Nintendo Summit - Reggie Speaks
http://wii.ign.com/articles/790/790916p1.html
In the history of the videogame industry here in the United States,
only one company has ever been the number-one manufacturer of a
hardware console, the number-one manufacturer of a portable console,
the number-one game publisher and the owner of America's top-selling
game all at the same time. The company was Nintendo back in the 80s.
And now today we've done it all over again.
The second point is a sales chart -- one of the few I'll show. What
this shows is the monthly cumulative sell-through for hardware in the
US for this year. If you can't see it clearly there in the back, the
red line all the way at the top is Nintendo DS. The second line is
Wii. The third line, interestingly, is PS2, not PS3. PS3 is down there
at the bottom, just holding off Game Boy Advance. [Laughter from the
crowd]
This is a chart that demonstrates what momentum is all about. And I
think what you're going to see today is that Nintendo has momentum and
will continue to have momentum all through the summer and all through
the balance of the year.
For the moment, let me go past individual company fortunes and instead
talk about some broader trends going on not only in the US, but
worldwide. Broader trends that we believe really help showcase where
the industry is going and our role in it, and that truly is the big
story. Let's start with Japan. Last year in Japan, more than half of
all games sold played only on the Nintendo DS. In other words, more
than half of the software purchased by consumers was just on one
machine. Also in Japan consider this: during the last console
generation for GameCube, less than half of those systems were set up
in the living room. Today with Wii it's over 75 percent set up right
there in the main room of Japanese households. Something is clearly
happening.
Let's move on. Here in Europe, both of the rival home console systems
are selling at slower rates than their predecessors. Now that's
shocking. And in the last weekly sales data that I saw out of France,
of the top 15 best-selling games, all were for Nintendo platforms.
Something is clearly happening in Europe.
Here in the US I can share some detailed market information on what is
happening and what we believe are the early signs of a significant
market change. In less than a year and a half, there's been huge
movement in the consumer make-up of consumers buy Nintendo DS. For
example, the number of female purchases for the hardware system is up
42 percent. The number of people purchasing Nintendo DS over the age
of 30 is up 127 percent. If you narrow that band down to consumers
over 35, the increase jumps to 212 percent. The reason for this
widening appeal is no secret -- we've been talking about it for quite
some time. It draws directly from the new type of software that's
being introduced to these new consumers. Here's an example. We look at
the percent of female purchasers for a typical DS game like Mario
Kart. You can see here that female purchasers represent only about 12
percent, but look how these other games perform. Nintendogs is double
that percentage. Brain Age: Big Brain Academy is also significantly
representing purchasers that are female. Let's look at another set of
bars -- bars that represent consumers age 25 and up. Here both Kart
and Nintendogs range from a third to 40 percent of all purchases. The
Brain games are over half. I don't think there has ever been software
in this industry driving this type of profile.
For Wii, it comes as no surprise that a year ago -- just about at this
time, a few weeks before -- we were at a substantial deficit in terms
of awareness for the console and also purchasing intent. But certainly
when we showed up at E3 the lid blew off. We certainly got gamers in
the industry device. But as much as it pains me to say it, not all
consumers are interested in what happens at E3. What we needed to do
was to make the message to the core and reach non-gamers, lapsed
gamers, people who haven't played games either never or certainly in a
very long time. And we did that. When it happened, we became a viral
and cultural phenomenon all to itself, driving all types of activity
in the online real as well as in the real world. So today by a number
of different measures we have a comfortable lead in terms of purchase
intent. But is what is more compelling is what's going on inside the
households that have a Wii. There's no question that consumers are
picking up a controller that have never played videogames before and
they're enjoying it and having a phenomenal times.
Couple other facts. Our parent company has reported that 40 percent of
owners around the world have already connected to the Internet using
WiiConnect24. That's not just for the millions of the games that
they've downloaded so far. It's for all types of activities.
Everything from sharing their Miis after they've created them to
accessing the Forecast Channel, Everybody Votes Channel... it's
becoming a part of everyday life for many consumers.
Here in the US, owners are telling us what's going on inside their
household. It's not surprising that 95 percent of males age six to 24
are playing Wii on a regular basis -- that's expected. But look what's
happening to other people within the household. So this first column
looks at males between the age of 25 and 49. 95 percent are reporting
that they've tried Wii and then there's the percent reporting that
they're playing on a regular basis, which is just over 60 percent. Now
let's add women to that same age band. Women 25 to 49. Almost a third
are regular users. Three quarters say that they've at least tried the
system. What about men over 50? 16 percent are saying that they're
playing regularly. Men over 50. Females over 50. Now this is amazing.
10 percent are saying that they're regular users of the Wii. I have to
believe that this is an industry first.
A few more Wii tidbits. We've researched something called a Net
Promoter index. The concept is really simple. It's looking at the
percentage of users for a particular system that say that they
recommend the system to their friends and family and you subtract from
that the percent of those consumers who say that they wouldn't to get
a Net score. On that, Wii stands alone with a Net Promoter score of 85
percent. The next closest competitor is Nintendo DS at 65 percent.
Now, because I'm a nice guy and all you know how nice I am, I'm not
going to show the competitive numbers, but to suffice it to say nobody
comes close -- no one scores over 50 percent in this measure and some
are down in the teens.
So to complete this thought, a couple of final examples about how the
market seems to be changing in unprecedented ways. First, every
publisher knows that the shelf life for games is extremely short. If
you don't capture someone's attention in the first few weeks or even
in the first couple of months post launch, typically you're not going
to sell a lot of software. Typically, games don't have legs. But
consider a couple of examples. Brain Age is already a year old in
America and so far this year it's a top 25 title. Another example: the
first Nintendogs arrived in the US in August of 2005 -- almost two
years ago -- and it's still in the top 25. What you're seeing here is
that some games -- games that appeal to a much wider audience -- can
stay on best-seller lists indefinitely as along as they appeal to a
wide demographic.
But maybe most intriguing is the change in the perennial post holiday
time period -- the slump, as we call it within the industry. Everyone
knows that more than half of our revenues are generated in November
and December and that typically software sales go in the doldrums for
the next quarter after the holidays. But we believe that as the
audience widens, we shouldn't be as dependent on that key holiday
selling season and, in fact, if we are successful these consumers will
be buying throughout the year because gaming is so new to them, the
software is so new, they'll constantly be in the marketplace buying
more.
One way to measure this is to look at the number of systems sold in
November and December and compare to the number sold in the next three
months - -the following January, February and March quarter. Now, I
could show you a great number using this technique for Wii, but that
wouldn't be fair because we're selling out everything we put in the
marketplace. So instead let's look at this for Nintendo DS. Comparing
holiday of 04 with the first quarter of 05, we saw unit sales in that
January through March time period at 35 percent of what they were in
the preceding November and December combined. The following year --
holiday 05 and into 06 -- the numbers were larger in the absolute, but
the ratio stayed the same. 35 percent in that first quarter. Now,
let's start focusing on 05 and 06 -- and 06 was the year that we
expanded the audience and it really started to take hold; Nintendogs,
Brain games, several other audience-expansion titles and a new DS
model that brought attention to a much wider demographic. That
would've boosted the holidays, which you see, but what about the
following months? From January to March this year, our sell-through on
hardware was a full 49 percent of what it had been in November and
December, and that's with DS essentially being out of stock in
January. In fact, during the first quarter of this year, we actually
sold more hardware than we did during the holiday of 2004.
So in our view these signs really do indicate that the overall
videogame industry is changing. Let's give you our view as to the why.
In the past, you've heard us talk about blue ocean strategy and
innovator's dilemma and our role in this industry as a disruptor. But
let me showcase for you another way to think about what it is that
we're doing in this marketplace -- another way to look at our
strategy. For as long as many of you have been in this industry and
for as long as this industry has been in existence, there's been one
prevailing view as to how to drive sales of a particular hardware
system, and that's to go activate the core and push out demand from
there as wide as possible. If you drive activity to that center group,
they will drive everything. Whether your game is Mario or Madden,
Zelda or Resident Evil, start it there and expand out. If that core
loves the game, they'll talk to other people -- they'll talk to people
a little bit further out on the fringe and get them interested in the
game. It continues to build and eventually you get to the more casual
consumers, expanding outward. In the best of all worlds, this game
becomes such a big deal that it motivates you to buy hardware just to
play that one game. Of course, everybody would be happier if that's
all that was published -- games of that caliber. But because everybody
is playing with the same dynamic, it's hard to break through all the
clutter.
What we're doing with both DS and Wii is to add an extra dimension to
the model. Games like Nintendogs, Brain games and Wii Sports are
designed to reside outside from the core -- to play on the outskirts
of this model. It's not easy to do. These games are designed to
attract people that have never played videogames before -- you might
consider them satellites to the main market. But if those games are
successful, as these games have been, they begin to exert a second
force on this gaming universe. Instead of just pushing demand out,
what they work to do is expand the outskirts of the market to include
them, so instead of just push it becomes a push/pull. The result, as
we're seeing, is an expansion of the game market.
Because of this dynamic we don't consider Sony and Microsoft as our
only competitors. Instead, we're really competing with other leisure
time entertainment, especially for that expanded audience. If people
decide to stay home on a Saturday night and play Wii bowling instead
of going to the movies, we win. If consumers spend 22 minutes making
their perfect Mii instead of watching a sitcom, we win.
Now, in talking through all of this, there's a danger. You might
assume, wrongly, that our differentiation strategy, the pull part of
what we're trying to do is all we care about. So let me be clear:
nothing could be further from the truth. We understand that if we
don't satisfy that core gamer, it won't matter how successful we are
on the outer edges. And as I've said more than once, our vision is to
be an 'and' company, not an 'or' company. We're not for one group or
the other; we're for the expanded audience and the core.
I'll tell you, sometimes it's really difficult when you launch a
stellar game to differentiate between the two. Take Pokemon Diamond
and Pearl. Are they core games or expanded audience games? Sometimes
our view is that they are in a category all by themselves. In just two
weeks of availability during the month of April, these two games sold
through 1.7 million copies. That made them not only the best-selling
games of the month, but just during those two weeks of availability,
the best-selling games of the year. Now, I know that Mr. Iwata and I
take a great deal of pride in being able to say that currently we're
the top game publisher, and these two games might keep that claim
going for quite some time.
Our next big attack on the expanded audience comes with Brain Age 2
for DS, due to launch on August 20. In Japan, according to Famitsu,
this second installment in the Brain game series is even more popular
than the first, already selling through to an audience 25 percent
larger than the original Brain Age. The goal of the game is the same,
but the path is entirely different. In this one, you'll be challenged
with everything from word scrambles to a game called piano player to
rock, paper scissors. And let me tell you, when you're demoing the
game and you play rock, paper scissors, and you need to do it in
reverse, so to lose to the other item, it will make your head explode.
A couple new Touch Generation games. Picross and Planet Puzzle League
for DS are both designed to appeal to a much wider demographic.
And more market expansion is on the way for Wii with games that
expanded their reach due to WiiConnect24. As I mentioned before,
Pokemon expands the gaming universe in a unique way and by captivating
millions of eight, nine and 10 year-olds every year, it doesn't just
sell games -- it creates gamers for life. With Pokemon Battle
Revolution as the first game to link Wii and Nintendo DS to live play,
four separate players can share in the action all at once.
Then there's Big Brain Academy: Wii Degree. Up to eight players that
can compete simultaneously and then compare scores with others that
are thousands of miles away through the WiiConnect24 system.
Then there's Mario Strikers Charged that also employs Wi-Fi play to
connect you to opponents at a distance. With the online experience, it
keeps the action going for hours on end. This is going to be, I think,
a favorite game for many of you.
Let me pause for a moment to comment on a franchise that's now moving
into version number eight. So what could be new with Mario Party 8?
Well, play for the first time with the Wii remote and then tell me
that it's not more fun than all of its predecessors.
So let me take a final minute to talk a little bit more about the
core. By some people's definition, the last time Nintendo published a
true core game was GoldenEye. But in our minds Mario, Zelda and Smash
are also core games and that's because you can't find a core gamer who
can say that they've never played those games. And later on this year
you'll be playing Super Mario Galaxy, Super Smash Bros. Brawl and
Zelda: Phantom Hourglass.
Let me assure you that our third party partners will also meet the
needs of both audiences. As you know, third party development is
moving enthusiastically to the Wii because of the innovation and
because of the potential return on investment. And despite what you
might have heard, to date in the US third parties have sold more Wii
games than Nintendo has, and this includes all the success we've had
with Zelda and Wii play.
Still, it wouldn't seem right if there weren't at least one Nintendo
first party game that seemed destined to appeal right at the heart of
the core, and so we've got that game too: Metroid Prime 3: Corruption.
Of course, you know the franchise, but you've never played it this way
before. Some of the people in the Treehouse say that this will
reinvent the control scheme for a first-person shooter. That this is
the closest you can get to a PC control in a platform game and that it
breaks through the lens of how you play.
Whether you're a hardcore or first-time player, it all boils down to
this -- it all boils down to a definition of fun. It's not enough to
define fun just based on things looking a little bit better; they've
got to feel a whole lot better. I hope you're going to get that
feeling when you're upstairs demoing these games. And I know that
feeling is going to grow as we prepare for the new E3 and as we get
further into the fall and prepare for the holiday season. So with
that, I want to thank you.
date: 22 May 2007 19:18:46 -0700
author: Air Raid
|
