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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

October 8, 2012 at 10:39 AM

Q&A: Nintendo boss on Wii U vs. AppleTV, Google, Xbox 720 …

Here are edited excerpts of my interview with Reggie Fils-Aime, president of Nintendo of America. (Photo by Mark Harrison, Seattle Times staff photographer)

The conversation in his Redmond aerie led to today’s column on the upcoming Wii U and its potential as a new TV interface.

Among the topics we covered was competition with Apple, Google, Microsoft and others developing new entertainment hubs.

Q: Could Nintendo TV be the killer app in the Wii U — even more than its gaming capabilities?

NintendoU_mh179200.JPG

A: The way that I would say it is Nintendo TV is certainly going to be something that every member of the family picks up and engages in at least once a day. If that helps them get more comfortable with the GamePad and in the end adds to more games being played, then that’s great. But fundamentally it’s part of the overall proposition of games, TV plus social.

Q: Do you think you’ve designed a superior TV interface for a family?

A: We think we have. In terms of a way to find what you want, to actually watch it on the big screen or on the small screen and then to be socially engaged on it, yeah, we do think we’ve created a better mousetrap.

Q: Will that broaden the appeal of the Wii U beyond gamers?

A: We believe so.

Q: Will people buy the system just for home entertainment, similar to the way many early buyers of Sony’s PlayStation 3 were looking mostly for a great Blu-ray player?

A: You know it could be, but I do think in the end the consumers we’re talking to are those consumers who want a game console in their home. So they want the best Nintendo entertainment, they want the best of the third-party entertainment.

So I think it’s going to be that larger community of gamers which now is like two-thirds of all households today. But once they get it in the house we think that Nintendo TV is certainly going to be a great value add.

Q: Lots of people are looking to “digify” their TVs with devices that connect them to the Web. Are you looking to fill that niche with a device that makes it easy to get Hulu and Netflix on their TVs?

A: Certainly. But I think more than that. If the consumer just wants to add VOD to their TV, there are a lot of different ways to do that. I think the value we bring is by providing the consumer a better way to find all of that content.

And here’s the example: if you have Amazon video services … for you to find what’s on there, what’s hot, what’s trending, is pretty tough. Now say you’ve got Amazon plus Netflix plus Hulu Plus and you’re trying to figure out what it is you’re trying to watch — that’s what Nintendo TV really solves.

Based on the way you watch TV — which is based on shows, based on the actors, based on the genres, based on what your friends are watching — we solve that equation by letting you search that way across all of your entertainment. For us, we think that’s the big idea.

Q: Google’s also trying to build a new TV interface with search and social capabilities …

A: There are a lot of people who’ve been trying to do this and I think the challenge has been how do you build the economics, how do you drive the installed base, and how do you drive the relationships.

Our approach was, because it’s on the back of the gaming platform, that’s what’s going to drive the installed base. Because we’re clearly a games and entertainment company, Netflix and us have a fantastic relationship. We’ve got a fantastic relationship with the Amazon video people, a fantastic relationship with Hulu Plus, a growing relationship with the cable companies and dish companies.

Essentially we were the perfect vehicle to drive this type of innovation into the home. Whereas all of the other competitors have maybe an issue from a partnership standpoint that is tough to solve.

Q: You don’t have a video store that’s competing directly (like Sony and Microsoft …)?

A: Exactly.

Q: But are you still getting commissions on the video rentals through the Wii U?

A: We’re not going to talk about the business relationships that we have, but suffice it to say we’ve got very mutually beneficial relationships with all of the entities that participate in Nintendo TV.

Wii U black.jpg

Q: Will you make as much money on the platform from services such as video as you will from video?

A: As a first-party publisher, there’s a large part of the value chain that we make on the game side … so I doubt we will make the same profitability on the services side as what we do on the games. But it’s still going to be a very healthy business for us.

Q: I talked to companies a few years ago that were working on ways to identify who was using the TV at a particular time so they could target ads to, say, mom, dad or the kids. How are you going to take advantage of that information, which you’ll see through your system?

A: Certainly the way the system works, it gives us access to a lot of information, as long as the consumer agrees to share it with us. How we utilize that, we’ll find out as we go.

Again, we’re not in the ad-serving business. We’re not in the micro-targeting business. But certainly I can imagine as we build out the service that’s something that Comcast or AT&T or any of the cable companies are really going to be interested in, potentially.

Q: So it could give you leverage, negotiating to work with them?

A: Sure.

Q: Apple TV is also a rival of yours, including the current adapter and the rumored actual TV set. If it comes to pass I’ll bet that it’s something comparable to the interface you’ve developed (blending services, adding search, social and messaging, plus a simple and elegant remote).

A: We’re all working off of the same public statements but it seems like they, too, want to be your cable box and they want to own that direct relationship with the consumer based on the content.

Again I think that’s the sticking point for how they’re going to bring their vision to life. Because I don’t think any of the established players are willing to give that up.

Q: Over the life of this console the landscape’s going to change, more video is going to move to on-demand, cloud services instead of cable.

A: Potentially. One of the beauties of what it is that we’re doing is that essentially Nintendo TV is a cloud service, right? It’s delivered over the Web. It’s interactive. It can change on the fly.

Q: If this really grows, will it change the character of Nintendo? Will it become more of a consumer electronics company vs. a game company?

A: We’ve always been an entertainment company, going all the way back to the hanafuda cards and our key equities. We’re an entertainment company. I think what the Wii U does is further show that our vision is this broader entertainment landscape.

Because in the end the time that consumer spends in any form of entertainment that’s not on our device is a missed opportunity for us. It’s that type of thinking that led us to create “Brain Age,” same type of thinking that led us to create “Wii Fit.” It’s looking at the broadest landscape possible as to what constitutes entertainment.

Q: Do game companies have to evolve this way because the box and games business is declining?

A: From a Nintendo perspective this makes sense for us because we view ourselves from this broader entertainment landscape. We view every potential consumer as an opportunity. Whether they’re 95 years old or 5 years old, we want to create entertainment that’s going to speak to that consumer. In our view whether we deliver it in a handheld device or in their home, it’s an opportunity to engage with that consumer, make them smile, give them something positive.

You look at the way we’ve managed the Mario franchise, the Zelda franchise, all our of our key franchise characters, utilizing a variety of different gameplay styles — it’s always been about driving entertainment.

Q: Will future versions of the 3DS handheld be more entertainment focused. Will there be a way to get Nintendo TV onto the 3DS or 4DS?

A: Today you can connect your DS to the Wii in terms downloading demos, downloading bits of entertainment. Second point is one of our key developers has already aid that they’re working on a key franchise — “Smash Brothers” — that will have some form of connectivity between the 3DS and the Wii U.

Certainly because we manufacture the devices, we can enable some sort of connectivity. But beyond that on your 3DS today you can watch movies, on your 3DS today you can have a variety of deep experiences. We’re certainly leveraging the learning we have in the broader space across all of our platforms.

Q: How about things like the timeline — the interactive chatting about a show in Nintendo TV — will that come to the future 3DS?

A: It could. But the piece to recognize and the reason we’re able to bring that to life is that your signal, from either your cable box or your dish, this system has access to it through the IR codes. … Who’s to say the next iteration, … the 4DS or whatever it is, might be able to do that, maybe.

But it just highlights the way we think about hardware development is we envision scenarios, we envision what can be done technically, that the current system doesn’t do and then we build it into that new device.

For example, if we hadn’t built the IR capability into the GamePad, the work we’re doing with Nintendo TV couldn’t come to pass. That’s another key advantage we have, for example, vs. tablets or other handheld device. Not all of them have IR blasting capability. In fact, most of them don’t.

Q: Speaking of tablets, how are you going to surface this against all the new tablets this holiday season?

A: We’re working very hard to make sure that consumers understand that this is an entire system. It’s the console, it’s the GamePad itself, it’s an entire proposition. It’s not just a tablet that you’re going to have in your home.

So the first step is really making sure that the consumer understands what is the entire proposition. The second step is making the consumer understand all of these great experiences that they can get that they’re not going to be able to get on a tablet, and they’re not going to be able to get on a tablet somehow connected to a gaming system like what our friends down the street are trying to do.

The only way we can deliver an experience like “New Super Mario Bros U” or like Nintendo TV is that this is an entire connected system , the way the GamePad talks to the console, the way the console is connected to the TV, the way it speaks to your entertainment provider. Your cable box or your dish provider. That entire ecosystem is what we’re providing.

In our view the best way to bring that to life is to talk about the actual experiences, to talk about Nintendo TV and show it is unlike anything you can do today. To talk about the games and show that it’s unlike anything that you can do today.

(Below is a screenshot of EA’s FIFA Soccer 13 on the Wii U, with control details on the GamePad)

Q: You must have made a decision that linear TV was still going to be first-class on here. Your competitors, say, Google TV, didn’t pony up for a guide. You did, deciding that people still watch a lot of linear (broadcast) TV. (Note: Google does not license a standard guide for live TV broadcasts, but a spokesman said there’s a “TV & Movies” app available that pulls show data from online sources.)

A: There were just some numbers that were put out that … in terms of TV viewing households, it’s still something like 95 percent of all households. Linear TV is not going to go away, despite what anyone else says. It’s certainly going to be driven by sports; it’s going to be driven by event type programming. And so for us we absolutely embrace that in the way we’re approaching Nintendo TV.

Q: Will you sell this system through Comcast or other TV partners?

A: It’s certainly possible.

Q: Why didn’t you just buy TiVo and go the whole DVR route?

A: That’s not what we do.

Q: I wonder if Nintendo 30 years from now will be seen as more of an entertainment/video company?

Thumbnail image for FIFA13WiiU_Screenshot-Tactics-DRC.jpg

A: I think that we already see ourselves as an entertainment company. I think that certainly as we launch the Wii U, as consumers experience Nintendo TV, I think consumers will also see us as a broader entertainment company.

Q: Consumers may also think you’re crazy to launch a system built around a tablet and a social network when there’s a dominant tablet company and dominant social network already …. How will your Miiverse social network compete against Facebook?

A: We believe we’re going to get traction with Miiverse because it’s going to be dedicated to your gaming friends and your gaming community.

Here’s the example: Yes, I belong to a few different social networks. But on that social network am I going to be posting how, you know, challenging this particular part of this particular Mario game is and asking for help? Probably not.

But I will post that type of information on Miiverse. And that’s the difference. We’re trying to cater to a specific opportunity around gaming and gaming conversations that we know our audience is passionate about.

Whether they’re the most active consumer or whether they’re the brand new game player, they get passionate about a game, they get passionate about questions of how to beat a level, the background for a level, what to play next. And we believe all of those social conversations are going to be best served by something like Miiverse vs. an existing social network.

Q: How about conversations about a football game or TV show that they’re watching?

A: For those types of conversation, we’re letting the consumer decide what’s the best social network to use, whether it’s through Miiverse or Twitter or Facebook. All of that’s possible through Nintendo TV.

Q: Would you prefer that all those conversations happen through Miiverse?

A: For non-gaming conversations, we are ambivalent as to how the consumer wants to have that conversation. But we’re passionate that when it comes to gaming, they’re going to want to have that conversation through Miiverse.

Q: Are you going to monetize those conversations and social activity?

A: Right now we see it as a service. We see it as something that’s going to be free to the consumer and a built-in part of the value proposition that is Wii U. Do we believe that potentially it’s going to be a way for consumers to discover more content — a way for consumers in the end to buy more software? Hopefully.

But we think making sure it’s the best service possible for the consumer in the end is going to be good for us.

Q: Consumers might think the Wii U is expensive. Will the price slow the adoption?

A: That’s why we’ve provided the two different price points and the two different SKUs. We certainly think that the basic model at $300 is a fantastic value. We think the deluxe version at $350 with “Nintendo Land” packed in is an exceptional value. We think whether you’re looking to spend $350 or only want to spend $300, we’ve got something for everyone.

Q: What’s your view on consumers’ spending this holiday season? have they already spent their money on phones, or are they looking for a big new thing this holiday?

A: We think there’s a variety of consumer situations out there. We certainly believe that there are quite a number of consumers looking for the next big hot product and looking to buy Wii U. That’s millions of consumers.

We also think that there are going to be a few million consumers who are very late adopters who are going to be looking for a lower priced home console that has fantastic games. The Wii is for that customer.

We think that the Wii will have a strong holiday as well because there certainly are many consumers who are still feeling some financial pressure who only want to spend a certain amount of money but still want to play Mario and Donkey Kong and all of these great franchises.

There are going to be other consumers where they want a handheld and we’ve got a full range of different handhelds all the way from a DSi for $99 to a 3DS XL for $199. So I think that we have positioned ourselves regardless of the consumer’s economic situation to find happiness with Mario.

Q: Will the Wii U and its capabilities last you through the next console generation?

A: We think so. It’s based on having great graphics, it’s based on having a robust online execution. We believe that this system is going to have a very long life, and it’s going to be very well supported by third-party publishers.

Q: Will you refresh it through its life by adding big new partners, such as new video partners?

A: Certainly. It’s going to be based on who the players are, and how they fit into the ecosystem that we’re building. But as we drive the installed base of Wii U, we think there’s going to be a lot of additional partnerships there for us to have.

Q: Can you fend off the Xbox 720 and PS4?

A: Once you talk about what that is, we can probably fend it off.

Q: What about goggles? Microsoft may be adding goggles. How can you make it without goggles?

A: Tell me if 3-D TVs with goggles have worked so far.

Here’s Nintendo’s demo video of Nintendo TV on the Wii U:

https://youtube.com/watch?v=08O0G9CjcI8?rel=0

Comments | Topics: 3D, 3DS, Apple

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