In a recent investors Q&A session translated into English this week, Nintendo management addressed a host of issues about the state of its business, including the dismal performance of the Wii U. Naively, many people within the company expected the Wii U to sell close to 100 million units. The reality is it's only managed to sell a paltry 13 million units lifetime compared to the Wii's more than 100 million.
Nintendo president Tatsumi Kimishima commented, "In an internal sales representative meeting, someone projected that we would sell close to 100 million Wii U systems worldwide. The thinking was that because Wii sold well, Wii U would follow suit. I said that, since the Wii had already sold so well, we need to clearly explain the attraction of the Wii U if we are to get beyond that and sell the new system, and that this would be no easy task. I was responsible for selling the Wii U, and I knew what was good about it, so I talked with those in charge of sales about the importance of conveying the attractiveness of Wii U to consumers."
Shigeru Miyamoto still believes in the Wii U, but for now the top brass at Nintendo recognizes that it must do a better job with the NX. "It is true that we are having a hard time with Wii U sales, due to its price and the added fact that tablets are distributed free of charge in the market. I do think Wii U continues to be attractive as a media device that changes life in the living room. A similar challenge continues with NX," Miyamoto noted.
Kimishima added, "I am not currently able to talk about concrete figures for unit sales, but we are planning for NX to make up for falling Wii U sales. Software for NX will also contribute to sales and profit."
What form the NX ultimately takes is still anyone's guess, but Miyamoto dropped more hints about Nintendo's possible jump into VR/AR. "As for VR, we are researching not just VR but AR and many other technologies. We have a range of core technology including 3D, and we are also considering the possibility of implementing these in our own hardware development. For VR in particular, we are continuing our research, and looking into development with a mind to how our current core products are meant to be played for a relatively long period of time," he said.
"We are looking into the possibilities of providing an experience that gives value when played for a short time, and how to eliminate the concerns of long-duration use. We are also looking into how to make sure that a parent doesn't need to worry when their child puts on a VR device in their living room. At this year's E3, I was on the show floor, and it did not feel like VR was that big of a topic. This could be because VR is not that much to look at for the spectator, even while it might be highly appreciated for the person actually experiencing it. It might also not be clear how the experience can be made into a product."
Another interesting point that Miyamoto made during the Q&A is that Nintendo can do a much better job in leveraging its incredible stable of IP. There's clearly potential for the company to use the IP for entertainment beyond games, and that could do a lot to keep Nintendo relevant.
"Video content is a really interesting area for us. Going forward, it is extremely important for Nintendo to move beyond the limits of game systems and make good use of its character resources in order for Nintendo not to be forgotten," Miyamoto said. "Nintendo has a variety of characters. That one company has all the rights to so many characters is something that is recognized as unprecedented. To avoid any misunderstandings, we have never said that we will produce a movie. We have talked about our expansion into video and other areas, but we are not saying anything official about the details. What I can say is that video is one of the business areas where Nintendo is making good use of its IP. Three years ago I created an about 20-minute video content of Pikmin's short movie, and just recently I made a 15-minute PR movie for Star Fox Zero. These were made in association with video production companies.
"We can make video content by mostly leveraging the knowledge and capabilities of outside companies. For the production of those two short films, I was basically the only person from Nintendo involved. Nintendo needs to make a lot more products, but when a company gets too big, it faces continual problems nurturing its employees. Besides video content, we have begun to provide Nintendo characters for theme park attractions through a basic agreement with Universal Parks & Resorts. By working on development with others outside of Nintendo, I am working actively to expand the number of Nintendo products. These projects will take time to bear fruit, but they are something to look forward to."
Moving forward with the business, Miyamoto said that Nintendo has to aim higher with its software sales in order to succeed. "...while it's important that we do not overextend by putting an excessive amount of content in our games, the only solution is how to make software that sells well. There will be big hits somewhere in our business, and they support the games that fail and allow us to take on other challenges. So our basic premise is to create software that will sell in the range of at least two million units. We simply couldn't recoup our costs if we only released games in Japan that had sales of around 300,000 units, so the global market is our standard," he explained.
Check out the full Q&A for more comments from Nintendo's executives.