Nintendo has finally released an official English translation for the Q&A of the 73rd Annual Stockholder's meeting held last June 27. They fielded 16 questions on a variety of topics, which we have summarized for you here:
1st, on a question regarding future game innovation, and if it hampers their business strategy:
Iwata first explains how each console generation has seen an improvement in graphics. Now that graphics have reached a photorealistic level, they've found that consumers derive less satisfaction with each advance, and so they continue to find new ways of entertaining consumers.
He then explains Nintendo's Direct and E3 strategy, and the need to satisfy core gaming fans vs broader range of consumers. Iwata also hints that they have more games than announced, which they are saving to get the most impact upon release.
Miyamoto then takes the floor to explain that Nintendo's struggles with competition are not exclusively their own. He states that development time has double on the Wii U, but will be more capable in the future thanks to the Nintendo Web Framework. Lastly, he defends the reuse of brand franchises like Mario and DK for their name recall.
2nd, regarding the appeal of alternate control schemes:
Iwata explains the line of thought behind innovating with new control schemes, such as the Wii Wheel, the DS, etc, to cater to newer consumers. With that in mind, they also aim for older gamers to enjoy these innovations.
3rd, regarding Virtual Boy games on the 3DS:
Iwata describes the Virtual Boy for investors unfamiliar with it and states that he will keep the suggestion in mind for the future.
4th, regarding making more games like those just released in Streetpass Mii Plaza:
Iwata elaborates on the Streetpass Mii Plaza games being possible only on 3DS' current framework, confirming that DLC as we know it today wasn't really possible on the original Wii. He is also happy the games became popular purely by word-of-mouth, and affirms they will be making more games like them in the future.
5th, seeking a clarification on the misquote from last year about Iwata resigning and what he really meant:
Iwata clarifies that he talked about making a commitment to meet operating profit of 100 billion yen for the present fiscal year. He elaborates on challenges with miscommunication and Nintendo's financial performance, and points out everyone took pay cuts and skipped bonuses in response to two years of operating losses. To sum, Iwata emphasizes his commitment to the goal, and he has never talked about resigning.
6th, about the Wii U losing momentum and lacking 3rd party support:
Iwata asserts 1st party titles should drive Wii U sales first, but then explains the scenario that he thinks will bring 3rd parties back, which is when 3rd party games released at the same time as on other consoles become hits on the Wii U.
7th, on the Tomita Technologies lawsuit:
Iwata explains the details on the Tomita Technologies lawsuit and their recent loss in court, which they plan to appeal. Accounting rules require them to report the suit as a loss, but litigation is actually still pending.
8th, on expanding to developing countries and adding more women and younger people to the board:
Iwata uses this question as a springboard to a discussion about the different world markets Nintendo is in, and explains before they can expand to developing countries, they need to improve their performance in the ones they are active in, like Europe. He points out board members are selected based on capability, acknowledging recent shift in leadership as well as having more women developers in games like Animal Crossing: New Leaf.
9th, on why the Wii Vitality Sensor was cancelled:
Iwata explains they found out the sensor works for 90 out of 100 people, and decided this didn't meet their standards, so they axed it.
10th, on Nintendo earning 600 billion yen in 2000 as they did today, and why they post a loss with this amount now when it was profitable before:
Iwata explains it as a simple matter of the changing value of the yen-dollar exchange through the years, but also acknowledges the company's increased headcount. Iwata also points out he considers their employees valuable so he never considered a restructuring.
11th, on the Nintendo Web Framework:
1st off, Iwata explains console development has become complicated as each hardware requires the use of different tools and programming skills. In contrast, web development uses a lot of common tools, such as Unity. Nintendo Web Framework was setup to appeal to the growing number of web developers using HTML5, Unity, etc.
12th, on Nintendo's network policy:
Iwata first brings up Miiverse, and explains that each of their games get network features that they feel best meet consumer demand. He promises to keep improving the service and communicating it better to consumers.
13th, on Nintendo expanding their business beyond current businesses (including gaming and hanafuda) and a special benefit plan for stockholders:
Iwata explains Nintendo has no plan to diverge from their core businesses. He then points out they cannot offer a special benefit plan because it provides no benefits to institutional shareholders.
14th, on misleading and biased news reports and articles about the company:
Iwata declined to name names, but points out they have no control over what people say about Nintendo over the internet, and reacting directly can exacerbate the issue. Their solution is to use their own communication channels, including Directs, social media, and press releases, to correct these statements and communicate directly with fans.
15th, on the stereoscopic 3D effect in the 3DS:
Iwata explains development of stereoscopic 3D and its quality is not dependent on whether Nintendo makes the game or not, but varies with each game. He explains opinions on the effect will continue to be subjective, and consumers should just try it for themselves.
16th, asking about other shareholder options and pending entry of NISA (Nippon Individual Savings Account), which will allow ordinary Japanese to start investing:
Iwata is interested in getting more investors and is considering options like a share split. However, these changes may affect Nintendo's status as a premium investment, so they are careful to move forward. Similarly, Nintendo is not buying back their shares because it won't be good enough to improve their stock performance without working on other aspects of their business
Finally, Iwata points out that Nintendo offers a high total returns ratio based on dividends alone, comparable to Japan's other premium companies.
