During their investor meeting Nintendo seems to have a large focus on digital content. Nintendo announced that when New Super Mario Bros. 2 launches in August, it will be available for digital and retail release.  Additionally, the ability to download full games will be available at the launch of the Wii U.

Update: More digital talk

Iwata explains a little more about the Wii U digital content. 

For the Wii U, we will start the digital download sales of packaged software that I just discussed, so our consumers can choose either the packaged version or the digital download version of the same software from day one of the Wii U’s launch.

Digital purchase through retail.

Our consumers can visit retail outlets or the retailers’ online shopping sites, look for products of interest, make a purchase decision and actually pay for the product there. The retailers then can issue the 16-digit software exchange code. As you can see on the screen now, consumers can enter the 16-digit code at the Nintendo eShop to download the software.

Some may wonder why we are adding this kind of process, as it may seem more complicated. However, for the majority of our consumers, this is a familiar process as they are already accustomed to making payments at the retail outlets, and it can lower their psychological barrier to making online purchases. Some consumers are hesitant in purchasing digital download software because they are concerned about inputting their credit card numbers. Also, payments by credit cards or cell phones are unavailable to some people under a certain age. Accordingly, offering a familiar payment method should lower the hurdle for our consumers to purchase digital download software.

Furthermore, we recognize that one of the biggest hurdles for the expansion of our digital business is the limited methods to expose digitally downloadable products to potential consumers. This recognition is one of the reasons why we are taking this sort of approach.

As I just said, the net connection ratio of Nintendo 3DS has grown significantly higher than that for other Nintendo handheld systems. The ratio of Nintendo 3DS owners who have visited the Nintendo eShop, as well as their visit frequencies, has also risen far above the level achieved by the Wii and the Nintendo DSi.
Naturally, consumers can digitally buy packaged software at the Nintendo eShop. However, if only the consumers who proactively visit the Nintendo eShop are aware of the digital download software that we deploy, there is no chance that our digital business can drastically expand.

Nintendo’s basic strategy is to expand the gaming population. We would like as many people as possible, regardless of age, gender and game play experience, to have access to our product messages.


How digital can help retail game lifespan.

Recently, except for certain software, the lifespans of software in general are increasingly becoming shorter. Even a small excess of inventory can cause a price break of the software at the outlets just shortly after the launch, and retailers are taking a rather cautious attitude in making purchase orders. This situation is simultaneously causing frequent losses of sales opportunity for the software titles that have sold more than the retailers’ original modest expectations.

By asking our retailers to take part in selling our digital products as we propose, they can prevent the losses due to having excess inventory and prevent their business opportunities from being lost due to being out of stock, we believe.
In addition, if they make use of a technology called POSA (Point Of Sales Activation), where they can have a software exchange code without any inventory value and their purchase is realized when a consumer buys the software and activates the software exchange code through a POS register, they do not have to stock the inventory until the actual sale occurs, which further increases the advantages of this distribution system. Even to those retailers who have not been able to deal with our products due to the inventory risk issue until now, Nintendo might approach them with this sort of transaction option and we might be able to further expand the exposure of our digital download software to consumers as the result.

So far, the software sold at the Nintendo eShop has not been offered in other sales channels, so the price points for the consumers are virtually fixed. When it comes to the digital download software that our retailers are going to deal with, just as they do so for our packaged software, we will ask them to decide the price points. Accordingly, the retail prices for the same digital download product can vary by retailer. In terms of the fact that the company is offering the value of the software itself, we do not have an idea to act on such a belief as, “digital download software should be sold at a cheaper price point than the packaged software counterpart.” In terms of the Japanese “maker’s suggested retail price,” in principle we intend to set the same maker’s suggested retail price point for a software title. By taking this approach, there will not be a situation like “there is no markdown for the digital products while markdowns are the norm for the packaged software.” We would like each of our consumers to choose the most appropriate purchase option for them.


Nintendo will not sale incomplete titles to make more money.

As you know, all of my remarks and explanations on our digital business are kept and made available for public viewing on our IR site inside Nintendo’s official website. Unfortunately, as some people seem to have a misunderstanding, I would like to once again sum up my comments here. First, we clearly distinguish digital distribution of packaged software from add-on content and, when it comes to making packaged software digitally available, we do not intend to offer any products that the consumers deem incomplete. Second, we sell add-on content so that the consumers can play a software title for even longer and on a deeper level and, when we sell this add-on content, we are making a proposal to consumers to pay for the content our developers have additionally created. In other words, as we have repeatedly confirmed, Nintendo has never conducted and will never conduct what is now widely known (in Japan) as a “gacha-type charging business” (capsule toy vending machine business), which asks consumers to pay money without knowing what kind of item shall emerge as a result of their payment, even if such a business model might temporarily yield high profitability. Nintendo does not believe such a business model can establish long-lasting relationships with our consumers. We hope that everyone understands our policy, and we will continue to make efforts to avoid such misunderstandings as, “the next ‘Animal Crossing’ might be a game which relies upon add-on content sales.”