have to be very careful. In fact, many people believe that lowering the price is an easy way to sell products, and price reduction is often discussed as an option when they try to obtain short-term profits. Because I am concerned that, if we lower the price of the software without regard to the real value, then we will be lowering the value of the software to the extent that there will be no value remained and no decent business would be conducted anymore, so I have no intention to reproduce what is written in the book Free as they are.

On the other hand, if we can smartly take advantage of the idea of Free, there is a potential that those consumers who were not able to try out products could have the opportunity to really understand their value, and it might be something that everyone should think about using.

In other words, Iwata is saying “LOL” to this book of ‘Free’. Anderson uses ‘disruption’ much in the book. However, I consider the book a shoddy piece of work. The fact that Anderson is using Wikipedia sources is reason enough to “LOL” at it. I didn’t think much of “The Long Tail” either.

There is a precedent for games being ‘free’. It is called shareware. And that model worked very well for some companies in the past. Basically, it would be like episodic gaming with the first episode being free (and encouraged for you to share that first episode to everyone). Unfortunately, the “Industry” keeps charging for the first episode which is why the shareware model cannot be reborn.

As long as we can change the circumstance(of the social acceptance of video games), we should be able to make more changes(for the better in developed markets). But, if I abandon such a possibility and say that the newly emerging markets are the only future, I felt I would be too irresponsible, which is the reason why I did not emphasize them today. Once again, however, we are not making light of newly emerging markets when we look at them in a three- , five- or ten-years range.

Investors are thinking of expansion only in new territories rather than in new contexts in the same territory. Iwata is trying to illustrate Nintendo’s direction that there is much to be done to expand gaming even in the older markets.

On to our challenges on the decline of our software shipment in the “Other Regions” including the European market, we acknowledge it as a big issue because, even though the decrease in actual sales in the markets was smaller than the decrease in our shipments (as I said during today’s presentation), the actual sales declined about 20%. Some say it is due to piracy activities made possible by devices such as Magic-Coms(R4), but I don’t believe it’s the only reason. When Nintendo DS was getting more and more popular and sales figure performed accordingly, some of our product proposals became a social phenomena. Just like Brain Training in Japan, Nintendogs or Brain Training did the same thing in the European market. Actually Brain Training performed fine there last year – it sold over a million copies in Europe but the previous year had sold more than three million copies. That means Brain Training had less visibility as a social phenomenon last year. Nintendogs is in a similar situation. If we could propose what will replace them and maintain a high visibility in society, then the Nintendo DS momentum can be activated and more software titles can be sold. What this means is that we were not able to do that. Thus I believe our highest priority is to propose and offer Nintendo DS titles which can be another social phenomena.

There are people running around saying the decline in DS sales in Europe is entirely due to piracy. Michael Pachter is one of those people. And Iwata rejects it as do I.

When was the last ’social phenomenon’ game to occur on the DS? Spirit Tracks? Bahaha! What it does show is that the DS is not a ‘casual machine’ where third parties sell garbage. Usually, there is a hit game that everyone wants. And then that interest bleeds over into other games. DS hasn’t had any killer apps in a while which is bringing down software sales in general. This is what Iwata is saying.

And then Iwata goes on talking about Professor Layton.

Another topic that I have addressed several times is the opinion that third parties can’t perform well on Nintendo platforms.” During the previous fiscal result briefing, I had shown some data to explain that it was not true, but it seems a hardened belief cannot be altered easily. Or you might see the situation from such a viewpoint because of the visibility of Nintendo titles on sales chart.

It is not that third party games do not sell on Nintendo platforms. It is that they do not wish to sell to the Expanded Market. They do not wish to make games for Sean Malstrom. They wish to make games for themselves.

The Industry tactics do not work for the Expanded Market. So this is why the Industry doesn’t want to make games for the system. Fortunately, the Industry will continue shrinking and the Expanded Market will continue growing.

Gaming has radically changed from twenty years ago. Games have become extremely mediocre and are sold entirely due to hype. The Expanded Market has the identical standards for quality that existed twenty years ago. Most game companies cannot measure up.

It may not be arrogant to say third party games cannot sell on a system. But it is truly arrogant to say that third party games cannot sell because you failed. It is easier to blame “da casualz” or “evil Nintendo” rather than blaming oneself.

As a member of that Expanded Audience, let me say that there are no third party games. There are only third rate games. Put the top tier team on the Wii and start making first rate games. Stop looking for marketing gimmicks to sell your crap. The Expanded Audience is more discriminating than the ‘hardcore’ gamers are. This is why the Expanded Audience do not normally play games.

The problem is not the business model. The problem is that you suck.

But during the last year-end sales season, I believe there was one thing we have to specifically consider. It’s Call of Duty: Modern Warfare 2, a great hit from Activision released in November for PS3 and Xbox 360. Its influence and impact might be as large as our ten-million trio(Wii Sports Resort, Wii Fit Plus and New Super Mario Bros. Wii). So when we remove it from the result, you will see this. The reason why the number of titles decreased by three was because NPD tracked three different SKUs for the game, namely, normal edition, pre-stage edition and special can-package edition. I think that’s one of the aspects of big titles’ impacts. In recent video game software market, there is a huge gap between what sells very well and what sells very badly and this is a challenge for the whole industry. Some people criticize that Wii business has been driven only by Nintendo’s great hits and there is little benefit for third parties, which in fact is not true, as the situation is similar even on non-Nintendo platforms, when we compare per-title sales figure like this. Adding to these facts, when we actually consider which platform owns more major titles of third parties, that criticism again loses the basis.

This is a very interesting argument. Iwata is saying the idea that only a few titles sell on Nintendo’s systems (Nintendo’s main games) and everyone else doesn’t is more profound on the HD Twins. And Iwata uses Modern Warfare 2 as an example.

As a reader emailed me pointing out that a huge blockbuster title and not much for anyone else shows the rising flood of disinterest. I couldn’t agree more. Infinity Ward made a very well made game. But the problem is that most games today suck.

Again, the problem isn’t gaming’s business model. The problem is that you suck.

Personally, I am really excited to see more and more movies getting 3D functionality, and feel no hurdle in using 3D glasses for two hours in order to watch a movie. But when we consider the possibility of 3D video game for a household, we also have to consider if everyone needs eyeglasses in order to start playing, or how would the graphic and players look like to spectators without 3D glasses? If it is played by one person or without any family member on the spot, I think 3D technology will be suitable for a video game experience. As Nintendo has been and is going to be focusing upon the number of users per household, I have some doubt that current 3D technology which requires eyeglasses will be suitable for our products. In fact there have already been discussions for a possibility of a 3D video game for a long time. To tell you the truth, GameCube is secretly designed to load graphical circuits which display graphics for right and left eyes respectively, for a future possibility of realizing 3D gaming experience. So actually we have had interest on this technology, but I have some doubt about everyone needing glasses to play. Also, we would have to consider the impact on a human body if we develop 3D games as full-scaled as current video games, which takes much longer than 2-hours movies. If we design games that the players can enjoy only for two hours, that would mean less value for the price. To wrap up, we have interests but are also aware that there are so many hurdles to overcome, thus we don’t believe every kind of game will become 3D environment in no time.

There is another significant problem to 3d games as well. Those games require two functioning eyeballs. Many, many people may have a weak eye or cannot see in an eye so cannot get the full effect. Prior to the Wii’s release, when there was much wondering about Nintendo putting out a visor type of console, one enthusiast gamer/website maker was depressed because he did not have eyesight full in both eyes. Being a huge Zelda fan, that would mean he could not play the new Zelda game. He was scared Nintendo would go that direction.

And as you get older, your eyesight doesn’t get better anyway.

These visor games are not changing the substance of the game, only the style of output. Gaming has already had its 3d revolution. Having 3d outputs is only changing the style, not the substance, of games. The next big change in gaming will be done with altering the substance of how games can be played (as motion controls did). Not in the style of how the graphics are displayed.

Why can a title that is fun not produce positive sales results? Even some of Nintendo titles are in such a predicament. When we analyze what they were lacking, we always come to the conclusion that we didn’t motivate and get consumers interested enough to actually try out the products in their own hands. Some forms of entertainment which attracts consumers by offering it free-of-charge have a much lower barrier for consumers to try. In order to not lose our significance against such free entertainment, we need to motivate and get consumers to actually experience ours. And it will be crucial for the future of our business.

Interesting. Iwata finds the ‘free games’ out there to be a threat because they may be ‘good enough’ for the consumer not to want to play Nintendo games.

The solution to this is the ‘Revolution’. Keep games exploring the New World and then you will get a hit or two to break out like Wii Fit.

These ‘free games’ also point that the future of gaming is in the hardware. Woe to the Industry thinking digital distribution is going to be the future. Do you guys really want to compete against free games? That line of thinking is going to get slaughtered soon.