GP Q&A: Nintendo CEO Fils-Aime talks Wii production woes, online plans
- July 27, 2007 11:40 AM PST
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GamePro editor Bro Buzz talks to NOA CEO Reggie Fils-Aime about the lack of "hardcore" games, Wii supply shortages, and a shortage of online Wii gameplay (Reggie's response: "Wii will offer more than simply first person shooters online.").
GAMEPRO: At last year's E3, Nintendo announced its "Blue Ocean Strategy" for expanding the games audience. Where is Blue Ocean at, and why choose this strategy?
REGGIE FILS-AIME: It was very clear [for us] looking at the Japanese business results that the total market for games was declining. And interestingly, even when you look at the U.S. business results for hardware and software for console, portable, and PC, there was a five-year time period where the numbers were just bubbling around $11 billion more or less. They weren't moving; the industry was stagnant!
We had to do something fundamentally different. So here we are at the midway point of 2007, the total industry is up just under 50 per cent, Nintendo is driving just under 70 per cent of that growth, and we're launching new accessories, like Wii Fit. Our focus is to continue driving this. It's making sure we have products for the Core gamers as well because they are still an important part of this industry, while at the same time making sure we have products for the expanded industry.
Wii will offer more than simply online first-person shooters. Nintendo's view is that we want everyone in the household to go online every day."
--Reggie Fils-Aime, president and CEO of Nintendo of America
GP: Then, do you feel from Nintendo's point of view that the Blue Ocean message has been delivered?
RF: I don't believe we have gotten the message out there as broadly as we can to the consumer. Why do I say that? Because some 30-year-old who hasn't played video games either ever or certainly in the last five or 10 years can't go to a store and buy a Wii today. We're so constantly out of stock, that I don't believe we have been able to effectively get our message out. That's why this year's holiday time period is so important to us. We want consumers to be able to walk in off the street and find our products.
GP: That would seem to be Nintendo's goal since the Wii launch. Why has manufacturing capacity been so low?
RF: Where we're at is that Nintendo has been constantly increasing its production capacity. We've been putting more and products into the marketplace. It is clear as we sit here with a 2.8 million unit installed base, where Sony isn't half that and at this point in their life cycle Microsoft was about half that number, that we're putting product into the marketplace. It's not lack of capacity; it's just overwhelming demand.
GP: So what do you say to consumers who want a Wii but are just not able to get one?
RF: My best counsel is to pick up the Sunday paper (that comes out on Saturday) and shop those circulars that it contains because those are the retailers that will have substantial stock. That enhances your chances of buying a Wii on Sunday. But I would also tell them to be a little bit patient with us because we're working to get more product out into the hands of U.S. consumers.
GP: What are the production challenges that are making it so hard to supply Wii's?
RF: I have to correct you. It's not a production issue. It's not like our competitors who are missing a component and couldn't scale up. We're making huge amounts of product every single month. It's not a capacity issue; it's a demand issue. We're not trying to temper demand, what we're now trying to do is to figure out how to add additional lines to meet a higher level of demand.
GP: And demand is beyond what the company projected for the Wii at this point of the life cycle?
RF: I think quite frankly demand is beyond what anyone could have projected. We're on a pace to drive installed numbers worldwide faster than any other home console box before us. Here in the U.S. we're on a better pace than the PS2. In Japan we're substantially in front of the PS2 base. So we're feeling pretty good about all that.
GP: The DS of course is another system in high demand by consumers. Does DS manufacturing somehow affect the Wii production capacity?
RF: Not at all, the systems are manufactured at different factories.
GP: In your E3 presentation, much emphasis was placed on reassuring hardcore gamers that they weren't being forgotten by Nintendo. How much of a concern is this for Nintendo?
RF: I think Mr. Iwata [Satoru Iwata, president of Nintendo of Japan] said it best: all of us who are Core at one time long ago were newbies, too. And we need to remember that feeling. We need to frankly embrace when new people come into this industry. Why? Because it makes the industry more vibrant. It gets more people playing. It gets more people talking about it. Arguably it ought to lead to better games.
GP: In catering so heavily to the new gamers, is there a danger that you neglect the Core?
RF: From that standpoint we embrace these new customers the same way we embrace the Core. That's why it was so important to bring out Metroid Prime 3 in its perfect state; that's why it's so important to launch Smash Bros. this year; that's why it's so important to bring Mario Kart for Wii out early next year. These titles for the Core are very, very important for us.
GP: Isn't that a conundrum: Nintendo has the classic and hardcore franchises that appeal to hardcore gamers, but when it comes to pushing the envelope it appears to be doing that to aggressively courting new gamers? No wonder hardcore gamers feel left out.
RF: This is something Nintendo takes very seriously. In our view we need to lead the industry in certain areas to show what can be. Wii Sports was very important to us. That's why we packed it in with every piece of hardware to show just how intuitive using the Wii Remote could be. Wii Fit is a way to just expand the mind and have people thinking about an input device in a whole new way. Brain Age and Brain Age 2 again were very important this way for DS. So I think at times the Core gamers mistake our passion for constantly pushing out the envelope for fear that we'll leave them behind. We'll never do that.
GP: Well, it said a lot that Mr. Miyamoto introduced Wii Fit, but doesn't the hardcore gamer look at that and see a fitness device?
RF: Mr. Miyamoto said this is a product that's been in his brain since the Wii console was early in development. We showed off [at E3] only a small example of what [Wii Fit] can do.
We have a ski demo, and this is a ski jump where literally you simulate the lift by jumping up onto your toes. Just think of what can be done! This can be applied to skiing games, but also to skateboard games. It can be applied to a surfing game. It won't always have to be in a fitness genre.
I'd expect other companies to jump onboard to use the balance board for other games. There are Core games to come that will be using this [Wii Fit] device.
GP: Did the fitness craze in this country have anything to do with the design of Wii Fit?
RF: You know, it really didn't; but I do think there's a recognition world wide that we're all becoming a little more sedentary, and that getting up and around is a good thing for you from a health standpoint. That worldwide trend may have impacted Mr. Miyamoto.
GP: Sony and Microsoft embrace the internet. What about Nintendo?
RF: We are online. Forty percent of the Wii's around the world are connected to the Internet, so our system is online. But our view is that we want the consumer to go online every day--everyone in the household. So what that means is that we will offer more than simply first person shooters online. That's why we have the Check Mii Out channel. That's why we have Wii Wear with other downloadable content that consumers can choose from.
Sure we'll have competitive play online. Madden is going to be fabulous. Strikers is fabulous. But we want to do more. These are the little examples that highlight how we are different from our competitors. They talk about online versus and co-op play. For us online will be much more than you against me sitting in our living rooms in two different states.
GP: So, when Reggie Fils-Aime peers into his crystal ball what does he see?
RF: The future looks like this: More and more consumers playing video games world wide. A vastly different profile that the typical--call him 20-year-old--male today. And in that view our devices the Wii and the DS are truly devices that people will use every day, all consumers in the household. That's our view of the future.
