Games/Interactive

As Nintendo continues to struggle through the current video game console cycle with the underperforming Wii U, the company is counting on its next console, code-named NX and shipping in March 2017, to help turn its business around. And ahead of the NX launch, the company is mulling over the use of virtual reality (VR) and plans to step up its release of apps for mobile devices.

That’s according to comments made by Nintendo executives June 29 during a Q&A at the company’s annual shareholder meeting in Kyoto, Japan. Their comments were translated into English and posted on Nintendo’s website July 5.

Nintendo is “well aware that other companies are developing games and game-related products using VR technologies, and that consumers are interested in all of this,” said company president Tatsumi Kimishima. “I cannot say anything specific at this time, but understand that we also consider VR to be a promising technology, and we are conducting research with much interest.”

Nintendo is “researching not just VR,” but augmented reality (AR) and “many other technologies” as well, according to senior managing director Shigeru Miyamoto. The company has a whole “range of core technology including 3D, and we are also considering the possibility of implementing these in our own hardware development,” he said.

For VR in particular, Nintendo is “looking into development” with a focus on “how our current core products are meant to be played for a relatively long period of time,” Miyamoto said. Nintendo is also “looking into the possibilities of providing an experience that gives value when played for a short time, and how to eliminate the concerns of long-duration use,” he said, adding: “We are also looking into how to make sure that a parent doesn’t need to worry when their child puts on a VR device in their living room.”

There’s been a lot of hype over VR devices from Sony, Oculus Rift, HTC and other companies. But at the annual Electronic Entertainment Expo in Los Angeles in June, “it did not feel like VR was that big of a topic,” Miyamoto said. “This could be because VR is not that much to look at for the spectator, even while it might be highly appreciated for the person actually experiencing it,” he said.

Nintendo understands that increasing corporate value “will require action on many fronts” in addition to its new console and VR, Kimishima added. That includes continuing to investigate projects that make use of its intellectual property (IP) and developing products that improve the quality of life, such as Nintendo’s ongoing QOL Project, he said. The company, however, is most focused on preparing for the NX launch and plans to “increase corporate value at a steady pace by bringing new projects to fruition,” he said.

Low consumer demand for the Wii U since it shipped in 2012 has been accompanied by a weakening of consumer demand for Nintendo’s once-dominant handheld video game systems, amid increased interest in much cheaper mobile games. To counter that, Nintendo decided to start making downloadable mobile apps available for other device manufacturers’ hardware. Its first effort on that front was the Wii-like social networking app “Miitomo,” released in March for Android and iOS mobile devices.

“Miitomo” was downloaded more than 10 million times by unique users and the number of downloads keeps growing, Kimishima said. Nintendo will expand the number of countries where it’s available and that “should further increase the number of downloads,” he said, adding the company is “focused on the retention rate” — the number of consumers who continue using the app. The communication style of the app represented a “new challenge for Nintendo, as this is not just direct one-way communication, but rather communication through Mii characters,” he said, conceding “there are some points that we need to improve” on.

Nintendo plans to release about another four mobile apps by the end of March 2017, Kimishima said. Of those, two titles — “Fire Emblem” and “Animal Crossing” — were already announced, he said, without disclosing the names of the other new apps. He projected that the smart device business will contribute to Nintendo profitability for the current fiscal year.

Nintendo is “still in the process of learning, as we have only just started the smart device business a short while ago,” Kimishima admitted. “We plan to deepen our analysis of the overall smart device business,” he said. Nintendo teamed with mobile developer DeNA on the app initiative, he said, adding his company was “leveraging DeNA’s know-how for our own business” because developing mobile apps “will require the involvement and support of our partners and not just our own human resources.”

The responses that Nintendo has seen to “Miitomo” from different age groups have been “very interesting to learn about,” said Shinya Takahashi, director and general manager of Nintendo’s Entertainment Planning and Development Division. He added: “Releasing applications for non-Nintendo platforms is one challenge for us, and we will try all kinds of things as we continue this challenge.”

Game controllers for apps that make it easier to play action games on mobile devices are available and “it is possible that we may also develop something new by ourselves” on that front, Takahashi said. Nintendo is looking into making action games for mobile devices, he said, adding the company’s goal is to make “Nintendo-like” applications “for everyone from children to seniors.”

Nintendo’s recently announced plan to produce movies featuring its IP is “less a venture into the movie business, and more a question of how we can utilize the Nintendo IP in video content as part of the broader effort to put our IP to practical use,” Kimishima also said. “If anyone wants to partner with us, we’ll hold discussions,” he said, adding “there are many interested parties.”

Nintendo might want to consider focusing on kids with the coming NX console, according to David Cole, CEO of video game research company DFC Intelligence. “The under-12 market may be the lost console generation and this demographic represents a significant opportunity” for video game console and software companies, he said in a research report. Nintendo has “tremendous opportunity to capitalize due to” Sony’s success with the PlayStation 4 and that console’s focus on older gamers, as well as Microsoft’s “multiple missteps” with the Xbox One and that company’s “poor support in leveraging” the hit game “Minecraft” with a younger audience, he said.

However, the children’s console video game market is “way too small” for Nintendo to concentrate on that audience alone with the NX, said Wedbush Securities analyst Michael Pachter.