August 12th, 2002 (12:00am) - Nintendo recenty conducted a press conference discussing the company’s future. In this conference Nintendo’s former president discusses why he picked Satoru Iwata as his replacement as well as many other things such as network gaming and Final Fantasy for the GameCube.
Here is the entire Q&A:
Dengeki: Why did you choose Iwata-san to replace you as the company president?
Yamauchi-san: The reason for Iwata-san’s selection comes down to his knowledge and understanding of Nintendo’s hardware and software. An executive, regardless of his vast successes is fundamentally an executivewho doesn’t intimately understand our products. Within our industry there are those who believe that they will succeed simply because of their successes in other ventures or their wealth, but that doesn’t guarantee success. Looking at their experiences since entering the gaming world, it’s apparent that our competitors have yielded far more failures than successes. It’s been said that Sony is the current winner in the gaming world. However, when considering their "victory," you should remember that their success is only a very recent development. Though Sony is widely held to be the strongest in the market, their fortunes may change. Tomorrow, they could lose that strength, as reversals of fortune are part of this business. Taking into account the things I’ve encountered in my experiences as Nintendo president, I have come to the conclusion that it requires a special talent to manage a company in this industry. I selected Iwata-san based on that criteria. Over the long-term I don’t know whether Iwata-san will maintain Nintendo’s position or lead the company to even greater heights of success. At the very least, I believe him to be the best person for the job.
Dengeki: Did you intentionally select someone in their forties for the position?
Yamauchi-san: I didn’t pay particular attention to that fact. I must say though, someone my age would not have been a consideration. [laughs..] I didn’t focus on age specifically, but the question of youth did factor into things. Health was another consideration. In this business the president must travel to America and Europe to establish contact with various people. I had a strong desire to do such things, but that desire was outweighed by my health concerns, and I was often unable to travel. In that respect, Nintendo’s ability to communicate internationally was insufficient. As the structure of things continue to change, I’m confident Iwata-san will remedy that. In short, the question of health and age was a concern insofar as being able to take care of business both abroad and at home.
Iwata-san: I’ve noticed people focusing on the issue of my age. It’s remarkable that a person my age could serve as [president of] a company of such magnitude. When Nintendo introduced the Famicom in 1983 I was in only my second year in "the real world." A chance presented me with the opportunity to work for Nintendo and their products from the beginning. Since the introduction of the Famicom, I have watched the gaming industry grow. When I began working here there was no one to teach me how to build games. I pondered things on my own, looking over at Miyamoto-san as we worked together, and learned throughout the years. And that has brought me to this point.
When I was selected as new president, I didn’t think of my age as a disadvantage. Currently, 70 percent of our sales come from abroad. America is an especially large market, which means that we must consider how to deepen communication between Kyoto and America. While the internet and video conferencing has lessened the need for direct contact, there is still much to be gained from physically meeting with our international contacts. For the past three years as the Gamecube was being developed as Project: Dolphin, I have been going to America every month. Over that time, I made more than 40 round-trip flights from Japan to America. Having commuted so heavily, I have a genuine feeling of accomplishment. Youth certainly is an advantage for such endeavors. Rather than thinking of my age as a liability, I consider it more of an asset.
Dengeki: Is the company’s group leadership structure Yamauchi-san’s legacy, his "last will and testament," as it were?
Iwata-san: I think that Yamauchi-san can provide you with a more interesting answer than I can, so... [smiles..]
Yamauchi-san: Well, I’m not certain when I’ll die but I may not be around too much longer.. [laughs..] As for the structure, it’s not a will so much as a wish. Having worked for this company for so many years, my greatest concern is how the industry will progress from here. I have my own ideas regarding the future of gaming; however, if I spoke at length, it would require too much time. Instead, allow me to summarize. As the business of gaming spreads, I think it will be very hard for one individual to lead the company.
Dengeki: Yamauchi-san, with your retirement, do you have any words for the new management executives?
Yamauchi-san: As I retire from management, I have no words to share. Coincidental to my leaving the company, I would like to make one request: that Nintendo give birth to wholly new ideas and create hardware which reflects that ideal. And make software that adheres to that same standard. Furthermore, this software should attract consumers as new and interesting. Lastly, and of equal importance, is completing these products quickly and at a cost comparable to today’s current market. I imagine most people question the feasibility of my request, but Nintendo has always pursued those objectives. I’d ask that the company continue to follow this goal as my final and only request to the new management staff. I can’t say what these new types of software will be, but I’m sure they’ll release it during my lifetime.
Dengeki: How do you intend to use Nintendo’s vast financial resources?
Iwata-san: I can’t answer that in simple terms, but our competitors have altered the playing field - notably Microsoft with an estimated 41 billion dollars in potential capital. In comparison, Nintendo has approximately 7.5 billion dollars available. That means we must use our money wisely. In the high-risk gaming industry, competition with a wealthy company like Microsoft means that we cannot cut corners and limit ourselves. There will come a day when operating costs will be measured by billions of dollars; we just don’t know when that day will come. Even when Yamauchi-san was young, companies experienced risks of bankruptcy. Throughout the years, the specifics may have changed but hard facts remain: a lack of cash flow means the end of that company’s business, and we are fully cognizant of that. Although we have the financial power to do so, we have no intention of willfully pursuing any ventures other than our company’s primary focus of gaming.
Dengeki: What are your plans for reclaiming the number one spot in the home gaming industry?
Iwata-san: Most people [equate] number one with the largest number of consoles sold. I understand that reasoning because realistically the greater number of consoles sold equals increased software sales. However, there are many people who view the sale of home consoles the same way as refrigerators and washing machines. Most customers only replace these items when they break. To extend that line of thinking, that would mean people who have already purchased a PlayStation 2 won’t buy a Gamecube. However, we don’t follow that line of thinking.
First off, we aim to create quality software that the consumer will want to play. Developing exclusive first-party titles is our way of saying to players, "If you want it, you’ll need a Gamecube." Certainly we’d like the Gamecube to be the platform of next generation gaming. Simply because the PlayStation 2 may lead in number of units sold, I don’t believe Sony is unbeatable. In many Japanese households the PlayStation 2 serves only as a DVD player, with its gameplay capability ignored. Taking that into account, it’s meaningless to compare the number of PlayStation 2 vs. Gamecube units sold. At Nintendo, we’ll do our best to win the praise of players as the company with the best games available.
Dengeki: What are your feelings about network gaming?
Miyamoto-san: Network games have undeniable appeal and they interest me. I think it adds a new dimension to a game when you can chat with someone and then go play together. However, most online play requires a credit card, which is an obstacle. Furthermore, the question of which country to target presents another challenge. Global network gaming is a very complex prospect. As a game designer I have an interest in it, but Nintendo isn’t thinking of all possible markets in terms of network gaming. Also, we’d like to apply our energies to other realms that our competitors aren’t even considering. We don’t feel the need to chase the goals of everyone else.
While it’s something we’re dealing with, online play requires us to take time out to set up a main server and online service, along with requisite maintenance associated therein. Right now for every new game we complete, we must translate it into six different languages. This alone requires a lot of work and then there are always new titles to begin. Adding network gaming to the equation means a disproportionate amount of labor to maintain something used by only five percent of our audience. At this point in my life, I have to wonder how many more titles I’ve got left in me… [laughs..] When you stop and consider these factors, I do feel somewhat hesitant about online gaming.
Dengeki: Don’t you find the GBA LCD display somewhat difficult to see?
Iwata-san: Certainly, since the GBA display is a reflective LCD system, when played without sufficient lighting that would seem to be the case. We have received requests to implement some sort of additional backlighting. But since the GBA is a portable battery-powered gaming system, making such a change would result in increased battery drain. As it stands now, we hear from a number of customers who mention the cost of batteries for their children’s GameBoy Advance units. We’ve taken steps regarding the problem of battery drain, and we must reconsider the issue of proper lighting in the future. Of course, we are working daily on improving the visibility of the game screen in ways beyond lighting. Once our staff completes these improvements, I will be able to present you with new options.
Dengeki: What are your plans relative to the Pokemon license?
Iwata-san: Towards the end of last year Nintendo opened its Pokemon Center in New York City. Regrettably however, the response didn’t meet our expectations. We’re presently researching ways in which to take advantage of the situation. That isn’t limited to Pokemon, of course. We are discussing how best to capture the interest of American consumers with our other upcoming titles.
Question: How do you see the future of the gaming market?
Iwata-san: While I’m not pessimistic, I cannot be very optimistic in my outlook. Regardless of how enjoyable the title you produce is, consumers grow tired of it soon. Regarding our efforts towards next-generation gaming, I’m not pessimistic because Nintendo is rich in employees, capital, experience, and the power of brand recognition. Still, only 20 years ago there was no video game industry. In 10 years’ time, will video games exist as they do now, with a direction pad and a four-button interface? I wonder...
Dengeki: This is a question for Miyamoto-san. What sort of next-generation games are you looking forward to creating?
Miyamoto-san: When it comes to new, exciting and enjoyable games, I think simplicity is key. A game should be so simple that if I told you now, another company could run with the idea and hurt Nintendo before we got a chance to work on it. And, since I’m such a cold person, I’m not going to tell you. [smiles..] If I tell you my specific ideas you could pass it on to someone else, and that would seriously hurt Nintendo’s sales two or three years down the road. [smiles..] In my 25 years at Nintendo, I’ve seen numerous highly anticipated games haven fall flat, while relatively unknown titles have claim the spotlight. Three years ago at the Game Developers Conference in America, I spoke on this exact thing: Developers can create exquisite titles such as Zelda or Final Fantasy, but when you compare our investment versus profit, we came out behind the Tamagotchis of the business. We’re currently developing a title that is quite straightforward and simple, but entirely different from our competition. However, I cannot tell you any details at present. [smiles..] I hope that you can wait for it...
Dengeki: What about the influence/power that Yamauchi-san holds in regards to Fund Q?
Yamauchi-san: Fund Q was created before my leaving the company, as game developers face many problems. If the fund operated as part of Nintendo, it would be subject to internal regulations resulting in further obstacles. I proposed the creation of a private source to sidestep such barriers. Although I took the initial steps, it shall continue to exist well after my retirement.
Dengeki: Could you speak about some of the titles being developed by Square?
Yamauchi-san: One of my first actions with the Fund Q was to create a separate company for a group of Square developers working on a new Gamecube Final Fantasy title that will linkup with the GameBoy Advance. This is more than a matter involving Square or Nintendo individually; I feel that it has much greater importance. Here in Japan, Final Fantasy is a dependable franchise that sells quite well. Previous installments of the series sold more than 2.5 million units each, but with its most recent online version, Square’s sales have dropped drastically. I think this signifies a big minus not only for Square, but for the entire Japanese industry. This means that the Final Fantasy title being developed for the GC/GBA must differentiate itself from the rest of the series. It shouldn’t be the same as its predecessors.
From its early roots, substantial financial investments, and with the addition of powerful CG effects, Final Fantasy has matured into an impressive series. However, I feel the era of a two or three-year development phase for a single game has ended. It simply doesn’t equal prosperity in the gaming business. Game companies are losing profits and facing the dilemma of shortening development cycles while maximizing game quality. I believe that we game creators have reached the point where we must give serious thought to this issue. A talented group of Square artists share that feeling, and they have started a project that attempts to face this challenge. How will Japanese gamers respond? If this new brand of Final Fantasy sells as well as previous incarnations, it will mean that audiences have recognized a game developed more quickly and at a lower cost than before. Developers everywhere are curious as to how it will turn out. They’re all wondering on what sort of game we will create and how players react. Depending on the outcome, it will have an effect on how games are developed in the future. At its core, the Gamecube (and my personal fund) has the potential to make new things a reality and change the gaming market forever. We’re taking a big chance, and I’m very excited about the possible results.
