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Financial Results Briefing recap

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Financial Results Briefing recap

Post by Gameguy1996 on Thu Oct 29, 2015 12:44 am

Here's the recap in one topic.

Thank you for attending our Corporate Management Policy Briefing despite your busy schedules. I am Tatsumi Kimishima, president of Nintendo.
As Mr. Furukawa, General Manager of the Corporate Planning Department, has just explained in the financial figures, our operating income for the first half of the fiscal year moved back into the black for the first time in five fiscal years.
For the second half, we will continue to make steady progress on what we should do for an earnings recovery, balancing revenue with expenses.

Let me begin with Nintendo 3DS.

This graph shows the comparison between the Nintendo 3DS hardware sell-through numbers from last year and this year in the Japanese market.
Four and a half years from its launch, the sales of Nintendo 3DS hardware have slightly decreased compared to the prior year during which titles such as Super Smash Bros. for Nintendo 3DS and YOKAI WATCH2 GANSO/HONKE (Japanese titles) were released.

This graph shows the comparison between the Nintendo 3DS software sell-through numbers from last year and this year in the Japanese market.
So far, the momentum has not reached that of the last year, in which the Nintendo 3DS software market was greatly invigorated by the release of five double-million titles within the six months from summer until the end of the year. However, we have a promising situation with already released million hit titles such as YO-KAI WATCH Busters Akanekodan/Shiroinutai (Japanese titles) and Animal Crossing: Happy Home Designer, and more Nintendo titles and anticipated titles from other software publishers planned for release.  

We mentioned in the Financial Results Briefing at the end of the prior fiscal year that the key to bringing more momentum to Nintendo 3DS in the Japanese market was to appeal to a wider range of female generations.
Animal Crossing: Happy Home Designer, released in Japan on July 30, has already reached over one million units in sales and is showing a steady transition.
This title can be played with “card-shaped amiibo,” a new form of amiibo, which has also reached sales of more than one million packs in Japan after its release, and we believe this played a good role in conveying the fun of using amiibo to play a game.
In addition, approximately 70 percent of the consumers playing this game in Japan are female, and in terms of our goal for the Japanese market to increase the number of female consumers, as I just mentioned, we feel we have obtained a definite positive result.
In the upcoming year-end sales season, we will launch a special set of light and compact New Nintendo 3DS with cover plates of “Hello Kitty,” “Animal Crossing” and “Super Mario Bros. 30th Anniversary.” By mainly focusing on female consumers with these items, we would like to continue to give momentum to the Nintendo 3DS market.
Incidentally, Animal Crossing: Happy Home Designer was released on September 25 in the United States and on October 2 in Europe, and its sales are making steady growth overseas as well.

This graph shows the comparison between the Nintendo 3DS hardware sell-through numbers from last year and this year in the US and European markets.
In the overseas markets, which have been affected by the release of New Nintendo 3DS in February this year, the numbers are growing at a pace higher than that of last year.

This graph shows the comparison between the Nintendo 3DS Nintendo-published software sell-through numbers from last year and this year in the US and European markets. It shows sales transitions slightly lower than last year’s in both the US and Europe. With the release of Super Smash Bros. in October last year, the gap between the sell-through numbers from this year and last year seems to deepen starting in October, but we plan to invigorate Nintendo 3DS software sales with the release of titles like YO-KAI WATCH, which has been announced to be released for the holiday season in the US and Australia.  

This graph shows a comparison of the number of units sold in Japan, US and Europe, for Super Smash Bros. for Nintendo 3DS and Pokémon Omega Ruby/Alpha Sapphire, which were released last year. The number of units sold in the US and Europe exceed those of Japan for both titles.
As we have mentioned in the past, especially in the overseas markets, not only does hardware sell well together with new titles, but it also tends to sell well with major evergreen titles. Therefore, we are aiming to popularize the hardware by keeping the rich lineup of evergreen titles already released highly active.
In the US, we are planning a Nintendo 3DS holiday campaign for the year-end holiday sales season for the purpose of promoting popular evergreen titles. Also, in Europe, we are seeing a good start in the sell-through numbers due to continuous sales of titles such as Animal Crossing: New Leaf and Tomodachi Life and the release of a lineup of discounted software called “Nintendo Selects.” With these, we would like to further increase sales mainly intensifying our sales to younger consumers towards the end of the year when sales peak.  

This slide shows the Nintendo 3DS titles that have either been released in each region in October 2015 or have already been announced and are awaiting release.
As you can see, a number of titles are to be released soon, and more unannounced titles that are not on this slide are currently under development. In the Japanese market, the motivation of software developers to create Nintendo 3DS software has remained high, and we will continue to assist Japanese software developers in bringing hit titles to overseas markets.  

Today, I would like to talk about the sales situation in the first half of the fiscal year, and also about the prospects for the upcoming year-end sales season.

This graph shows the comparison between the Wii U software sell-through numbers from last year and this year in the Japanese market.
You can see that Splatoon released on May 28 and Super Mario Maker released on September 10 have boosted the sales pace, surpassing that of last year.  

In May, we globally released Splatoon for Wii U as a completely new IP. This is a 4-on-4 online combat game in which players skillfully switch between “squid” and “human” character forms while they compete to cover the largest part of the battle area in ink. We were able to receive high commendation from many consumers regarding the fun of playing this brand-new and unique game only Nintendo can offer.
In Japan, the combined sales figure of its package version and download version surpassed 905,000 units as of last week and we are certain it will reach a million within this year.  

In Splatoon, we are also making an effort from an operational perspective to create opportunities for consumers to continue playing the game even after some time has passed from its release, by distributing new content, such as additional maps and weapons, and periodically holding in-game exclusive events called “Splatfests.”
We believe this is an important activity to keep up the operating rate and momentum of the software, and enabling users to enjoy the software for a longer time.  

In addition, the Wii U title Super Mario Maker, which was released globally in September,  

is a game in which you use the Wii U GamePad to freely create a 2D Mario course that you can upload and share worldwide via the Internet; in other words, it’s a “create and play” Mario software title.

Since its release, this title has been showing steady sales in each market, and has reached one million sell-through units within the first three weeks of its release.
The characteristic of this title is that, with time, more users create and submit courses, the fun increases and the software becomes more and more exciting. We will continue our activities to convey the fun to consumers in order to bring the sales peak to the year-end sales season.
As of last week, there were more than 3.3 million different user-created courses available, and they had been played more than 150 million times.

This graph shows the comparison between the Wii U hardware sell-through numbers from last year and this year in the Japanese market.
Regarding Splatoon, there were many consumers who purchased the software with the Wii U hardware.
Nintendo has seen in its history several situations where the release of one software title becomes a dramatic positive turning point for the hardware, and we believe that Splatoon has the kind of potential that can make many people willing to purchase the hardware if it is sold with this software.
Together with the release of Super Mario Maker on September 10, the periodic release of strong titles gave momentum to the sale of hardware, resulting in a higher sales pace compared with last year at this moment.
We will launch a new set of Wii U hardware with Splatoon preinstalled at the end of the year. By making this set appeal to a wide range of consumers, we will work to keep consumers’ attention and increase sales over a long period of time.  

This graph shows the comparison between the Wii U Nintendo-published software sell-through numbers from last year and this year in the US and European markets.
Due to the continuous sales of Mario Kart 8 and Super Smash Bros. for Wii U, both released last year, and the release of the two strong titles Splatoon and Super Mario Maker released almost at the same time as in Japan, the pace of sales is exceeding that of last year’s in the US and European markets as well.

This graph shows the comparison between the Wii U hardware sell-through numbers from last year and this year in the US and European markets.
Compared to the Japanese market, the hardware has not been moving as much by these strong titles. However, we still feel that Splatoon and Super Mario Maker are pushing the sales of the hardware in the overseas markets as well. We believe that our continued efforts to appeal to younger generations will pay off and show their effects in the form of hardware sales in the holiday sales seasons, such as Thanksgiving and Christmas, so we are expecting the growth in sales to come.

Next is amiibo. amiibo was launched last year simultaneously with the Wii U version of Smash Bros. as a new product category. As of the end of the first half of this fiscal year, amiibo has shipped a total of approximately 21.10 million units globally since its launch.

As of the end of the previous fiscal year, approximately 10.50 million units of amiibo were shipped. In comparison with the end of the previous fiscal year, shipments almost doubled with incremental sales of approximately 10.60 million units in the first half of this fiscal year.
The shipments for this second quarter (approx. 6.40 million units) reached an all-time high for a single quarter. The Smash Bros. series amiibo and 30th anniversary Mario amiibo performed especially well in the US.
Sales managed to grow significantly despite it not being the year-end sales season, and the trend for this product being steadliy purchased regardless of seasonality is continuing.

In addition to the figure-type amiibo, we released Yarn Yoshi amiibo and card-type amiibo. Yarn Yoshi was released in Japan, Europe and Australia during this second quarter period and shipped approximately 400,000 units. It was also launched in the US in October and is enjoying a good start.
In addition, card-type amiibo, which was launched during this second quarter period, shipped approx. 8.60 million individual cards. As for the Japanese market, the first series of Animal Crossing amiibo cards, which were launched on July 30, surpassed the company’s expectations and production fell behind. Therefore, we delayed the launch of the second series of Animal Crossing amiibo cards in order to prioritize additional production of the first series. The second series will be launched today in Japan. I would like to apologize to our consumers and distributors who have been waiting for them.

This is a graph that shows the latest ratio of shipments by region for figure-type amiibo. The blue colored area represents the Americas. In the US, the so-called “Toys to Life” category, in which games work together with figures, are well recognized and people are familiar with this way of having fun. This is why during the previous fiscal year the percentage of shipments for the Americas was 66 percent, which represented a significant portion of total amiibo shipments. The Americas market still holds more than half of the total sales but you can tell from the graph that regions other than the US, where “Toys to Life” products had a late release, are gradually expanding. For your information, the majority of sales for “Other Regions” are from Australia. In addition to Australia, we started to ship to Asia from this financial period.

This slide shows individual amiibo characters sorted by cumulative unit sales from the end of last year’s launch to the end of this September for the Japanese, US and European markets.
Depending on the region, there are characters that are out of stock and some regions have different release dates for the same character, so this does not simply represent the demand or popularity. With that being said, you can see that Mario and Splatoon have a strong presence in Japan, whereas in the US, the Zelda series is strong, and character sales trends slightly differ between regions.

amiibo that were launched during this period are highlighted here.
You can see that newly released amiibo, such as Yarn Yoshi and Animal Crossing amiibo cards, are selling well.
In Japan, newly released amiibo have good momentum as amiibo compatible software and product recognition has increased. In the US, amiibo that were released in the past still continue to sell and one characteristic is that the ranking does not shift so much.

We will be introducing new amiibo to the lineup in the future.
Though we are preparing many, not all amiibo that will be released until March 2016 are shown here. To introduce a few, the first series of Animal Crossing amiibo figures will be launched in Japan, the US and Europe from the middle to the end of November. The second series will be launched in Japan on December 17.
In addition, Mega Yarn Yoshi will be launched in the US and Europe in November and in Japan on December 10.  

Next is our digital sales situation.  

This graph shows download sales from the latest three accounting periods up to the second quarter of this accounting period.
In this fiscal year, second quarter sales were less than the first-quarter sales, but the first half totaled 21.0 billion yen, which is double the figure of the previous first half and is the all-time high for first-half download sales historically.
The increase chiefly arises from the sales of add-on content.

This shows the top titles for download sales, excluding download versions of packaged software.
In particular, the add-on content for Smash Bros. and Mario Kart 8 made large contributions.

This is a ratio comparison of download sales by region up to the second quarter of the previous fiscal year and this fiscal year. The Americas, the blue part of the graph, accounts for just under 50 percent followed by Japan and Europe.

And now, I would like to explain how Nintendo is dealing with its new businesses.
As you know, Nintendo’s basic strategy has consistently been “expansion of the gaming population.”

A variety of popular characters, including Mario and Link, appear in Nintendo’s video games and these characters are the source of Nintendo’s IP value.

By increasing the number of people who have access to this Nintendo IP or video game characters, music and world view, and by increasing the value of Nintendo IP, we aim to further expand the gaming population.

More specifically, we will provide people with new applications on their smart devices by utilizing our Nintendo IP. We are also planning to offer new attractions at theme parks by using Nintendo IP. Further, by using Nintendo IP in a variety of other ways, such as licensing and commercializing this IP for visual content and merchandizing products, we are planning to maximize the value of Nintendo IP, which has traditionally been used mainly for our dedicated video game systems.
Needless to say, there is no change to the fact that dedicated game systems remain at the core of Nintendo experiences.

We are planning to introduce a new account system that connects all of these Nintendo experiences beyond platforms and operate a new membership service globally.

It is generally said for any account system that more than half of people registering accounts quit halfway through the process. Every one of you must share the same experience of not being able to recall your account name or password when trying to log in.
Accordingly, we have focused on making the new account easy to create or easy to sign up as well as easy to use, namely, it is harder for members to forget about it.

Specifically, for our new account, you can log in with your Facebook, Google or Twitter account. Alternatively, you can log in with a combination of your email address and your password. Of course, you can continue using your Nintendo Network ID as well.

The name of this new account system is “Nintendo Account.”
With Nintendo Account as the basis, we will provide new membership services.
Today, let me introduce you to a part of the service.

Also, in accordance with each member’s profile, purchase records and play records, we will send notices and gifts.
For example, an Animal Crossing character called Isabel may send some information or a present to those who are playing with that game, Mario Kart players may receive a notice about add-on content and we may also send a message that enables the recipient to purchase some software at an attractive price point on his or her birthday.

We will start a new point program as well, which not only involves Nintendo’s dedicated game systems but also smart devices.
With the Club Nintendo membership service that was ended on September 30, 2015, you earned points when you purchased software. With this new point program, you can earn points by playing games as well.
Whether you have played the software for dedicated game systems or our applications for smart devices, you can earn points that can then be used on our dedicated game systems or on smart devices.
Naturally, you can also earn points by purchasing software.
With the new points, you can obtain digital add-on content, which will make the game you are playing even more fun, original merchandise or a coupon, which can be used as a discount for new software.

In terms of creating connections among the members, members can make friends with those who enjoy playing games together by establishing “Friend” relationships.
As we place importance on the security of our consumers, a Friend relationship can be established only between two people who know each other and have consented to the relationship. This Friend relationship can be used for software for dedicated game systems and for our smart device applications.

If I can discuss our plans for the future, the service will eventually allow game save data, such as character data, to be stored in our cloud system so that you can use them both for the software for dedicated game systems and for our smart device applications.

This is also a plan for the future, but we are going to provide our membership service benefits in other real-life facilities such as theme parks, movie theaters and retail outlets.

The name of our new membership service is “My Nintendo.”
My Nintendo will work as a bridge between dedicated game systems and smart devices.

Now, I would like to introduce you to a free-to-start type communication application for smart devices, namely, our smart device application, which can be started for free and will push forward the My Nintendo membership service.

It’s Miitomo.

Please see these slides.

The Mii asks you a variety of questions and communicates your answers with your Friends’ Mii.

The people you will be able to communicate with are limited to your friends whom you have registered as Friends. We are designing this communication application to enable Friends to share information comfortably and securely.

In this way, instead of the users proactively sending their own messages, Miitomo has a unique characteristic that can be called “friendly communication starters” as your Mii will automatically dispatch the answers you gave to certain questions to your friends.
These “friendly communication starters” have an advantage that even the people who are less willing to send messages can easily participate. Another unique characteristic of Miitomo is that you may be able to find out unknown aspects about your friends or unexpected commonalities you share with your friend because Miitomo may pick up the topics that you usually do not discuss but would be willing to answer if asked.
What we would like to realize is, through such communication, you will be able to deepen friendly relationships and have more people with whom you can play games.
Both My Nintendo and Miitomo will be available in March 2016.
For reference, more than 200 million Mii characters have been created on our platforms, which means that many people around the world understand the appeal of Mii.

Finally, please let me tell you again about the objective and policy of our smart device business.

We have three main objectives for our smart device business:
By using smart devices, Nintendo aims to maximize the population that has access to Nintendo IP.
Needless to say, our premise is to make profits from the smart device business itself.
We are aiming to create a synergetic effect on Nintendo’s game dedicated device business.
By achieving these three objectives, we will try to maximize the Nintendo businesses overall.

In principle, we have a policy on our smart device business that we will not exclude any of our IP as a candidate to be deployed and that any and all IP could potentially be used.
There is no change in our already-announced schedule that we will release approximately five titles by the end of March 2017.
Although we announced during the last Financial Briefing that we would release the first application by the end of this year, we have rescheduled it to be released in March 2016 with our aim to further improve the application and to optimize the overall smart device business.
As for the content of the smart device applications, we will offer Nintendo-like applications that take advantage of smart device platforms.
In principle, we will release each application globally, but the specific countries in which we will release each one will be determined in terms of each IP to be deployed.

In this way, Nintendo will be aiming at further “gaming population expansion” through utilization of our Nintendo IP, Nintendo Account, which connects all of the Nintendo experiences beyond platforms, My Nintendo, our new membership service, and applications for smart devices.

That is all for my presentation today.

Even though the mobile game kind of sucks. At least the rewards system seems better then Club Nintendo at this time.


Thanks Zero Smile


    Current date/time is Thu Jul 19, 2018 6:50 pm