Iwata: 'Something Is Wrong' With Dwindling Japanese Console Market
Nintendo president Satoru Iwata is openly confronting the dwindling console market in Japan, where home hardware growth is being rapidly outpaced by the U.S. and Europe.
"Perhaps, the Japanese market is the least robust market in the world today with regard to home console systems," said Iwata, who gave a Q & A briefing following Nintendo's third quarter financial results.
"If the U.S. sold two or three times as much as Japan, it would be tolerable," Iwata added. "Yet, I feel that something is wrong when the U.S. is selling ten times as much as Japan on a weekly basis."
"So, I do not believe Nintendo should be content with the current situation in the Japanese market and believe that we have other methods to confront this."
He noted that the release of Animal Crossing: City Folk and Wii Music during the previous quarter failed to "revitalize the Wii market in Japan," despite healthy sales for both titles.
"While Wii had very strong momentum in the overseas markets, the Wii market in Japan (during the year-end sales season) showed a slow start, did not show sharp trajectory in sales, and ended up moving back to the sales level of non-sales-season level quickly," said Iwata.
Iwata blamed Japan's diminished home console sales partly on Japanese consumers having busier lifestyles and moving towards portable forms of entertainment. "In these times, we need to provide the Japanese market with entertainment that only a home console can realize," he said.
He noted that conversely, the Wii markets in the Americas and Europe expanded at such a rapid pace, the company needed to delay plans to enter emerging markets with large populations, such as South Korea, China, South-East Asian countries, India, and Russia.
"Around the start of last year, I was hopeful that the company could focus and allocate resources into such markets," he said. "However, we needed to allocate almost all the Wii hardware consoles we can manufacture to the [the Americas and Europe]. This is how we came to think that the timing of our deployment into the newly-emerging countries should be next fiscal year or thereafter."
The Nintendo head also conceded that current global economic troubles have affected these countries more than others, and that the company needs to have "a more long-term perspective in estimating how quickly we may be able to enter into these new markets."
He added that in South Korea, where it has sold over 2 million Nintendo DS systems, the Japanese yen has appreciated against the Korean won to a point where it is "more challenging" for Nintendo to maintain a profitable business in the region.
"However, countries with large populations from a mid-term prospective have significant market potential for DS, Wii and any future products," said Iwata. "So, we would like to tackle them as our mid-term issue."