The Investor Briefing Q&A Breakdown

Nintendo has finally released the English translation of the Q&A session of their recent Investor Briefing, and the nuggets of information were plentiful. Several questions were asked and answers were given. Among the answers were a few that truly stood out to me, personally, and I wanted to be sure to point them out, as they pertain to the heart of me as the gamer.

Instead of simply copying and pasting the entire session, I will grab the handful of exchanges that I feel are most representative of where the company stands and is also heading. Nintendo Co. President, Tatsumi Kimishima was able to shed light on a few things that many have been interested in, but of course, was unable to share anything regarding ‘NX’ or its development at the moment.

One such area that sheds a little light is the third question which pertains to the expected source of Nintendo-like profits that are to come in Fiscal Year (FY) 2016, which ends March 2017.

With regards to the financial performance, I believe you said that the fiscal year ending in March 2016 has been about balancing revenue and expenses, while the next fiscal year (ending in March 2017) will be a step towards aiming for Nintendo-like profits. Have these priorities changed at all? It seems like a lot of new endeavors, such as smart device business and amiibo sales, will need to go smoothly in order to realize Nintendo-like profits. If you had to provide one example of an area where you can be sure to achieve Nintendo-like profits, what would that be?

Kimishima:

The previous and current fiscal years have been a period of preparation to launch a number of new endeavors, such as NX development, development for smart devices and business using our character IP, in addition to driving our Wii U and Nintendo 3DS businesses. At the same time, it has been our priority to take a close look at areas of our existing business where the revenue and expenses had become unbalanced, and to make sure that we corrected this balance. As I have said before, we will be launching many of our new business activities as we move from this fiscal year into the next.

When you start any new business, it is important to make the public aware of what you will be doing. In the next fiscal year, we will have to make preparations and investments to achieve these goals, and that comes with certain costs.

The question was to pick one area with which we will be able to achieve Nintendo-like profits, but I would like to suggest two areas. One area is our NX business, and another is our business for smart devices. I believe that keeping these two endeavors on track will be key to achieving Nintendo-like profits. I don’t have any further details to share about the next fiscal year at this time, but we will explain about our plan and when we will aim to achieve Nintendo-like profits at a future date.

Kimishima-san’s response shines a light on several things with a single statement. He talked about the need for making investments to making the public aware of what the company will be doing throughout the new FY. The costs for that will be enough to ensure successful launches. He also suggested that there are two areas of focus for returning to Nintendo-like profits in the FY, being NX business, and smart device business. Understand, that FY ends March 2017, which all but states that we will indeed see not only the reveal of, but the release of the system before March 2017.

Also addressed was the recent consolidation of the handheld and home console hardware and software development divisions, and how that has begun to affect the company’s efficiency.

Nintendo has been working to restore balance between revenue and expenses and has announced a number of new ventures during this and last fiscal years in order to realize Nintendo-like profits from next fiscal year on. How would you evaluate your current progress on your plans, such as reorganization and business partnerships? What areas need improvement in the future?

Kimishima:

We have made a number of changes to our corporate structure to gear up for our new ventures. For example, (as I have described before,) where development was split between handheld and home console divisions in the past, we have unified these activities for both hardware and software development, and the exciting new ideas coming from development are evidence of the progress being made as a result of that unification. We are also making steady progress in working with our partners in a variety of businesses.

Of course, gaps in communication that may arise from reorganization could hinder plans that require timely execution. This is why our Corporate Planning Department is also implementing organizational reform that allows for precise understanding of progress across the whole company. The General Manager of the Corporate Planning Department has a lead role in this project.

To achieve Nintendo-like profits, one important factor will be establishing a solid launch for our NX and smart device businesses. I believe the key to doing this is to allocate our resources appropriately to proceed with hardware and software development on schedule and deliver our products to our consumers in a timely manner.

I believe what is most interesting in Kimishima-san’s response here is the reassurance that the unification of their development divisions is producing exciting new ideas, is working toward eliminating communication gaps, and helping to truly help in establishing a solid launch for both the NX and smart device businesses.

The next question and answer that was very striking was the sixth response wherein Kimishima-san was asked about strategic planning with both the older and younger generations.

When you became president, Mr. Kimishima, I believe you stated that you would be carrying on the existing strategies, but we also expect that you will bring your personal touch to Nintendo’s business strategy. Do you have a plan that you can share today, or do you intend to leave strategy to the younger generation? Are there any particular goals that you have set for yourself?

Kimishima:

As you said, when I became president, I stated that my role was to continue to proceed on the course that I helped to set with President Iwata and the rest of the management at that time. The ideas of our young employees are also key to our ability to transition to the next generation and to continue to produce exciting ideas. It is important to structure our organization so that these young people can take active roles. We have worked to establish such an organization; one that will allow our employees to reach their full potential in many different areas. It may be difficult to see from outside of the company, but we have made major changes to our organization. For example, our game developers have not had much of a public presence in the past, but we would like to create more and more opportunities for you to get to know them in the future.

As for business strategy, the hardware-software integrated business will remain the core of our game business, but we ensure that we will also expand this to include smart device activity and fuse these businesses into a synergistic whole. “My Nintendo” is a crucial part of this strategy as well. We seek to deepen our relationship with our consumers by having them join the “My Nintendo” program.

I would also like to touch on the QOL (Quality of Life) program today. We do not feel that we are currently at a stage where we can commercialize a product that deals with sleep and fatigue, so we are not planning to launch any products in this area in the fiscal year ending in March 2016. However, we do believe there is potential in the QOL sector, so we will continue to consider further development in this area.

With this last response, it was very apparent that Kimishima-san is intent on continuing the legacy that began with late Company President, Mr. Satoru Iwata. The many new facets of the business in conjunction with the main dedicated gaming device business are exciting and are sure to help bolster the company to Nintendo-like profits, for sure. I love the fact that the management group is keenly working to develop and further utilize the young developers. The same minds that created the smash-hit Splatoon are but a small sample of the group who will be seeing a bigger role in the company, going forward. Also, it will be even more exciting to have the opportunity to get to know more of the game devs from within the company. And of course, hearing how integral “My Nintendo” will be for the company moving into the future is encouraging beyond measure. A future-thinking Nintendo is an incredible force that I am happy to see on the horizon.

Some people have attempted to take the contents of this Q&A and see disparaging info, but those same people will continually share how others smartly remark that “you should never count Nintendo out!” Of course, I don’t subscribe to the naysayers’ mindset, so in the end, I am always looking for the good news in the story. Hope you will too.

How do you think Nintendo will fare in their pursuit of regaining Nintendo-like profits? Do you expect that “My Nintendo” will be an even bigger deal than was initially suspected? What excited you most about the information that was shared?

As always, gaming is meant to be fun, so keep gaming!!


 

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