Keeping Up Nintendo's Momentum

After overseeing several years of rapid growth at Nintendo Co., President Satoru Iwata faces new challenges: how to keep players of the company's videogames interested, and how to cultivate a new wave of customers.

Under the 48-year-old Mr. Iwata, Nintendo has already redefined videogames and widened their appeal beyond the typical young male player who favors fast, action-packed games. Its DS portable game device, launched in November 2004, has attracted young women and an older audience with a touch-sensitive screen players can write on and simpler games, such as the brain-training quiz game Brain Age and the virtual-pet game Nintendogs. The Wii videogame console, released two years later, allows users to wield a controller as they would a tennis racket or sword. Using body movements to play games has enthralled customers and turned the console, which sells for about $250, into a global phenomenon.


Associated Press
Nintendo characters Mario and Yoshi frame President Satoru Iwata at a recent presentation.
Both products have allowed Nintendo to emerge from the shadows of Sony Corp. and its PlayStation and Microsoft Corp. and its Xbox. Nintendo's stock price has more than doubled in the past two years, at one point propelling the company to the No. 2 spot -- behind Toyota Motor Corp. -- among Japanese companies based on market capitalization.

Now, Nintendo is adding more games and functions to the Wii. For instance, Wii Music lets players simulate playing music together in a band. Using a new accessory called Wii Speak, players can communicate with each other remotely during a game. And the Wii Motion Plus attachment makes the controller more responsive to a player's movements. It will be bundled with a new sports title called Wii Sports Resort, which offers games based on activities such as jet-skiing, Frisbee and fencing.

In an interview, Mr. Iwata talked about the challenge of maintaining Nintendo's momentum. Excerpts:

WSJ: You finally unveiled Wii Music, the game that Super Mario Brothers creator Shigeru Miyamoto demonstrated three years ago.

Mr. Iwata: Wii Music completes what Miyamoto wrote in his proposal when he came up with the idea for the Wii. He was saying that he needs to think up more ideas now.

WSJ: Since you first launched Wii, you've introduced several accessories, such as the steering wheel to play racing games and the gun-like Wii Zapper to shoot targets in a game. This month you unveiled the Wii Motion Plus and Wii Speak. Are there any more accessories in the pipeline?


Associated Press
Mike McCartney, lead producer of Electronic Arts video game Skate It, using a Wii Balance Board.
Mr. Iwata: Most of the ideas for accessories that we had initially come up with are out now. We might think up some more, and we might make them if we do, but we don't have any plans to release a whole lot more.

WSJ: Will Wii owners be forced to buy a Wii Motion Plus for each controller they own to play newer games?

Mr. Iwata: There will be games that will be enhanced by the Wii Motion Plus as well as games that can only be played with it. Users will need four if they have four controllers, but we're going to try to offer it for as little as possible. We haven't announced the price yet, but the cost of making the Wii Motion Plus is not that much, so I think we can make it very affordable.

WSJ: You once said you hoped that new game players who were drawn to the easy-to-play games would eventually start buying more traditional games like Mario. Is that happening?

Mr. Iwata: Of the people whose first videogame purchase was Brain Age, about 35% bought more games within 90 days. Of those, more than 10% have now bought 11 titles or more.

WSJ: You're now offering some nongame services for the DS -- especially its wireless feature -- such as getting airport-transfer information and ordering food while, say, you're at the baseball stadium. How is that going?

Mr. Iwata: I think we're doing significantly better than other devices that offer [similar] services. We're trying constantly to think of ways that the DS could be used more often in everyday life -- services we can offer that will make people want to take their DS with them everywhere. We need to convince all kinds of customers that they should own a DS.

WSJ: Aren't mobile phones a more suitable device for this kind of service? What strengths does the DS have that a mobile phone doesn't?

Mr. Iwata: Mobile-phone services have to be compatible with many different models and their formats, but we can customize services specifically for the DS so it's much easier to use.

WSJ: Do the features and services for use in everyday life mean you're moving beyond your original mission as an entertainment company?

Mr. Iwata: We're still an entertainment company first and foremost, but the definition of videogames has changed. If we keep our view of what a videogame constitutes as broad as possible, then naturally we're going to be doing things that people might say aren't games.

WSJ: Sony and Microsoft's video-downloading services on the PS3 and Xbox 360, respectively, are both aimed in part at winning customers beyond core game players. But Nintendo has already captured the audience it wants with simple, intuitive games. Have you thought of offering a video-downloading service, too?

Mr. Iwata: If we can do something different that plays up our strengths -- and broadens what a videogame constitutes -- then we might do it. If we have no ideas, we're not going to compete with the exact same services against companies like Sony, which has a movie studio, and Microsoft, which has a lot of money.

WSJ: Now that you've added all these new users to the market, what do you want to do with them in the future?

Mr. Iwata: Our sales may have grown beyond expectations, but there are still a lot of people who have never played videogames. I think there are still many new kinds of games that we can offer to pique the interest of people whom we haven't managed to attract yet. After we complete our mission in developed countries, then we'll have to start thinking about how to make our products appealing in developing countries. We'll have a whole new dimension of issues to tackle like pricing, quantity availability and regional adaptation. We're not going to meet our goals that easily.

WSJ: Some people are starting to speculate about your next-generation console.

Mr. Iwata: The hardware team started work on the next thing as soon as they were done with their previous project, but what they think up doesn't necessarily become a product. We only turn something into a product after it's been thoroughly vetted inside the company. We're not at a point where we can give specifics, but of course we're working on it.

http://online.wsj.com/article/SB1217...googlenews_wsj