This was a lovely set of tales. We got a demo of a Zelda game for DS, we got a free copy of Brain Training for the DS, and we got a lot of laughs from the lovely man who heads up Nintendo. While they're clearly saving all the Nintendo Revolution details for E3 [nngh], this was still a wholesome, hearty speech.
As ever, just my notes, not a transcript. I can't listen and make sensible notes at the same time, so I just slam down the bulk of what's said.
Thanks for giving me the honour of speaking before you again this year. In my work I have to talk to a lot of people but as you all know since I still have the heart of a gamer I have most fun talking to you.
Once upon a time way back in the 1980s a company became number one because its products meant fun to young people. But then in the 1990s another company became a bigger brand and its bigger budget took away the first company’s number one position. Luckily this company had a product that was still appealing, and this company used a strategy to win over new customers. It would redefine its own business and expand it market to new users. Could this work, this company asked? Well we know the answer, the answer is yes. Because that first company, Pepsi,
…became number one, displacing Coke; it stopped asking “how can we sell more cola”, instead it started asking, “what else do people want to drink”. Today Pepsi is number one in bottled water, sports drinks and health drinks, and it remains number one in the snack business too. As every game developer understands, the three basic food groups are Fritos, Cheetos and Doritos.
I’m here today to share some stories with you. But I began with Pepsi because it demonstrates how thinking differently and holding strong to your strategy can disrupt an entire industry - and in a good way. For some time, we have believed that the game industry is ready for disruption, not just from Nintendo but from all developers. It’s what we all need to expand our audience and to expand our imaginations. Several years ago when I began talking about reaching out to casual gamers and non-gamers, people [listened?].
Today the Nintendo DS is succeeding in disrupting the handheld market. Most industry growth last year came from just this one product line. Now people are listening more closely. I know many of you smiled when we demo'd Nintendogs last year at E3, and I’m sure not many of you believed it would sell 6 million copies around the world by this time this year! But the success of the Nintendo DS is not just a story of one game, it’s also the story of several new software titles creating brand awareness. Let me explain how disruption is working for us. Let me share some information about Japan’s market.
When it launched in 2001 the PlayStation 2 sold 6 million units in its first 21 months. The Nintendo GBA reached 6m in 20 months. But the Nintendo DS is selling much faster – we’ve reached 6m in just 14mths! This number would be far higher if production could keep up with demand. In part the success of the Nintendo DS is due to how we define technology with new features, but more the disruption comes from how we take advantage of […]: no system has created more discussion or surprise than our Brain games. The first Brain Training sold 1.9m units in one month!
I have been asked many times how we decided to develop these games. So this is the first story I should share. Where did this idea come from? You can guess. It started where all great creative ideas begin: from … a board of directors.
When [person] was a member of our executive company, he complained no one his age played games. Japan is an aging society. He thought a game for seniors might work. I agreed that it was a good start, but it thought it would be perhaps a mistake to target only seniors. Something to appeal to other users as well maybe? So just after E3 two years ago, we were finalizing the Nintendo DS hardware as well as preparing the Nintendo DS launch games. It was a busy time. Even so I asked each of our four main development groups to nominate a few people to start a task force on this. Some of them did not have much experience making games, so I got to play the role of professor.The goal of the task force was to invent a game whose appeal would include everyone – young, baby boomers, seniors. Our brainstorms didn’t produce any solid ideas, but at that time people in Japan were reading a book; “Train Your Brain. 60 days to a better brain”. I thought this sort of game would be a good idea. Our CFO was doing these exercises already and convinced me to go forward. Then I consulted with Miyamoto and he got excited too.
Several of the taskforce said maybe exercising game would not be enough. Would there be a way to measure brain age? What an idea! People would compete with their scores! But nothing could begin till we came to an agreement with the author of this book. As we are the same age, I decided to meet with him. He agreed to find just one hour on just one day to talk to me, he was a busy man .. and that day was the day the DS launched.
The meeting lasted 3 hours. We showed him our prototype brain training software, and explained how his mark might translate to other media. He was enthused. The doctor offered to demonstrate evidence of how the software was stimulating brain activity. He asked if he could borrow one of my team members. I said, certainly. His assistant came in with a strange bowl with wires attached. He placed it upside down on my team member’s head. It looked like a 1950s sci fi movie! He could prove that the game was changing the blood movement on the surface of the brain. I’m sure people at Nintendo wondered how I could spend so much time on this meeting, on the day of the DS launch. But I think it turned out to be a great idea.
Internally we have one thing we call the [development environmental group?]. They’d finished a library of tools for voice and sound recording. Simultaneously, handwriting recognition. When they began this work we all thought these functions would be useful for the DS someday but we had no idea how. But then suddenly it seems to Miyamoto and me that they would be a perfect match for this brain game. I was very enthusiastic about the project now! But the development team didn’t feel the same way. I assembled a group of 9 and told them this wasn’t very complicated. They should be able to finish the first game in just 90 days. Including holidays. I could tell they were not happy! But at least with such a short schedule they couldn’t waste much time complaining.
My concern was how the market would react. Few people inside Nintendo believed the retailers would place big orders. It was too different from what they knew already. So at this point one member of the sales team suggested a new rule: when a salesman showed the software, the first 15 minutes of the meeting must be the buyers trying the brain exercises themselves. The retailers hated this idea. They were disgusted! But we gave them no choice.
We could only wait to see how they react. And how did they respond? Well…at this point I think I will take a risk and see if we can reproduce those first reactions right here on stage. Here’s Nintendo’s Localisation team person, with some friends.
[demo, using Will Wright as a tester, hehe]
Iwata: Thanks Will, Jeff and Jamil. I think we have discovered people who are now determined to improve their brain age! That’s the secret appeal of this game. Let me add one more note. Those retailers agreed to buy a total of 70,000 units, which was just a few more than our team expected, but I was not satisfied with that number. Between the launch of the first game and the second, you could see a disruption in Japan, something had changed, many new people were playing. We returned some months later with the second version. The retailers quickly placed orders for 850,000 units. Brain Training 2 recorded the biggest first week sales of any DS game ever. Now, the three games, including Big Brain Academy, have sold 5m+ units in Japan. The moral of this story is: if you want to succeed in game development, you need to follow 2 simple rules. First, listen to your board of directors. And second, listen to your chief financial officer.
The development of this game came from our belief that people wanted something new and in this case it took form of a treadmill for the mind. But we learned that the only real way to demo the appeal of these games is to have people play them. In Nintendo Japan we had teams take the game home to show to their friends and family. Suddenly family members who had never played before were playing. So I decided the same thing might work here in America. The time to start is right now. So when we finish today, I thought we should test your brain age and you can show it to a friend and parent. So when you leave this keynote, please, all of you take a copy of Brain Training for the DS with you!
Please only take one!
The second story I want to share is disruption of a second type. Not only of a new technology but finding a way of making it attractive to everyone, so opening up to a whole new audience. This technology was the Nintendo wi-fi connection. You used to have connection in Japan, you could use your NES to trade stocks, but the time wasn’t ready for networking then. Recently we decided to launch Nintendo wi-fi connection. We knew Animal Crossing and Mario Kart were coming, and we wanted them to have multiplayer wi-fi. Development time was short. Then I wanted the connection to be seamless. Someone around the world or next to you in the same room, it should be the very same experience. This causes problems. Making things easier for players makes things harder for developers.
But the hardest thing would be to decide who to connect with. Online gamers can be a very aggressive, vocal group. For the casual player this kind of interaction can be intimidating. If we only cater to this very vocal hardcore we will never expand the audience, I think. I wanted the wi-fi network to be a gameplay version of MySpace. We referred to it as “project houseparty”. This idea of comfort, of inviting friends to play in your own home. Well in Nintendo of America this name wasn’t very popular. They thought it sounded like a Tupperware party. But no matter what we called it, I believed it should be simple and fun.
It’s simple to connect locally when you’re in a room with friends. It should be just as easy even if they’re thousands of miles away. But fun depends on the players – you may want to play mariokart with only friends you know, or maybe your fun is to defeat total strangers. No one playing Animal Crossing wants someone to come in an cut down all their trees and trash their town. I wanted players to have the choice. Freedom to choose. For developers: easy and fun? That would mean the work would be easy OR fun. There were many barriers to overcome.
In the end, it is the freedom of choice that has made the Nintendo wi-fi connection so successful. We’ve surpassed 1m players, and 29m sessions, in 18 weeks. This is faster than Xbox Live! It took them 20 months to reach 1m. Of course this has made our wi-fi development team very happy! Here is a picture of them: you can’t see the sign they’re holding up in this picture, so I shall show you. It says “Hello GDC, Wi-fi loves you”.
They wanted to come but I told them sorry no. But I promised at least I could bring their picture.
This week we added a new game to Nintendo Wi-fi; Metroid Prime Hunters, and it has brought something new. I knew a wi-fi demo would be nothing new to demo to you. Instead the true appeal is seen best if we hold a 4 person demo here on stage.
Demo: this demo will show you something close to mouse and keyboard ! You use the touch screen to aim, then you slide left back front with the control pad. You jump by doubletap.
[Alice: This is amazingly speedy. Very Quake 3.]
I know I am much better watching this than playing it.
When we talk about expanding the market to new players, may times this means new kinds of software. I hope that metroid shows we’re not […] ..we’re catering for all tastes. Tetris DS is something your grandmother would enjoy – and you can compete head to head with people over wi-fi! We’re bringing out an all new Super Mario Bros game...and because you are all such game fans, I’ve decided to reveal one more brand new adventure for you today.
[Zelda clip for DS]: to rapturous applause
So Legend of Zelda: Phantom Hourglass is designed exclusively for the DS. It will launch later this year. It’s a product from the same team who created most of the Zelda hits in the past. You can play both on DS and Gamecube at E3.
The third story I have to share is the answer to a question that people ask me all the time, “how did you have the idea for the Revolution’s freehand controller”. We started with a simple question: why is it that anyone is comfortable picking up a remote for a TV but that most people are afraid to even touch a normal controller for a game?
Our first meeting started in 2004. First we decided the controller must be wireless. We must give players freedom to move. Second it must be simple, non-threatening. But it should be sophisticated to serve the needs of complex games. And yes, we wanted it to be “revolutionary”. Finding an answer to all of this was not easy. For more than 6 months two people in Nintendo did nothing but produce sketch after sketch. Each led to more discussion. Dozens of prototype designs. All in all, 15 people were involved trying to figure out the answer. I was considering technology that would incorporate a direct pointing device…
Many good ideas were floating around but nothing felt revolutionary. Then last year a young team leader came up with a disruptive idea. What if you could play with just one hand? Mr Miyamoto quickly imagined a small simple wireless device. But we saw an immediate problem – how to do backwards compatibility to games requiring two hands? Mr Miyamoto had the answer – make the small wireless controller detachable..[..]. this sounded good, but when we shared the idea with our Metroid Prime producers, they objected. They said their game wouldn’t work with what we invented. They added another idea – keep the one hand device but add another device for the other hand if the game required, like this nunchuk device. We think this is something that will entirely change first person shooters. So now we really went to work.
What did it look like finally? Well… it looked like the TV remote control that we first imagined a year earlier: sometimes ideas are like good wine, they just need time. After all the mockups, we were happy. It was wireless, inviting to new players, and something brand new for hardcore players, plus a new interface. But it also represented something else. As you can imagine, this was a very expensive process, not just in research and development but also in manufacturing such an elaborate control system. Some people bet their money on the screen [being the most important innovation], but we put our money on the experience. This is an investment in market disruption.
We believe there is a new way to connect a player to his game. New is good. But there also is an appetite for old. For young players, classic games are brand new! For others, they are a way to feel young again. After we announced the Virtual Console concept last year, I can announce that .. specifically developed for the Sega Genesis and Hudson games will also be ..[…]
[applause over speaking]
…available for Revolution via a budget system. Between them these guys built a library of over 1000 games. But not all the games will be available, only the best of them will be available.
Thank you for listening to my stories this morning, however the most important story of all is still to be told. I hope all of you, the creative force of our industry, will help us write it. It’s a story of how disruption will help all of us overcome the growing barriers to game development. We know the main barrier is cost. There is one dominant business model for our industry. Publishers work backwards from a console game at retail for 50-60 dollars. Games must be longer, larger and more complex to compete. This requires bigger development teams. Success is more likely if a strong license is acquired. But even then huge amounts of money are needed to market that game to a mass audience. It’s understandable that publishers feel most comfortable with sequels as a way to manage risk, but as a result our business is beginning to resemble a bookstore where you can only expensive full-set encyclopedias. No romance novels! No paperbacks!
In our business too often people with a fresh idea don’t have a chance. I believe if Tetris were presented today here’s what the producer would be told: “more levels, better graphics, cinematics and you’ll need a movie license to sell that idea!”
The producer would go away dejected, and today Tetris might never be invented. We understand […] the future zeldas, marios and metroids will be bigger masterpieces. But this doesn’t have to be the only business model. We want to help you make new ones. We offer a combination of opportunities that can’t be matched. Our controllers .. it allows for game creation that isn’t just dependent on the size of the development budget. Our Virtual Console concept is the videogame version of Apple’s iTunes music store. Since I announced this virtual console, other people have been interested in digital downloads. But they will not be the same as us: for we will be truly disruptive. The digital download process will bring new games to the widest possible audience of new players.
When I think of what faces all of us right now I imagine what it must have been like for the new explorers who first set foot on new continents. Our adventure is still ahead of us! We are committed to creating an environment where all of you can prosper. I began by saying that disruption is not just a strategy for us. We’ve disrupted handheld and it worked. We disrupted wi-fi and it worked. We disrupted the definition of a game, and that’s worked. In a few weeks [at E3] you will understand how better to disrupt a console game!
We do not run from risk, we run to it. It should be our goal to reach new players as well as current players – for all of us. Show them surprise. Our reward, to convince them overall: videogames should just be one thing. Fun.
Fun for everyone!