Revised profit target within reach, says president
OSAKA -- Satoru Iwata, president of video game maker Nintendo, in a recent interview with The Nikkei, expressed confidence his company would meet its newly lowered operating profit target for the fiscal year ending in March.
Q: Nintendo in January downgraded its forecast group operating profit for fiscal 2014 to 20 billion yen ($165 million), half its original prediction. What is your latest outlook?
A: The improved 3DS (a hand-held game device with 3-D graphics) did not debut in the U.S. and Europe until after the start of the year, which meant demand did not increase as quickly as we expected. That does not mean that 3DS business itself has significantly declined.
The revised estimate already takes advertising factors including expenses for the new 3DS models into consideration. We do not expect our results to slide much further.
Q: Why have sales of the Wii U remained flat?
A: I believe the Wii U business still has considerable room for growth, as a number of software titles that are compatible with the console are slated for release in 2015.
The way Japanese gamers enjoy video games is different from their counterparts in the West. More and more Japanese gamers play on smartphones and 3DS hand-held devices. On the other hand, a majority of gamers in Europe and the U.S. still connect their consoles to TVs and play them on a bigger screen. In the global video game market, game titles for consoles are still dominant, and that market is much larger.
Q: What are you doing to shore up your console business?
A: Newer consoles are equipped with a function to process micropayments using Suica electronic money cards [in Japan]. Our service that allows people to purchase games online using those cards is popular.
It is also possible to turn smartphone games from other software makers into 3DS-compatible games and offer them for relatively low prices. We intend to pursue a variety of options. Only those products and services that receive strong support from customers will survive.
Q: The market for smartphone games continues to expand. What are your plans for this category?
A: In the past, I have opposed making smartphone and tablet versions of Nintendo titles. Prices for content aimed at smartphones and tablets are falling quickly. I am still wary of the category. We intend to develop products that will allow customers to identify with Nintendo products and make people pay attention to Nintendo games.
For example, some Nintendo game consoles incorporate Mii, which creates a digital avatar to represent players. It would be fun for players to use their Mii characters as icons on social media. We are currently developing an application that will allow users to do that. The app will be announced around the time our full-year results are released.
Q: What is Nintendo's outlook for the next fiscal year and later?
A: We foresee improved performance for the next fiscal year, so long as we are not adversely affected by foreign exchange fluctuations. I have been saying we hope to achieve a profit suitable for Nintendo as early as fiscal 2016. My understanding is that an operating profit of 100 billion yen is the level the market and shareholders expect of us.
Interviewed by Yukinori Harada, Nikkei staff writer