Q&A with Nintendo CEO

[Lost Soal]

Thursday, March 23, 2006
GDC: An Interview With Satoru Iwata, CEO of Nintendo, Before His Keynote Speech

Dean Takahashi, 02:00 AM in Dean Takahashi, Gaming

Gdc06_001 I was able to chat with Satoru Iwata, CEO of Nintendo, at the Fairmont Hotel late Tuesday. He listened to my questions in English, then spoke Japanese, while Bill Trinen translated it into English. I don’t speak Japanese and will truly never know if Bill was making things up as we went along. But I suspect Iwata would have reined him in if he got too creative with the translation. Naturally, my first question was about the Nintendo Revolution game console that is arriving, umm, sometime this year. He is giving a keynote speech on Thursday morning, but as of Tuesday he wasn’t done yet. At the end, I showed him my book cover and he said he would read it.

Q: You’re going to save your information on the Revolution until E3?

A: Your prediction is correct.

Q: What will you talk about there?

A: Our objective for E3 is to have a lot of product to experience things such as the controlle. At the Tokyo Game Show last year, we showed video of the controller. A lot of people were surprised, pleasantly I hope. With E3 we want to take the experience of the video and show people what it’s like to hold it in their own hands. That is where were will do more talking.

Q: How much information will you share at E3 about the price and launch dates?

A: We’re still in the process of deciding how we’ll release the information. The goal is to have the product there to experience. The Revolution is coming out this year.

Q: What did you think about Sony’s delay of the PlayStation 3 until November?

A: I don’t have much of a comment. One thing we heard was that people thought that spring 2006 was impossible. We don’t receive development kits from Sony or launch materials and so we didn’t know for sure.

Q: Because they are launching late, will you have more options for your own decisions on when to launch Revolution?

A: If we were doing the exact same thing, it would be much more important in terms of who was launching first. Because we have taken a different approach, their delay does not affect us. We are launching this year and so it doesn’t have an impact on our plans. Two years ago, we started thinking about taking a step back from the performance race of the consoles. A lot of people criticized us. They said we were making excuses, that we were falling behind. As people have seen with the results of the (Nintendo handheld) DS, they see that if we don’t find new ways to appeal to people who don’t play games, then the industry as a whole faces tough times. The Nintendo Revolution is going to launch and benefit from those new gamers that the DS created.

Over the last year, we saw disruptive innovation that hit the gaming industry. This time last year, we finalized the first version of Brain Age. People could see it was very fun. We felt we created something that inspired people to start playing games who had never played before. Over the last week or two, it hit its 2 millionth sale. We released a sequel to that game and it sold 1 million copies in a month.

Q: Nintendo stands for first-party innovation. But what about innovation for third parties (those independent companies who make games for Nintendo’s platforms)? Larry Probst, the CEO of Electronic Arts, said that he believes Sony and Microsoft are fighting for the largest market share. But he said he didn’t think Nintendo cared about market share and it is comfortable with its niche. As a result, EA will invest heavily in Sony and Microsoft platforms, but it will be more selective about investing in games for the Revolution.

A: Anytime you introduce a new game machine, there are new ways of providing content. Someone needs to take the lead to show the developers what to do. When 3-D graphics hit, someone had to show how you could do 3-D in a console game. Super Mario 64 did that. It became the starting line for 3-D. We need to continue to do that in a number of different ways. We need to stimulate the development community in ways the other consoles don’t. I think the idea that Nintendo doesn’t care about market share is a misunderstanding. Market share is a way to sell your innovative content. It’s a means. It is not an end. If we create innovative and unique software, we use the market share to deliver it to the widest audiences. That unique and innovative software drives hardware sales. With the GameCube model, we weren’t able to execute on that. This time around, with Revolution, I don’t think that will happen.

It was about three years ago that we were thinking about the DS and planning Revolution. The Japanese game market was continuing to decline. We were sensitive. We saw if we have 100 percent market share, it doesn’t do any good if the market keeps declining. So we are looking at ways of expanding the market.

Q: Microsoft had a shortage of consoles. Is there a lesson in that as you launch the Revolution?

A: In general, the platform business is a business of momentum. Idea is maintain and build momentum. Microsoft had problems with strategy. There were markets where they had consoles left on store shelves. I think I understand where their problems were. I don’t want to give an answer because I don’t want to give them any help.

Q: It seems Microsoft is thinking about a handheld game player?

A: I read the report on that. Unfortunately, there isn’t much information and so there isn’t much we can say about that. It doesn’t have an effect on us this year. We see the DS as a platform of possibilities. We are excited about the DS and its future.

Q: Will you invest in online gaming with the Revolution?

A: Taking advantage of the Internet will continue. Especially with WiFi. Wireless chat capability on the DS has made it possible for many people to chat online. You don’t have to worry about wires. With the earliest online gaming, there were a lot of headaches associated with it. Even with Microsoft, only one in ten gamers plays online. Our concept is to get 80 percent to 90 percent of the players online. That was the reason we build Nintendo WiFi networks. You can expect this to continue with the Revolution.

Q: What is your message to game developers?

A: Mostly I will talk about disruptive innovation. To have an impact, we have to look at disruptive innovation. Sustainable innovation we have made already. One important message is that the Nintendo Revolution is a system that really gives people the opportunity to take on a disruptive innovation. The industry has problems with rising game budgets, huge teams, the need to get movie licenses just to compete. The Revolution will allow small game developers to duke it out in a battle of ideas. Long ago there was a little game called “Tetris,” designed by a Russian scientist, which managed to take the world by storm. I’d be worried if he proposed to do it now, would he raise the money? What would happen now if a person took such a game to a publisher? They would say bump up the graphics, add more modes, add computer-generated movies for the cut scenes, maybe you need a license to go with that. You would have all these elements to enhance a game. They cost a lot of money but don’t add a lot to the game.

If I were to compare this to the book industry, huge thick volumes of encyclopedias would be on the shelves of bookstores and nothing else. There would be no paperbacks, no trashy romance novels. When an industry gets there, then it can no longer sustain itself. I’ll talk to developers about how to come up with a system to create paperbacks for consumers.

Q: What about the big games that cost $20 million to make?

A: I’m not saying that I want to remove all the bi thick encyclopedias. People always want a full course meal. People want Zelda and Mario, these elaborate games. But we want the dynamic range of titles. We don’t want to be the bookstore that sells only encyclopedias. We look at this as more of an abundant library of different games for the consumer. We are at a point where the others are creating an encyclopedia model. The fact is each genre can only have one or two such games that can make money. We are looking at selling more than just encyclopedias.

Q: I’ve heard concern that if you do a $20 million game, you can more easily use the same assets for the Sony, Microsoft Xbox 360, and PC platforms. But with the Revolution and its unique controller, you would have to do a $20 million game for that console alone. Is that a disadvantage?

A: I think in terms of the controller, it is a misunderstanding. We have ported existing games over to the Revolution. We will have the ability to take games over, and to bring assets over to Revolution from other systems. The same problem exists now. The PlayStation 2 is the lowest in terms of processing power. Most developers develop for the PS 2 baseline. It’s not causing problems there.

Q: Why didn’t you choose to support high-definition TV with Revolution?

A: If you look at HD in the long term, you’ll see the number of TVs will shift. In the short-term, the percentage is low. Compare with what it takes to create a game with four times to six times the memory, similar factors of higher processing power. Developers are required to make those assets. For us it was more important to create this interesting new interface with the controller. In the future Nintendo will release a console that does take advantage of HD. At this point, we’ll have other functionality in the Revolution. There are other issues with HD. Now, you have a wide variety of resolutions. As we see the formats evolve, we will get a stable technology. NTSC is a stable format. It’s a matter of taking advantage of HD technology once it becomes more standard. Our focus is always next on what we can do to surprise the consumer. HD is not the best weapon. Only a small number are there.

I showed him the cover for my upcoming e-book. I said, “It’s not an encyclopedia.” He said he would read it. An e-book, he noted, is a disruptive innovation.

Source

[Praxis]

Compare with what it takes to create a game with four times to six times the memory, similar factors of higher processing power.

An interesting point. Since the Revolution won't need high definition textures, does that not mean that the textures will take less space on the disk, meaning both more free space (Microsoft and Nintendo both use DVD's, but Nintendo won't be constantly strapped for space and forced to use compression to squeeze everything on) and faster loading times (less data to copy into the RAM)?

The load times on the 360 seem very long to me, coming from the GameCube and Metroid Prime and Wind Waker that have NO load times.