Nintendo’s CEO Satoru Iwata and Games Developer Superstar Shigeru Miyamoto

Nintendo’s CEO Satoru Iwata and games developer superstar Shigeru Miyamoto presented in Tokyo on April 9, 2009 about Nintendo’s situation and future plans.

Iwata emphasized plans to move from one DS per household to one DS per person, by personalizing the DS, and by seeing that DS enriches everyday life. As examples he mentioned applications in hospitals and schools (which provoked a question from the audience what he plans to do about children who’s parents cannot afford to purchase a DS for their children), and in museums, where explanations on exhibits are given via the DS.

Nintendo plans a “My DS” experience, by including two cameras in the new DSi, and with online downloads of small non-cartridge games and other applications from a new online store to enrich owners’ daily lives.

Asked about Nintendo’s plans for the recession, Iwata answered, that key is to keep Nintendo’s products at the top of consumers’ wish lists.

Read more about this presentation and analysis of Nintendo and Japan’s games sector in our J-GAMES report.

Asked how Iwata plans to respond to the success of mobile phones, iMode and Appli games, and whether Nintendo plans to create own mobile phones or add phone functions to DS, Iwata explained his thinking under which conditions he would consider entering the mobile phone space.

Nintendo CEO Satoru Iwata and Chief Producer Shigeru Miyamoto
Nintendo CEO Satoru Iwata and Chief Producer Shigeru Miyamoto
Nintendo CEO Satoru Iwata speaks with passion
Nintendo CEO Satoru Iwata speaks with passion

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games Japan's electronics multinationals

Games: Nintendo – the winner takes it all

Game industries in total are MUCH bigger than music industries… in Japan game industries are about 10 times bigger business than music industries… Last weekend we had the Tokyo Game Show – read some key points below! From 2006 Japan’s game sector changed dramatically- Nintendo created several paradigm shifts, and “took off”. Read more about Nintendo driven paradigm shifts below. US games giant Electronic Arts (EA) would rank 5th in sales, was EA Japanese. Japan’s games industries are big!

Nintendo income takes off: Nintendo broke the PC-style race for faster machines, and broke out of the limited market of hard core gamers. From FY 2007 Nintendo’s income takes off:

Operating income for Japan's electronics companies
Operating income for Japan’s electronics companies

Nintendo’s DS: braintraining instead of shooting.

SONY’s PSP goes for power, and Nintendo’s DS changed the paradigm + went for lower price. By the way, we see a shift from TV video games to portable and mobile phone games in terms of numbers: for current 7th generation game platforms portables outsell TV video consoles 2:1. DS’s success encouraged Nintendo to develop the Wii.

sales of SONY-PSP vs Nintendo DS in Japan and globally

Avoid the dinosaurs:

global sales of Nintendo Wii, SONY Playstation PS3, and Microsoft Xbox-360

“Too many powerful consoles are like ferocious dinosaurs. They might fight and hasten their own exinction” (Nintendo’s Shigeru Miyamoto in an interview). Nintendo’s Wii has much less power, lower screen resolution, and is much cheaper to make and cheaper to buy than PS3 and Xbox360. Nintendo makes money on every Wii sold.

Sales of Nintendo-Wii vs SONY-PSP vs Microsoft XBOX
Sales of Nintendo-Wii vs SONY-PSP vs Microsoft XBOX

Report: “Nintendo and Japan’s games industries” (9th edition, 181 pages, release October 15, 2008, pdf-file for download):

Eurotechnology report on Nintendo and Japan's game industry
Eurotechnology report on Nintendo and Japan’s game industry

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XBOX Japan strategy – Microsoft still struggling

Microsoft XBOX introduced XBOX to Japan on February 22, 2002

XBOX Japan Strategy – CNBC interview

Microsoft introduced the original XBOX game console in the USA on November 15, 2001, in Japan on February 22, 2002, and in Europe on March 14, 2002.

During the period January-June 2005, three years after introduction of the XBOX to Japan’s market, SONY sold about 2.4 Million game terminals in Japan, Nintendo sold about 1.9 Million, and Microsoft about 9000 XBOXes, about 0.2% marketshare.

As of August 24, 2008, Nintendo has sold about 6.7 Million Wii, SONY has sold about 2.3 PS3, and Microsoft about 380,000 XBOX-360 in Japan, a 4% share in this segment.

A few days ago, Microsoft announced a price cut of 30% for XBOX-360 in Japan – the video below gives our comments on this price reduction on CNBC.

Here is a short summary of the CNBC-TV interview:

XBOX Japan Strategy Question: Do you think the price reduction is going to do the trick?

A: No. In other markets maybe, but not in Japan.

XBOX Japan Strategy Question: Do you think XBOX can be successful in Japan? What will it take before Microsoft will give up and say it just isn’t working

A: Of course Microsoft can be successful in Japan with XBOX. There is no law that XBOX cannot be successful in Japan. Microsoft generally is a company that never gives up. But they have to change their strategy for Japan.

XBOX Japan Strategy Question: So Microsoft isn’t doing the right things. What would the right things be?

A: Difficult to say of course, if it was easy Microsoft would already have done this. The situation is that Nintendo has completely changed the business paradigm of the game industry. Microsoft’s XBOX is still operating under the old paradigm.

XBOX Japan Strategy Question: How long do you think Nintendo’s sweetspot is going to last?

A: Nintendo have reinvented the game industry, and completely changed the business models. They also make a lot of their own software. All this puts Nintendo into a very good position.

What can we learn about strategy for Japan from Microsoft’s XBOX experience:

Global products, not adapted to Japan’s market, often do not succeed in Japan. Microsoft’s XBOX is a very good example. Microsoft has one of Japan’s most famous brands, so its not a problem of the brand.

Microsoft faces three problems in Japan:

  1. XBOX is not made for Japanese users in mind
  2. Nintendo changed the paradigm of the game industry, and XBOX is still on the old track
  3. Of three global game console companies (Nintendo, SONY, Nintendo) two are both much stronger than Microsoft in games, and both are on their hometurf in Japan. Microsoft would need to invest more and focus efforts much more on Japan to succeed in Japan with XBOX.

Japan game market disruption market report:

Japan game market report (398 pages, pdf-file):

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Assessing Japan’s Gaming Sector (CNBC TV interview)

More in our J-GAMES report:

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