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TGS: Iwata On Expanding The Entire Games Market

TGS: Iwata On Expanding The Entire Games Market

September 16, 2005 | By Simon Carless, Tokyo

September 16, 2005 | By Simon Carless, Tokyo
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Although the Revolution controller is currently (and correctly) dominating press coverage of Nintendo president Satoru Iwata's Tokyo Game Show speech, almost equally interesting was his explanation of why Nintendo has decided to take such a bold step, and how it relates to the launch of the DS and recent Nintendo software. Iwata clearly outlined Nintendo's inner thought process in the early parts of his TGS presentation, held on Friday, September 16th at the Makuhari Messe in Tokyo, Japan, giving a unique insight into one of the more notoriously secretive firms in the video game business.

Iwata started by noting that, 2 years ago, he was given the opportunity to give a keynote at TGS, and the theme was on the 20-year anniversary of the Famicom (NES). In talking about the history of the game industry then, Iwata noted that there are few instances of industries where market expansion can occur over 30 years using same framework. When combined with the relative slump in Japanese video game sales over the previous few years, Iwata, on Nintendo's behalf, has a simple message: "For the future of video game business, we have to expand the market. We need to get back to the basics."

Thus, Iwata claims, there's a simple problem: "If we can't expand the market, all we can do is wait for the market to die", and Nintendo formulated a strategy to help the company deal with this perceived problem. This strategy consists of three main strands - to re-engage people who have stopped playing, to actually attract new gamers, and to create new products that appeal to everyone, even though many people feel that games are too difficult, but novice-only products won't satisfy the core gaming fanbase.

The Nintendo president then listed the Famicom Mini (Classic NES in the West) software line for Game Boy Advance as fulfilling the first of these strands. The range of seminal Nintendo Entertainment System software re-releases, including Super Mario Bros and Castlevania, among many others, were instituted to celebrate the 20th anniversary of the Famicom in Japan. Iwata commented: "We hoped to encourage those who had quit playing to once again play their favorite games." Eventually, 30 software titles were released in Japan, and they sold a total of 4 million copies, a distinct success. According to Iwata, a wide variety of male and female customers visited retail outlets, and retailers suggested that many dormant customers returning to stores. [However, although Iwata left this unsaid, it's unclear that the Classic NES software relaunch had the same effect in the West, where the NES was perhaps not quite so ubiquitously mainstream as it was in Japan at the time.]

Finally for this section, Iwata pointed out that the 20th anniversary of Super Mario Bros was this week, prompting another relaunch of the Famicom Mini version of the software, alongside the new Game Boy Micro, which has a Famicom-faceplate version that is already sold out in many Tokyo stores. He then pointed out Shigeru Miyamoto, who was sitting in the audience, and urged everyone to applaud the Mario series' birthday - which they did with some gusto!

Mr. Iwata then went on to discuss how exactly we can attract new gamers, pointing out that much game software is highly sophisticated, and the hurdle is just too high for many first-time players, bit if we were to only offer simple titles, we would not satisfy veteran gamers. He then pointed to the design of the Nintendo DS as an important step towards changing the interface of how we play games, with the dual screen, touch screen, microphone input, and wireless connectivity - in other words, more accessible for the novice player who can't get used to complex button-pressing controls.

But it was the software in particular that Nintendo indicated they were concentrating on, and Iwata explained the success of the Touch! Generations DS software series in Japan, commenting that "each title offers a brand new style of play." The signature Touch! Generations title is Nintendogs, which has already sold 1 million copies in Japan, 250,000 in its first week in North America, and has a European launch scheduled for next month. But less known outside Japan right now is the DS Brain Training title, already confirmed as coming to the West, and created with the help of a university professor. This puzzle-based 'brain exercise' program has, according to Iwata, created a buzz amongst non-gamers and even senior citizens in Japan, and has been a driving force for new customers, alongside another similar title, Gentle Brain Exercises.

Iwata then showed a number of graphs from Japanese DS software registration data at the official Club Nintendo site, showing that Nintendogs had as high as 40 percent female registrants, and Gentle Brain Exercise also had a very high percentage, with Brain Training have a significant percentage of people above the age of 45 purchasing it. In addition, some very high hardware tie-in percentages were being seen, with people specifically buying a DS just to play games such as Brain Training - in recent weeks, as many as 6 out of 10 people purchased DS hardware at same time as Brain Training, and Iwata indicated it may even be higher than this figure in reality.

The Nintendo president also took some time to analyze the weekly sales rate after a games' launch, pointing out that many games have a short life span in sales, and often don't exceed 20% of the first week sales in the second week in Japan. Three months after its release, most sales have stopped for the average Japanese video game. However, according to Media Create's sales statistics, Brain Trainer had its biggest sales in its 14th week, with Nintendogs also showing surprisingly little slowdown after a big initial sales surge. All these factors combined, Iwata believes, are showing an expansion of the overall market for games, and DS sellthrough has now topped 3 million in Japan at the end of August, less than 9 months from launch.

From there, Iwata went on to discuss the much-heralded Revolution controller as another way to expand the overall market for games, as previously covered on Gamasutra. But an important point that he made before doing so is that of increased costs for making games. He is concerned that smaller development studios feel that they can't create competitive games. He also suggests that, in using new interfaces either on the DS or even the Revolution, those with a limited budget can make innovative software with just their great ideas. For example, the development team for Brain Training was less than 10 people, working in a short space of time, and "Nintendo is willing to help bring these ideas to life."

Although Nintendo's series of announcements are focused on the uniqueness of its hardware, making multi-SKU development arguably trickier for third parties, the innovation of its thinking in trying to expand the market for games cannot be denied. Its wish to see everyone benefit through its forward movement, even the independent studio, is also laudable. As Iwata commented at the end of his speech: "Those who believe in the past success formula can just go ahead. However, Nintendo does not believe in that direction."

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