Nintendo
TG editor-in-chief
هاذي الرسالة وصلت لاصحاب الاسهم بشركة ننتندو من وكالة KBC للاخبار .. لا ماعندي اسهم بالشركة ولكن منتديات اشارك فيها فيها ناس عندهم وفيه معلومات كثير عن حفلة عشاء ايواتا بيوم معرض E3 .. وحديثهم عن سوني ومايكرو
Nintendo in safe hands, Sony still floundering
• The highlight of the E3 conference every year is the dinner hosted by Nintendo CEO
Satoru Iwata. Listening to him speak for just over two hours, we got the distinct
impression that the company and its shareholders are in very good hands. Six years
into the job at the top of Nintendo (7974), we believe he continues to set higher
goals, does not remain complacent about achievements to date and is willing to take
risks in order to (for want of a better phrase) put a smile on gamer faces worldwide.
• Saying that, we feel that Nintendo will be in for a testing time come H2 FY3/09. The
press event today unveiled the sequel to the console sports franchise ‘Wii Sports
Resort’, which should be a major success but perhaps not a runaway blockbuster.
‘Animal Crossing’, more of an acquired taste but nevertheless a heavy hitting title on
the DS should be a success on the Wii. However, we are rather more sceptical on
‘Wii Music’ (‘Twinkle twinkle little star’ is on the set list, folks). Despite it being
another pet project of creator mastermind Shigeru Miyamoto, compared to some
other music genre titles available, the proposition does seem rather wanting initially.
We will test these titles out tomorrow.
• We pitched two questions during dinner. One was about the slight about-turn with
the release of ‘mature dark’ content ‘Grand Theft Auto’ on the DS. Here Mr. Iwata
explained that Nintendo did not specifically ask Rockstar Games for it, but if the
software passes the rating system it would be nonsensical to discriminate against it.
Secondly, we asked about the worsening macro conditions – on the day that Mr.
Bernanke is highlighting the fact that the US economy is skewed to the downside,
Mr. Iwata believes that in the short term it will have no impact on Nintendo but that
longer-term it will. His specific example was the risk over hardware inventory levels,
as production cannot be halted quickly. His comments came as a bit of a surprise to
us, as to date the company line was to reinforce the view that the game industry was
recession-proof. Nintendo will need Mr. Iwata to navigate through what we feel to be
completely uncharted territory.
• Sony’s (6758) press conference kicked off with high expectations, as 2008 was
supposed to be the ‘year of the PlayStation 3’. However, despite its press event
being the longest one to date, in our view it yielded very little in terms of instilling
confidence in the flagship product it is pushing. The promising ‘Little Big Planet’ is
now set for release in October 2008, but with the lack of truly must-have exclusive
titles these days, will PlayStation 3 ever be able to recover?
There are images with text captions where KBC Securities gives their interpretation to it. I will post some of these captions now:
The Kodak Theatre in Hollywood played host to arguably the most anticipated press event of E3
2008. The pace set by Microsoft yesterday (where the consensus view was ‘they’re not messing
around this year’) led to a raft of rumours being piped around industry circles – a new DS and
major core software franchise announcements.
New Executive Vice President Sales and Marketing Cammie Dunway took to the stage, and
introduced a snowboarding game by Ubisoft ‘Shaun White Snowboarding’. Ms. Dunway was
formerly at Yahoo and Frito Lays.
CEO Satoru Iwata recapped his thoughts on the business direction Nintendo continues to take,
expanding the user base as the DS had done with the Wii. To comfort core gamers he did
confirm that the internal development teams for ‘Mario’ and ‘Zelda’ are currently hard at work.
However, no further details of what they might be working on were given.
The first in-house software release for November 2008 was ‘Animal Crossing’ for the Wii. This
has been telegraphed by the company for some time, and was a major success on the DS
particularly in Japan. The Wii title has a special feature which allows chat online, via a USB
microphone set-up called WiiSpeak – it can be used for Skype according to Mr. Iwata.
Although ‘Animal Crossing’ is a good title, in all fairness it is not in the same calibre as the key
‘Mario’ franchises the company has. Thus it was to some relief that Nintendo of America
President Reggie Fils-Aime came on and unveiled ‘Wii Sports Resort’ later on. However, before
this he did highlight the following.
• DS hardware sales in the US to June are up 12% YoY.
• DS software sales are also up 29% YoY.
Thus we should expect some strong June 2008 monthly sales data from NPD this Thursday.
Reggie also highlighted that the third-party software line-up for H2 FY3/09 is attractive with the
release of ‘Spore Creatures’ from EA, and ‘Grand Theft Auto: Chinatown Wars’ from Take-Two.
Wii Sports Resort is described as ‘literally a day at the beach’. Various mini-games are available,
from jet-skiing, dog frisbee and kendo matches on the sand. This title will utilise the Wii
MotionPlus attachement that was unveiled yesterday for more accurate and sensitive controls for
the remote controller.
We feel that despite Reggie talking about a ‘must-have’ title for Christmas, a sequel to ‘Wii
Sports’ with no online play was not exactly what most people had in mind. We feel ‘Dog disc’ is a
very close rendition of the pet training exercises on the DS ‘Nintendogs’.
Things began to take a turn not exactly for the worst but certainly into bemusement territory when
creative director Shigeru Miyamoto (sprightly still at 55 years of age) came onto the stage ‘playing’ a saxophone (just pushing buttons on the controller). Here is ‘Wii Music’, originally shown back in 2006.
The idea behind ‘Wii Music’ is that you actually have no control over the notes you play – you
essentially waggle the controllers in your hands to set the beat of the tune that is being aired.
That’s it. You can use up to 60 different instruments, and ‘Twinkle twinkle little star’ is on the setlist.
Our first impression (and yes we will be in a position to revise this tomorrow) is that this looks like
fun – for about 10 minutes.
KBC Securities then goes into commentary about E3 for Nintendo:
Commentary
In some ways our concerns for the company were realised at the press event as follows.
• There was no DS upgrade.
• The software line-up for H2 FY3/09 is wanting versus H2 FY3/08, and the hurdles set do
look very high YoY However, there are signs to point to recent trading being stronger than we expected (at least for
the US).
Arguably we feel that the pace of core franchise software releases set in the last six months was
clearly unsustainable, and with the current high momentum Nintendo can still see out a very
strong H2 FY3/09. However, we feel that with the macro environment worsening, things today
cannot be taken for granted as remaining the same come the festive season.
From an investment perspective, we feel that the shares remain attractive as a source of
protecting capital, as opposed to major upside opportunities.
Now for the fun Iwata Dinner part.
Nintendo – CEO Iwata dinner
Nintendo CEO Iwata hosted a dinner for 18 lucky ‘finance people’ tonight. It is a rare occasion for
us to be able to meet him, so questions were being peppered from all fronts.
However, despite being surrounded by a predominantly bullish crowd, Mr. Iwata kept his answers
succinct and to the point, never bragging and remaining polite, entertaining and informative about
the company and the industry.
Interesting snippets that we heard are as follows.
• Wii hardware constraints in the US and Europe are a major headache for the company,
despite efforts to re-route stock to most needy areas.
• The Wii Fit is proving to be a success way beyond expectations, especially in Europe.
However, as the balance board is so heavy it is still being sent by sea freight.
• Wii Sports Resort was developed from a mish-mash of little individual game ideas, and
consolidated into the final product in a very short space of time.
• The Wii MotionPlus has a multi-axis gyroscope inside from a company called InvenSense.
The addition was released now as production costs became affordable, although the idea
has been worked on for the last two years.
• Grand Theft Auto – Nintendo did not specifically ask for this title to be made for the DS.
Although it may come as a surprise that it will be on a Nintendo platform, the software will be
rated accordingly and it does not make sense to discriminate against it.
• Macro conditions – Mr. Iwata has said that in the short term he expects no impact.
However, he expects in the long term it will have a bearing on the strategy of the business.
One key risk identified is hardware inventory risk, as production plans cannot be stopped
immediately.
• Japan – Demand for the Wii is faltering, as the super-combo release schedule (Super Mario
Galaxy, Smash Bros, Wii Fit and Mario Kart) has not worked as well as in overseas markets.
Mr. Iwata believes Japanese gamers need something different compared to the West. He
would consider colour variables for the Wii hardware to rack up demand.
• Emerging markets – Russia is perhaps a place the company could have worked harder to
crack, but BRIC countries do not appear to be a major issue at present.
• Piracy – Mr. Iwata is riled by the availability of DS piracy hardware like the R4 on the
Amazon.co.jp marketplace.
• Creators who work on a dud project are not reprimanded nor is their performance review
affected. Everyone works to get a job done well.
• People expansion – There is a need for more hands at Nintendo. However, Mr. Iwata will not
hire expansively to risk the existing culture within the company.
• 48 years old – Mr. Iwata is recently receiving fewer negative comments about his age for
which he is grateful!
• Games – He has found ‘Cooking Navi’ useful at home, and is playing ‘Band Brothers’ music
titles as they finish very quickly.
• iPhone – Yes, he has the latest 3G handset and loves it!
• Why is there a kendo game for ‘Wii Sports Resort’ as it’s not really a beach game. In
essence, the title is a mish-mash of individual ideas packaged into the product.
• The WiiSpeak microphone can be used as a Skype handset.
• Square Enix (9684) – The ‘Final Fantasy XIII’ announcement on Xbox 360 was not a major
surprise, given when he heard CEO Wada was coming to E3.
• Microsoft releasing its avatar service – Mr. Iwata appeared a little miffed as it looks very
similar to the ‘Mii’ service on the Wii.
• End game – Nintendo would like to have 300 million users around the globe!
Now, the report goes to the Sony press event and then, following, the Capcom event.
Sony press event
In a word – disappointing. Unbelievable to think that even now they dedicate time to talk up the
PlayStation 2. The PlayStation 3 needs software now, and yet there is still no delivery of this
much needed content. The PlayStation Network downloading service for TV and film kicked off
today which is positive, but now nearly two years after its release the flagship product still feels
like a work in progress.
Capcom (9697) – Lost Planet film unveiled
• Capcom’s E3 press event focused solely on the forthcoming film adaptation of the game title
‘Lost Planet’.
• What is rather different this time is that Hollywood is taking a greater role and taking this
project (at face value at least) very seriously.
• The event showed the parties involved in the forthcoming production - the lead producer
being former Marvel CEO Avi Arad (producer of the wildly successful Spiderman films for
Sony Pictures), and scriptwriter David Hayter (of X-Men fame, and the voice of Konami's
MGS lead character Snake).
The film is still a long way off, with a release earmarked for 2011. We have as yet no details of the
financial commitments the company will make. However, with these heavyweights on board, the
initial story sounds promising.
Nintendo in safe hands, Sony still floundering
• The highlight of the E3 conference every year is the dinner hosted by Nintendo CEO
Satoru Iwata. Listening to him speak for just over two hours, we got the distinct
impression that the company and its shareholders are in very good hands. Six years
into the job at the top of Nintendo (7974), we believe he continues to set higher
goals, does not remain complacent about achievements to date and is willing to take
risks in order to (for want of a better phrase) put a smile on gamer faces worldwide.
• Saying that, we feel that Nintendo will be in for a testing time come H2 FY3/09. The
press event today unveiled the sequel to the console sports franchise ‘Wii Sports
Resort’, which should be a major success but perhaps not a runaway blockbuster.
‘Animal Crossing’, more of an acquired taste but nevertheless a heavy hitting title on
the DS should be a success on the Wii. However, we are rather more sceptical on
‘Wii Music’ (‘Twinkle twinkle little star’ is on the set list, folks). Despite it being
another pet project of creator mastermind Shigeru Miyamoto, compared to some
other music genre titles available, the proposition does seem rather wanting initially.
We will test these titles out tomorrow.
• We pitched two questions during dinner. One was about the slight about-turn with
the release of ‘mature dark’ content ‘Grand Theft Auto’ on the DS. Here Mr. Iwata
explained that Nintendo did not specifically ask Rockstar Games for it, but if the
software passes the rating system it would be nonsensical to discriminate against it.
Secondly, we asked about the worsening macro conditions – on the day that Mr.
Bernanke is highlighting the fact that the US economy is skewed to the downside,
Mr. Iwata believes that in the short term it will have no impact on Nintendo but that
longer-term it will. His specific example was the risk over hardware inventory levels,
as production cannot be halted quickly. His comments came as a bit of a surprise to
us, as to date the company line was to reinforce the view that the game industry was
recession-proof. Nintendo will need Mr. Iwata to navigate through what we feel to be
completely uncharted territory.
• Sony’s (6758) press conference kicked off with high expectations, as 2008 was
supposed to be the ‘year of the PlayStation 3’. However, despite its press event
being the longest one to date, in our view it yielded very little in terms of instilling
confidence in the flagship product it is pushing. The promising ‘Little Big Planet’ is
now set for release in October 2008, but with the lack of truly must-have exclusive
titles these days, will PlayStation 3 ever be able to recover?
There are images with text captions where KBC Securities gives their interpretation to it. I will post some of these captions now:
The Kodak Theatre in Hollywood played host to arguably the most anticipated press event of E3
2008. The pace set by Microsoft yesterday (where the consensus view was ‘they’re not messing
around this year’) led to a raft of rumours being piped around industry circles – a new DS and
major core software franchise announcements.
New Executive Vice President Sales and Marketing Cammie Dunway took to the stage, and
introduced a snowboarding game by Ubisoft ‘Shaun White Snowboarding’. Ms. Dunway was
formerly at Yahoo and Frito Lays.
CEO Satoru Iwata recapped his thoughts on the business direction Nintendo continues to take,
expanding the user base as the DS had done with the Wii. To comfort core gamers he did
confirm that the internal development teams for ‘Mario’ and ‘Zelda’ are currently hard at work.
However, no further details of what they might be working on were given.
The first in-house software release for November 2008 was ‘Animal Crossing’ for the Wii. This
has been telegraphed by the company for some time, and was a major success on the DS
particularly in Japan. The Wii title has a special feature which allows chat online, via a USB
microphone set-up called WiiSpeak – it can be used for Skype according to Mr. Iwata.
Although ‘Animal Crossing’ is a good title, in all fairness it is not in the same calibre as the key
‘Mario’ franchises the company has. Thus it was to some relief that Nintendo of America
President Reggie Fils-Aime came on and unveiled ‘Wii Sports Resort’ later on. However, before
this he did highlight the following.
• DS hardware sales in the US to June are up 12% YoY.
• DS software sales are also up 29% YoY.
Thus we should expect some strong June 2008 monthly sales data from NPD this Thursday.
Reggie also highlighted that the third-party software line-up for H2 FY3/09 is attractive with the
release of ‘Spore Creatures’ from EA, and ‘Grand Theft Auto: Chinatown Wars’ from Take-Two.
Wii Sports Resort is described as ‘literally a day at the beach’. Various mini-games are available,
from jet-skiing, dog frisbee and kendo matches on the sand. This title will utilise the Wii
MotionPlus attachement that was unveiled yesterday for more accurate and sensitive controls for
the remote controller.
We feel that despite Reggie talking about a ‘must-have’ title for Christmas, a sequel to ‘Wii
Sports’ with no online play was not exactly what most people had in mind. We feel ‘Dog disc’ is a
very close rendition of the pet training exercises on the DS ‘Nintendogs’.
Things began to take a turn not exactly for the worst but certainly into bemusement territory when
creative director Shigeru Miyamoto (sprightly still at 55 years of age) came onto the stage ‘playing’ a saxophone (just pushing buttons on the controller). Here is ‘Wii Music’, originally shown back in 2006.
The idea behind ‘Wii Music’ is that you actually have no control over the notes you play – you
essentially waggle the controllers in your hands to set the beat of the tune that is being aired.
That’s it. You can use up to 60 different instruments, and ‘Twinkle twinkle little star’ is on the setlist.
Our first impression (and yes we will be in a position to revise this tomorrow) is that this looks like
fun – for about 10 minutes.
KBC Securities then goes into commentary about E3 for Nintendo:
Commentary
In some ways our concerns for the company were realised at the press event as follows.
• There was no DS upgrade.
• The software line-up for H2 FY3/09 is wanting versus H2 FY3/08, and the hurdles set do
look very high YoY However, there are signs to point to recent trading being stronger than we expected (at least for
the US).
Arguably we feel that the pace of core franchise software releases set in the last six months was
clearly unsustainable, and with the current high momentum Nintendo can still see out a very
strong H2 FY3/09. However, we feel that with the macro environment worsening, things today
cannot be taken for granted as remaining the same come the festive season.
From an investment perspective, we feel that the shares remain attractive as a source of
protecting capital, as opposed to major upside opportunities.
Now for the fun Iwata Dinner part.
Nintendo – CEO Iwata dinner
Nintendo CEO Iwata hosted a dinner for 18 lucky ‘finance people’ tonight. It is a rare occasion for
us to be able to meet him, so questions were being peppered from all fronts.
However, despite being surrounded by a predominantly bullish crowd, Mr. Iwata kept his answers
succinct and to the point, never bragging and remaining polite, entertaining and informative about
the company and the industry.
Interesting snippets that we heard are as follows.
• Wii hardware constraints in the US and Europe are a major headache for the company,
despite efforts to re-route stock to most needy areas.
• The Wii Fit is proving to be a success way beyond expectations, especially in Europe.
However, as the balance board is so heavy it is still being sent by sea freight.
• Wii Sports Resort was developed from a mish-mash of little individual game ideas, and
consolidated into the final product in a very short space of time.
• The Wii MotionPlus has a multi-axis gyroscope inside from a company called InvenSense.
The addition was released now as production costs became affordable, although the idea
has been worked on for the last two years.
• Grand Theft Auto – Nintendo did not specifically ask for this title to be made for the DS.
Although it may come as a surprise that it will be on a Nintendo platform, the software will be
rated accordingly and it does not make sense to discriminate against it.
• Macro conditions – Mr. Iwata has said that in the short term he expects no impact.
However, he expects in the long term it will have a bearing on the strategy of the business.
One key risk identified is hardware inventory risk, as production plans cannot be stopped
immediately.
• Japan – Demand for the Wii is faltering, as the super-combo release schedule (Super Mario
Galaxy, Smash Bros, Wii Fit and Mario Kart) has not worked as well as in overseas markets.
Mr. Iwata believes Japanese gamers need something different compared to the West. He
would consider colour variables for the Wii hardware to rack up demand.
• Emerging markets – Russia is perhaps a place the company could have worked harder to
crack, but BRIC countries do not appear to be a major issue at present.
• Piracy – Mr. Iwata is riled by the availability of DS piracy hardware like the R4 on the
Amazon.co.jp marketplace.
• Creators who work on a dud project are not reprimanded nor is their performance review
affected. Everyone works to get a job done well.
• People expansion – There is a need for more hands at Nintendo. However, Mr. Iwata will not
hire expansively to risk the existing culture within the company.
• 48 years old – Mr. Iwata is recently receiving fewer negative comments about his age for
which he is grateful!
• Games – He has found ‘Cooking Navi’ useful at home, and is playing ‘Band Brothers’ music
titles as they finish very quickly.
• iPhone – Yes, he has the latest 3G handset and loves it!
• Why is there a kendo game for ‘Wii Sports Resort’ as it’s not really a beach game. In
essence, the title is a mish-mash of individual ideas packaged into the product.
• The WiiSpeak microphone can be used as a Skype handset.
• Square Enix (9684) – The ‘Final Fantasy XIII’ announcement on Xbox 360 was not a major
surprise, given when he heard CEO Wada was coming to E3.
• Microsoft releasing its avatar service – Mr. Iwata appeared a little miffed as it looks very
similar to the ‘Mii’ service on the Wii.
• End game – Nintendo would like to have 300 million users around the globe!
Now, the report goes to the Sony press event and then, following, the Capcom event.
Sony press event
In a word – disappointing. Unbelievable to think that even now they dedicate time to talk up the
PlayStation 2. The PlayStation 3 needs software now, and yet there is still no delivery of this
much needed content. The PlayStation Network downloading service for TV and film kicked off
today which is positive, but now nearly two years after its release the flagship product still feels
like a work in progress.
Capcom (9697) – Lost Planet film unveiled
• Capcom’s E3 press event focused solely on the forthcoming film adaptation of the game title
‘Lost Planet’.
• What is rather different this time is that Hollywood is taking a greater role and taking this
project (at face value at least) very seriously.
• The event showed the parties involved in the forthcoming production - the lead producer
being former Marvel CEO Avi Arad (producer of the wildly successful Spiderman films for
Sony Pictures), and scriptwriter David Hayter (of X-Men fame, and the voice of Konami's
MGS lead character Snake).
The film is still a long way off, with a release earmarked for 2011. We have as yet no details of the
financial commitments the company will make. However, with these heavyweights on board, the
initial story sounds promising.
