Nintendo Q3 Financial Results Recap: Nintendo Network Expansion, DS Games on Wii U, Future Hardware Hints

Tonight during the Nintendo Q3 2013 Financial Results Briefing, Satoru Iwata detailed Nintendo’s plans to change up the Wii U as a console, further the Nintendo Network as a new platform for many different devices and what could be the future of not just Nintendo, but all of gaming.
Before we get to the details of the briefing, Nintendo brought up some factoids earlier this week. Nintendo sold only 2.41 million Wii U consoles from April-December. This plus the other bad news from this last week prompted Iwata to cut his salary in half for five months, while other executives will take a 20-30% cut. Lastly, Nintendo will acquire some of its own shares, up to 10 million, between today and March 31st. They will spend up to 125 billion yen (approx. $1.25 billion) on those stocks.

Nintendo also posted all the numbers (sales, earnings, announced titles, etc.) here as well as Iwata's full report here.
Iwata started up the presentation apologizing to the shareholders by announcing the “steep downward revision” to the forecast due to the weaker-than-expected sales in the Western markets. He also wanted everyone know that it hasn't made the company worried about the video game console market, and that they’ll continue making software that compliments their hardware. The problem is that people’s lives are changing, and that they need to adapt to a world where the Internet and smart devices are overruling a market of devices that usually needs a TV or handheld screen to operate. Like they did with the Wii Remote, Wii Balance Board and the Nintendo DS, they must once again redefine video games.
Nintendo however, isn't as “resource-rich” as other companies like Sony, Microsoft, Google or Apple, so they consistently go into directions and niches that may not have a rival to create and gain traction in newer markets (the “blue-ocean” strategy that always tout). Iwata believes that following trends like smart devices won’t fulfill a medium to long-term growth and that for now, Nintendo can only focus on Wii U and Nintendo 3DS.
Short-Term Goals: Wii U and 3DS
Iwata knows the Wii U is in a tough position and that its biggest weakness is the GamePad, in which Nintendo has not taken full advantage of (and we’ll agree with that) to the point that consumers don’t (and thus won’t) learn that Wii U is a different device entirely. He wants to have this solved by the end of this year.

The first feature that Nintendo wants to utilize from the GamePad is the NFC chip, which to this date only Pokémon Rumble U uses as an option. Iwata states that we’ll first see these NFC-compatible games will be at E3.
In addition to NFC, the next feature they want to feature is Off-TV play, which doesn't require the TV at all to play Wii U software. While a ton of games use this feature from exclusives like Super Mario 3D World and Pikmin 3 to multiplatform games like Call of Duty: Ghosts and Assassin’s Creed IV, Nintendo would like to make this feature much easier to use. This summer, we will see an update that’ll quickly get someone into a game. The following video shows how fast it'll do it (via the following YouTube upload from Nintendo World Report).

One of the biggest news form this is another feature Nintendo wants to sell the GamePad as a system-definer, and that’s bringing Nintendo DS games to the Wii U’s Virtual Console. Since the system has the same two-screen feature, this was something that shouldn't be a shocker. Though they did announced GBA games would hit the Virtual Console too, and we’ll still waiting on that; so with no ETA with this new announcement, I’ll say don’t hold your breath.
Of course, like any other console, the system could use some system-selling software. One staple to Nintendo consoles is Mario Kart and the latest installment, Mario Kart 8, will release in May worldwide.
The Nintendo 3DS however is in a different situation - a much better situation. In Japan, the system has been nothing short of dominant in the region. It’s so popular that smartphone makers in Japan are porting their games to the 3DS with great results, most notably Puzzle & Dragons Z, which pushed more than a million copies in less than a month. Even Angry Birds Trilogy pushed a half-million copies on it in the West. If only we can get Candy Crush Saga on the 3DS, minus the needless microtransactions.
Medium-Term Goals: Redefining the Video Game Platform and Emerging Markets

Looking ahead, past 2014, Nintendo realized that their devices in the past have been totally separate from one another, and that a “platform” must exist to bring a relationship to all current and future Nintendo devices. When you bought a WiiWare game or even now an eShop game, it’s only tied to that one and only console. Now with the Nintendo Network IDs on Wii U, and now the 3DS, it’s a step to making a unified account system that allows you to hold on to your Nintendo identity (and purchases finally). Nintendo will bring the Nintendo Network to smart devices too for communications, including those who don’t own any Nintendo devices and create their NNID.
That doesn't mean that Nintendo will put games on smart devices, though Iwata hasn't given “any restrictions to the development team,” so games could be something, just don’t expect anything big from it.
Iwata means that he wants Nintendo devices to be less separated and more united to one another. He wants them to have a brother/sister relationship to one another, much like iOS is similar to each iPhone, iPod Touch and iPad, and Android is to all Android devices. But also allow the Nintendo Network to be accessed to those devices, much like the Xbox and Playstation apps do.

This unified system can also derail how a user could buy a game from Nintendo, sometimes for the better. Nintendo hinted that the model of buying a console and buying $30-50 games for it consistently might not be a viable method anymore, and actually would like to see a more flexible pricing scheme for those who “meet certain conditions.” For instance buying a lot of titles could get discounts (much like the “Digital Deluxe Promotion” that many Wii U users aren't taking advantage of) or discounts for those who invite others to play a game.
In more of a startling revelation, Nintendo totally listened to me (probably) and will be licensing their IPs to those in non-competing (i.e. non-gaming) fields for “win-win” scenarios. Brand recognition is a beautiful thing, and ironically it only took the continued success of one of their own products to realize it. It’s not a coincidence that Pokémon X and Y were Nintendo’s most successful games in the fiscal year - the only Nintendo IP that has a TV show, trading card game, and a decent merchandise line full of toys and clothes (like this awesome Charizard hat).
Nintendo will also bring their products to new markets in 2015 to further sales and brands. While Iwata tiptoed around this without mentioning any examples (like the Chinese market that I also offered), but he did mention that they’ll use smart devices as a gateway to a Nintendo product purchase.
Long-Term Goals: A New Business Area
The Wii and DS challenged consumer apathy towards video games and gained a new audience from it, and now both kids and adults of all ages can relate to a video game. However, the market for them has shifted and now Nintendo must again redefine entertainment.

Now Iwata’s goal is to create a device to “improve people’s quality of life (QOL) in enjoyable ways.” This device includes a dedicated gaming console.
Iwata mentioned that the console market shifted to a mobile market, but there were also a lot of wearable tech at CES this month. If Nintendo should expand, they shouldn't join crowded markets like the mobile and wearable tech, but to “leapfrog” them to a new dimension, to “non-wearable” tech. A new blue-ocean strategy.
The first step of this goal is something health related, but not really like Wii Fit. This tech would provide prevention to illness, monitor health and not let the user get bored of it (i.e. Wii Fit), as well as interact with games and create synergy. This is more like the “Touch Generation” lineup like Brain Age, Personal Training: Cooking and the aforementioned Wii Fit that expanded Nintendo’s user-base. This tech will be announced this year, with a rollout plan in fiscal 2015 (April 2015-March 2016) and a growth plan for fiscal 2016.
So that’s Iwata’s proposal for Nintendo’s plans for the next few years. While the short term is very cut and dry (though DS on the VC is pretty sick), the glimpse of Nintendo’s future is now known in the works.
This new tech could be something big, and think of how this can further Nintendo and their IPs. Think less Wii Fit/Sports/Music, and more Pokémon MMO but with some non-wearable VR (maybe like Star Trek’s holodeck – I kid you not). Believe me when I say that you'd be fit in a month when you're interacting in a game like that. When you think of it that way, the possibilities become pretty exciting. We’ll see later this year.