While a number of Nintendo gamers and observers will have reacted to Nintendo's Quality of Life platform announcement earlier this year with curiosity and wondered what it could mean, there was a substantial group that expressed concern. The reasoning was simple — if Nintendo was diverting resources to a new platform focused on health (initially) and related experiences, would that detract from game development for 3DS and, more vitally considering its need to boost sales, Wii U?
They're reasonable concerns, of course, and raise the issue of Nintendo's long term plans and whether, in generations to come, the company will still be focusing much of its effort on the video game market. That very issue was raised by a shareholder at Nintendo's recent AGM, with the questioner asking Shigeru Miyamoto about the big N's "dreams for the future". The crux of the matter was whether Nintendo could remain in the games industry with major changes potentially on the way, or whether the company would shift it priorities into other areas such as the health device market.
Thank you so much for expecting a lot from the future of the game business. My comment relates to the comment made by another shareholder today, and I believe that these kinds of questions on video games from shareholder are not irrelevant to our company management. This is because, for an entertainment company like Nintendo, the most essential question is not to improve our profitability but how to maintain a high level of sales and sustain the company over a timespan of, for example, 10 years. The entertainment business inherently has a lot of ups and downs. When I joined the company over 30 years ago, Nintendo had a great amount of debt loans. Now, it is sometimes said that Nintendo is too cash-rich, but this is essential for us to try new endeavors. I am sorry for the shareholder who just asked this question, but I cannot predict what is going to happen 10 years from now. It is true that I have a sense of fear in that “hand-me-down smartphones,” as pointed out by another shareholder, are becoming hardware systems on which to play games due to their prices being lower than that of our most inexpensive video game system in our history. However, I do not believe that will completely control the future of video games. Of course, it is important to gain profit in effective ways, but Nintendo always has to take seriously, for example, network security for children. Taking into consideration that more and more children have a good command of these kinds of media, which help these media to spread, the most important task for Nintendo is how to provide new styles of entertainment by using these technologies, and how to make these new kinds of entertainment yield significant sales and profits. It goes without saying that Nintendo has been trying to improve its profitability at the same time. For example, at E3 this year, we were able to obtain more page views on our website while considerably reducing our E3-related costs.
About the prospects of “ten years from now” (which were mentioned in the question), I believe it will work itself out because new forms of entertainment are always born. But, we always need to work with a clear consciousness that we have to act now to make that happen. This consciousness is mounting high among people at Nintendo now, so please wait for our next move. I believe the appeal of video games is not transient and human beings have an instinctual love of games. I would like to keep on producing new products that surprise people all over the world.
Genyo Takeda (Senior Managing Director and General Manager of Integrated Research & Development Division) also pitched in to emphasize Nintendo's status, primarily, as an "entertainment business".
Let me add some comments. Nintendo is in the entertainment business; our products are not daily necessities. Therefore, we have experienced many ups and downs so far, but we have also provided a lot of surprises to the world. The hardware-software integrated platform business, as we always mention, specifically means that we integrate software technology, hardware technology, ideas, art, music, graphics and even elements of psychology to produce our entertainment products. Thus, even though we stated that Nintendo is going to attempt to improve people’s health, we do not intend for consumers to just become healthy but aim to improve their health in enjoyable ways, which we believe, is another kind of entertainment. Please understand that we are not aiming to become a health device company (as you worry).
It remains a concern for Nintendo fans that simply want the company to focus on game systems and related software, yet the reality for any corporation is that profits are a priority. Let us know your thoughts on these answers from Miyamoto-san and Takeda-san in the comments below.