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Nintendo resolute on Wii U, still unconvinced by cloud

"There are certain things that cloud gaming cannot achieve," says Iwata

A question and answer session between investors and senior Nintendo executives has revealed a company which retains its sceptical stance on the technical arms race and the power of online and the cloud, choosing instead to maintain the pursuit of unique software offerings.

The corporate briefing, published as part of the assessment of recent financial results, offers an insight into the thinking of both president Satoru Iwata and Shigeru Miyamoto.

Questioning opened with a look at the Wii U, which was confirmed as having missed sales expectations so far. Asked whether the management had set a specific window of time in which to furnish the system with a suite of games which "communicates better the product value of the hardware to the wider public," Mr Iwata promised a busier release schedule for Wii U from Summer onwards, including a few surprises.

"A month or two is certainly not adequate to release a large number of titles," he said of the catalogue so far, "but we are hoping to be able to communicate to our consumers the new value of our hardware with titles that we are going to launch from approximately the second half of the calendar year toward the end.

"I believe that we will be able to launch new software within this year that we have not yet announced at this point."

"We are hoping to be able to communicate to our consumers the new value of our hardware with titles that we are going to launch from approximately the second half of the calendar year toward the end."

Satoru Iwata, president, Nintendo.

In addition, Mr Miyamoto expressed his confidence that the games on offer will sell the hardware, even if it takes some time.

"Our belief in designing this hardware was to create a standard machine full of convenience for every living room. We would have liked to create new entertainment that instantly communicated its value to the public, but we could not. However, I am confident that we did manage to develop software that, once people have played it, does communicate its value very well.

"We have not yet launched many titles, but Nintendo has been striving to sell its software for as long as three years in an industry where a typical software title has only a few weeks of product life. In this sense, we are confident that even our existing ideas are attractive enough to draw people to our hardware."

Next, investors moved onto the question of the future of gaming hardware, touching on Nintendo's refusal to enter into a graphical arms race, the competition afforded by devices such as mobile and the company's continuing seeming refusal to engage with cloud gaming.

"The term 'cloud gaming' is one of the words we have lately heard so often," said Mr Iwata, "but I would like people to understand that there are certain things that cloud gaming cannot achieve."

Whilst Iwata was not completely dismissive of cloud gaming, accepting that it can function perfectly well in situations where latency and input delay is no problem, he expressed confusion at it being heralded as the holy grail of gaming's future.

"By the laws of physics, it always takes some time to transmit data, and given the current level of Internet technology, there is bound to be some latency during the processes of a server receiving data, producing images instantly and sending them back. There are many things that cloud gaming cannot do by design, but this fact has not been communicated well to the public, and I find it strange that many people claim that cloud gaming is the future."

Sticking with technology, Iwata reiterated his faith in a future for dedicated gaming hardware, as well as a future for a separate development path for handheld and console gaming.

"Naturally, our stance is that dedicated gaming platforms will not die out and we are determined to create a future where they will not. In terms of our platform integration, as I explained to you a short while ago, we are not saying that we are planning to integrate our platforms into one. What we are saying is that we would like to integrate software development methods, operating systems, and built-in software and software assets for each platform so that we can use them across different machines. This means that if we manage to integrate our platforms successfully, we may in fact be able to make more platforms."

Miyamoto had a slightly different tack to his answer, focusing instead on the development of software which properly showcases the advantages of dedicated gaming hardware whilst acknowledging the encroachment of smartphones into the market.

"We would have liked to create new entertainment that instantly communicated its value to the public, but we could not."

Shigeru Miyamotu

"The fact of the matter is that the technologies included in smartphones have progressed so much that they can now do what mobile phones couldn't do in that arena previously. Therefore, what Nintendo should do this time is create something that is more fun to play on our devices," said Miyamoto, citing the success of Animal Crossing: New Leaf.

"Moving on to our home console business, I think there are only a handful of machines on the market that really try to answer the question of how best to use the TV screen in the living room. It seems that, in developing powerful video game consoles, the TV screen in the living room is just considered as an output device which could be replaced by a computer monitor. We, on the other hand, believe that our mission with Wii U is to make the TV sets in the living rooms more convenient and diverse in people's daily lives."

Nintendo is planning to achieve an operating profit of 100 billion Yen in the next financial year - an aim which will clearly require a fairly significant upswing in the Wii U's prospects. He is, however, apparently quite willing to take full responsibility for that goal and the potential consequences of failure.

"First of all, this may not be a direct answer to your question, but it is my job to focus on how to accomplish this aim, rather than to think about what we should do if our aim cannot be accomplished," the president explained when asked about the 100 million Yen target.

"I believe my job is to establish as promising a situation as possible to accomplish this aim. From this perspective, for Nintendo 3DS, it is vital to create similar momentum as we see in Japan in the overseas markets. So, the point is to launch several key titles seamlessly abroad to change the sales momentum of Nintendo 3DS itself, and then to create a cycle where hardware sales soar and its software sells well. As for Wii U, there will not be any key titles at the beginning of the year, so even though it will take some time, starting from this summer when the software lineup is enriched, we will promote our platform and aim to change the sales momentum dramatically.

"As for your second question[about accepting responsibility if this doesn't happen], I used the word 'commitment,' so I believe you can understand what I meant by that."

For further insight into Nintendo's prospects, see our twin editorials on the company's recent results by Rob Fahey and Steve Peterson.

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Dan Pearson