November 1st, 2002 (12:00am) - Here’s part two of the speech Peter MacDougall gave to the attendees of the GXM conference:
While breadth is important, so is exclusivity. Every manufacturer, like every game publisher, is chasing a mega-hit to sell his system. Even better, if you capture one that is available only on your system, you’ve given yourself a huge competitive advantage.
For quite some time, our new president Satoru Iwata has been working to do exactly that. Many of the partnerships we’ve recently announced -- many months in the making -- are about to deliver exclusive payoffs. We’ve created a joint venture with both Sega and Namco called "Triforce" to migrate the Nintendo GameCube technology to arcades. Not only is Nintendo GameCube’s combination of high power and low cost ideal for cutting-edge, site-based applications but there’s a game payoff for Nintendo as well.
In the same time period that many of those new thrillers hit the arcades, Nintendo GameCube versions will be released for play at home. The first of such projects -- the high-speed racer F-Zero -- arrives in the front half of next year. Separately, we’ve come to an agreement with Capcom, so a series of its immensely popular Resident Evil games will be exclusive to Nintendo. And here in North America, our second-party equity positions with companies like Retro Studios and Silicon Knights assure that their work will also appear only on Nintendo.
The majority of these deals also indicate a second significant change for us: the aggressive targeting of the teen and 20-something market. We are rolling out substantially more high-profile games for that audience and implementing sharply focused marketing tactics to talk to them. The push begins in earnest over the next few weeks when we bring an explosive one-two punch to retail with two exclusives: Retro Studios’ Metroid Prime and Capcom’s Resident Evil 0
Metroid Prime is the first console appearance for that wildly successful franchise in eight years. Along with Rockstar’s Vice City, Metroid Prime has all but dominated online fever concerning upcoming, older content games, and we’re backing it with our largest, game-specific budget in over three years. As just one example, beginning November 1st, moviegoers in 6,000 theatres nationwide will start "getting primed"’ with a one-minute spot on the big screen; at the same time, TV viewers will be seeing the same one-minute spot on their not-quite-so-big screens at home.
Closely preceding Metroid Prime is the launch of Resident Evil 0. This is the franchise that has already proven there’s an eager audience thirsting for mature content on Nintendo GameCube. In April, Capcom launched its first Resident Evil exclusive. Within weeks, it sold through to one out of every six Nintendo GameCube owners, and remember, this for a strictly limited mature audience. Undoubtedly, older Nintendo GameCube fans are out there just waiting to be served.
As good as these two hits are, they are only part of a much larger story. All told, we are featuring dozens of new releases here in the latter part of the year with particular appeal to older gamers. Every major publisher, every hit franchise is represented and we’re communicating with older players this fall in new and more focused ways. Here are a few examples:
-We’re about to move to market limited supplies of our platinum version of Nintendo GameCube hardware, which promises very strong appeal to older players
-Exclusive Nintendo Cube Clubs will run in urban storefronts in 15 cities, featuring live music and extensive hands-on game play
-We’ll be distribute 3.5 million DVDs featuring over 80 minutes of game play from two dozen new titles
-We’re sponsoring the U.S.S.A. Snowboarding Grand Prix
-We’re running promotional partnerships with companies like Heineken
-We’re conducting numerous out-of-home programs in schools, malls, college campuses, airports, and nightclubs
Make no mistake, Nintendo is right in the middle of this game! We’ll let older players know Nintendo GameCube is a great place to be. Overall, our marketing spend in the second half of this year is up 25 percent over the similar period last year and that was for the launch season for Nintendo GameCube. Certainly, within that increase, older players are a specific target but understand, this outreach is an expansion of our marketing efforts, not a strategic redirection of our mission.
Like Disney’s movie groups, we’re convinced we can fully maintain the all-family appeal of characters like Mario and Yoshi and Pokemon, while at the same time making ourselves more relevant to older gamers. We will not only maintain but also actually increase our market appeal to younger and all- family players. To explain how, let me take a brief step back to the demographic breakdown I described earlier.
When you say the plus-18 crowd is now making up a larger percentage of console players, it’s only logical to ask, "Well, what happened to the kids?" Or, in other words, is what we’re offering now, on the whole, too intense, too complicated or too violent for a 10-year-old? Perhaps on some consoles but as an industry, the answer is no. They’re still responding with as much excitement as ever. Here in America, our Super Mario Sunshine, whose appeal certainly includes younger players, launched during the last six days of August. Despite less than a week’s availability, it immediately jumped to number two on the sales charts for the full month, and it will easily become a million-seller, joining the top 10 list for the year.
Across Europe, Mario’s impact was equally strong. Unit sales exceeded 300,000 in just nine days and boosted the sales rate for Nintendo GameCube hardware by 60 percent. Now, the multi-million-selling Mario Party series also made its debut on Nintendo GameCube. But I think there’s an even more significant issue at work in explaining that smaller percentage of younger players on consoles. It’s called Game Boy Advance.
We now have over a dozen years of sales history around the world for our Game Boy line, and you can see that despite constant restaging: smaller housings, the addition of color, new 32-bit technology ? it has always been a great seller and lately, it’s moving faster than ever. Last year we sold through 19 million Game Boy Advances around the world, an all-time high. And although it’s probably unrealistic to maintain that extraordinary level indefinitely over time, the trend-line consistently reaches upwards. If you scratch a little deeper, further evidence emerges. Back in 1992, when the original Game Boy was all the rage, the proportion of players under the age of 12 was 29 percent. Today, that number has jumped to 40 percent, and that’s on a geometrically higher numerical base.
Younger gamers deterred by cost and a generation of game consoles that, to date, has largely been driven by teen and mature rated titles, have opted instead to buy Game Boy Advance as their point of entry into new gaming technology. In understanding its appeal, it’s also instructive to look at what games are selling on Game Boy Advance.
Over the last 15 years, home console owners have most enjoyed the exploits of characters like Mario, Sonic and Zelda. Maybe it’s more than coincidence that when you look at the top-selling Game Boy software thus far in 2002, whose names should pop up but Mario, Sonic and Zelda? Younger players are discovering these games for the first time because after all, they’re brand new to them. The easy-to-play, character-based challenge of these adventures is every bit as attractive to a pre-teen today as it was a decade ago. It’s just available now on a different device. So, we have no intention of changing this recipe.
A huge splash will come in December with the introduction of The Legend of Zelda that includes Zelda: Four Swords. This single SKU marks the first four-person Zelda game in history. Also, our pink puffball Kirby, now a certified star in the worlds of Saturday morning cartoons and licensed merchandise, returns in a new Game Boy Advance title next month. Game Boy is also where Pokemon sprang to life and where Pokemon returns early next year with Pokemon Ruby and Sapphire.
Additionally, to further appeal to the young gamer’s appetite for low cost, easy-to-play games, we recently launched an exciting new Game Boy Advance accessory. Our exclusive e-Reader swipes optical data right off the edges of traditional collectable trading cards and transforms it into a brand new entertainment experience. For example, complete classic NES games are available to e-Reader owners for under $5.
We believe this is the holiday season in which many Game Boy Advance owners will acquire their very first console. We also strongly believe Nintendo is uniquely positioned to be their system of choice. With Nintendo GameCube offering a line-up of character-based games so familiar to them, the chance to see these characters play out on the bigger screen will be a compelling proposition. We also provide another unique reason to buy our console, the ability to connect Nintendo GameCube and Game Boy Advance.
For example, in the hugely popular Animal Crossing Nintendo GameCube game, connecting the two platforms opens up new game environments. For e-Reader owners swiping the Animal Crossing card further enhances the game play experience. The step from Game Boy Advance ownership to Nintendo GameCube play should be an easy one. But I don’t want to fool you into thinking Game Boy Advance is just for kids; quite the contrary. You might be surprised to find out how many members of the audience here today spend down time in airplanes or even on subways enjoying Game Boy.
The big news this fall includes hit titles like Minority Report, Turok Evolution and Castlevania, and to add to that, Metroid Fusion is fully connectable to our Metroid Prime console software.
I’ve focused on user demographics -- teens and young adults versus kids and tweens and the need for different software, separate marketing programs and the opportunity that comes from capturing their changing gaming needs as they progress through the market. However, it is not always that clear cut. The fact of the matter is that innovation is ageless. That Animal Crossing game I referenced originally targeted an ages 8 to 12 market. We assumed kids would be most attracted to the premise that rather than accomplishing a specific goal, the fun comes in just living an alternative life: design your own village, your own relationships, even your own clothes. Well, we aimed too narrow.
The reaction from all ages, especially adults, is approaching cult proportions. At launch, Animal Crossing immediately rose to number 7 on the console charts. Almost three quarters of a million visitors have already clicked on to the dedicated Web site. Hundreds of custom game applications are offered for bid on e-bay. A college coed from Florida says, "I wake up in the morning and it’s the first thing I think about." A housewife in Georgia says, "I have to set my kitchen timer so I know when it’s time to quit." And the rock group Weezer has specific instructions on its own Web site on how to download their music into the game.
New innovative gaming experiences, indeed, are for everyone. At E3 this past May, we predicted a strong holiday season for Nintendo and nothing has transpired since to change our perspective. And let me assure you, the drumbeat continues right into the first quarter of next year.
Look for new software launches that include our exclusive snowboarder 1080: Avalanche for Nintendo GameCube, and dozens of titles from our third party partners, most notably, the Nintendo GameCube debut of The Legend of Zelda. Theater goers will begin seeing game trailers in the month of December, providing yet another reason to request the Nintendo GameCube system this holiday season.
For Nintendo, another trip to the Gerard Klauer Mattison Conference seems like yet another chance to answer doubters. For two decades we’ve responded to doomsayers who saw us about to be trampled by other technology, other publishers, other manufacturers. To be sure, today we remain the last pure play in the sector, challenged by two much larger, more diversified competitors for whom video games are but a single strategy within a larger mission. Well, let me be clear.
Nintendo is in the software business -- to stay. Nintendo is in the handheld business -- to stay. And Nintendo is most certainly in the home console business -- to stay. Work is well underway on the successor technology to both Game Boy Advance and Nintendo GameCube.
The industry future is bright and Nintendo’s future is equally bright. In the end, this business is all about a game player saying, "Man, that’s cool!" In generating that kind of response, we feel we hold a unique combination of assets: deep financial reserves, a history of both business flexibility and product innovation, unrivaled, world-renowned game franchises, powerful partnerships with second and third party developers, and an absolute dedication to one simple goal - the very best in video games.
And consequently, the very best of Nintendo is still to come.
http://www.gamersmark.com/news/2002/11/1/1930/"> Part I
