"Hello, my name is Reggie, and Im addicted to my Blackberry. In fact, to me, its a Crackberry.
(Holds up Blackberry
)
Since I was given my first taste of the Blackberry, I havent been able to put it down. Sure, the constant email connection is a rush, but I also have to admit, when I first got it, i just loved the attention it generated. every time i pulled it out and explained what I was doing, people would say, wow! Now, Im no techie poseur, but that reaction made me kind of feel like I belonged; for the moment, I was cool.
Then, not long ago, I was sitting in a meeting where everyone had their cell phones in front of them on the table, like cowboys displaying their pistols at a poker game. I thought that made me at least equally cool as everyone else until the guy who runs our European operation confessed that while we were discussing business
he was using his phone as a modem to connect his PDA online. While we all talked, assuming he was taking notes, he was simultaneously surfing the net. This time, it was my turn to say, wow!
And the experts say were on the cusp of seeing both those devicesthe phone and the browserbeing incorporated into one wireless package simple enough and affordable enough for the mass market. To that
again I say wow!
These moments matter to me, because like everyone else in our business, I live and die by the ability to generate that same reaction. Were all looking for a way to make them say, wow!
Today Id like to share a few thoughts on how Nintendo approaches that challenge
how our take might differ from those of our competitors
and finally, how this all applies to the upcoming introduction of two new handheld gaming devices: the Nintendo DS and the Sony PSP.
Let me begin by returning to the Blackberry example. This is a wonderful device, but it did not invent email. What it did was to give me a new way to connect to my email. In the same sense, Apples iPod invented neither music nor even portable music play.
But it did revolutionize access because of how much music it transports, and because Apple figured out how to un-tie the legal knot between rights owners and music lovers. These two devicesthe blackberry and the iPoddeserve their success and their hip status because their developers were both innovative and patient.
Despite critical acclaim from the start, the iPod spent a year and a half in sales obscurity before it began to take off, and few people realize that the Blackberry line is already five years old. Well, they did succeed, but success inevitably breeds competition. As hot and dominant as these products are right now, there is no guarantee that they will stay that way. No more than Wangs word processing program; or Texas Instruments portable calculator; or Netscapes browser.
What is rare in the technology world is a product line than can maintain its dominance. If you do that for five years, its called amazing; if you succeed for a decade, its called unprecedented; but if you do it for 15 years, you can only call it one thing: Game Boy.
I say that not just because it makes me feel good, but also to draw a distinction. Game Boy has not succeeded because no one else cared about our multi-billion dollar global market. Not because people thought they couldnt chip off a decent piece of our effective 100% market share over the years, we count nine serious contenders to our portable game line. None succeeded. They didnt fail because they were undercapitalized, or unsophisticated or backed by unintelligent people. They were all playing for keeps. But one difference between Game Boy and those contenders was a differing perspective on what business we were in. Most of them saw themselves in the technology business, and competed accordingly.
We do not for a minute argue that Segas Game Gear in the 90s wasnt technically superior to our Game Boy, after all, it featured a color screen. Back then, Game Boys screen was color, too (as long as you didnt want more than one color.) Recently Nokia married a game machine with a cell phone and other devices, clearly something Game Boy did not. But as yet, N-Gage has not made a ripple in the market.
In the near future, Sonys Game Boy rival will also come to market with a better spec sheet, but the question of better market performance remains, at best, unproven. The distinction is this: while weve steadily improved the technology of Game Boy, Nintendo has never considered itself in the technology business. We are in the entertainment business.
The difference is telling, and I can use the recent history of Sony to illustrate the point. Over the last year or so they introduced two very different kinds of video game products. The first was the PSX in Japan, likely the most advanced game-based device ever devised. It promised video game play with a recordable DVD, a TV tuner, built-in Ethernet capability and a 120 gig hard drive. Believe me, the techies said, wow! The second was a simple camera attachment for the Playstation called the Eyetoy, technology at least one serious reviewer unkindly referred to as primitive. Yet, the Eye Toy is a wow product, and is having infinitely larger market impact because its far more entertaining.
What this again underscores for us at Nintendo is the eternal distinction between high performance and high entertainment. Technology should and will continue to improve over time. But alone, its no guarantee of success, whether your business is games or music players or wireless email.
Now, as I said, technology should and will continue to improve. Historically, the most notable technical advances in our business have come from on-screen graphics. What Donkey Kong Country did for 16 bit; what Super Mario 64 did to invent 3D graphics; what Madden football is doing right now blurring the distinction between video game and real game, all those things produced millions of wows! In fact, when asked to identify the most important advance in game play over the last 10 years, 90% of both PC and console players said graphics.
But in terms of onscreen display, consider where we now stand. In a business where artists and game designers were always forced to compromise, how many pixels to do this? How much shading can i afford for that? The compromises are all but gone. If you can see it or imagine it, you can probably put it on screen in convincing fashion. From this point forward, graphical advances may be far more theoretical than observable. Just like a consumer hooking up a progressive-scan DVD player to a non-progressive scan TV, better technology may be there, but you cant see it.
And this isnt lost on the players. Asked what they expect the most important advances of the next ten years to be, virtually none said graphics. But this maxing out of screen display doesnt mean better technology doesnt matter or wont come into play. It will just evolve in a couple other important areas.
The first is interface, where consistent evolution has already occurred over the years but with substantially less fanfare than on screen imagery. In short, interface is how a player connects with his game. How can we make that better, more entertaining? Traditionally, this comes first from the controller. Nintendo is justifiably proud, i think, of the advances weve introduced here. The original cross pad; the a and b buttons; even the inclusion of a joystick right in the middle of a controller were all innovations available on the original NES home system two decades ago. So was the step-activated Power Pad, a precursor to recent dance game peripherals.
Seven years ago we brought the rumble pak to market to add some buzz to the controller interface, and two years ago we were credited with finally giving the industry a stable and reliable wireless controller with our Wavebird. No more wires to trip over? Everyone said wow to that! And by the way, were not stopping. Youll soon see a brand new kind of party game operated remotely: by bongo drums.
(Roll DK video from E3 sound up)
We believe these kind of advancesimproving the way a player connects to his gameare at least as vital as enhanced on screen graphics because they make games play better, not just look better. And as Ill explain in a minute, we think the new Nintendo DS amply expands on our legacy of interface innovation.
The other area where the industry will continue to see enhanced technical improvement can be roughly defined as interaction. In other words, not how a player connects to his game, but how players connect to each other. One of the signature breakthrough games of the last decade was Goldeneye on the Nintendo 64; it sold more than five million copies in America alone. For a time, its hold on late teens and early 20-somethings was so hypnotic that we received countless complaints from young women that their boyfriends and husbands were paying much less attention to them and much more to beating their buddies on four player Goldeneye. The James Bond license and excellent game design certainly didnt hurt, but the key to success was Nintendos decision to put four controller ports right on the N64 console. That made four-player competition instantly availabe to all older Goldeneye gamers, just as it did for players of all ages with Mario Kart a short while later.
An equally interesting connection story is playing itself out right now with the advance of online gaming. its adherents are simply expanding the same dynamic that exploded with Goldeneye to unseen rivals in unseen locations. Nintendo has not been at the forefront of this push, I guess thats putting it mildly; and the questions we and others have raised are well publicized:
How much is online tied to broadband penetration?
How much of an investment is needed to maintain and upgrade game worlds over time?
And in the end, how many people prefer playing against strangers rather than friends or the computer console itself?
Some of those answers are updated with an ESA study released in June. First, among those who do play games online, there is an overwhelming preference to do so on their PCs as opposed to their game consoles; second, despite some rosy predictions, growth in online gaming is relatively flat year-on-year; third, the favorite genres are puzzle, board and trivia games, not action fare; and fourth, less than 8 percent are paying to play online.
While there is nothing terribly Earthshaking in these numbers, that doesnt mean there isnt a future in head-to-head play over long distances. But what if you could do it with no wires at all? In the current vision of gamers, that wow would be the Holy Grail. Right now, some of the most popular names in massive multiplayer online games are available for wireless devices, but as yet, only as single player adventures. Were not at a point where multiple players can battle over realistic distances wirelessly. As an industry, well see small steps toward full wireless competition. and as Ill discuss in a minute, we think Nintendo DS represents one of those important first steps.
But before I do that, allow me one more important point concerning Nintendos long history of using game technology to wow gamers. In short, technical advances tend not to grow and thrive in a vacuum. in order to prosper, game technology is always nurtured and nourished by the same thing: the presence of a great game.
Why did the original Game Boy succeed? Its incredible surge of acceptance was probably due to one factor over all others: the packaged Tetris game that came with virtually every one of those millions of initial game boy purchases. If we didnt have Tetris then, we might not have Game Boy as we know it now. In 1998 we gave Game Boy a color screen and immediately recognized record system sales, but to credit the new screen for its sales explosion is to ignore the real reason for the leap, the worldwide introduction of Pokemon. Remember, Game Gear boasted a color display in 1990, but it didnt have Pokemon to build the wow.
To bring this necessary association of hardware and software full circle, let me point out that so far in 2004, once again Game Boy is the worlds best selling video game system. And helping fuel those sales is the reintroduction of great NES classic games including Super Mario Brothers and Zelda and Excitebike and Pac-Man. For us in this room, theyre nostalgic, but for many other younger players, they are brand new thrills like reading Harry Potter or watching Star Wars for the first time.
Now, as always, software sells hardware, no matter what the hardware technology. Thats why Nintendo and all subsequent competitors came to the same conclusion about how they advertise their products. Technology is always dressed in the appeal of the latest hot game. I want to stop briefly to show you how were again showcasing the Nintendo Gamecube with great games this fall, and how we even wrap the dominant Game Boy in entertainment imagery
(Roll GCN and Freeboy spots sot
)
So now, let me shift focus to the future, specifically to the upcoming hardware launches for Nintendo DS and the Sony PSP in particular. What is it from these machines thats going to make players say, wow? In order to answer that, we at Nintendo believe there are four key questions that have to be answered, no matter whos manufacturing the technology.
The first is multifunctionality. I dont know any fellow Blackberry owner who doesnt love his machine for what it does, and most of them say theyd love it more if it could do more; specifically, if it could also replace their cell phone. Well, new Blackberries do combine wireless text and voice functions, but you dont often see someone holding his Blackberry up to his ear and talking into it. Im not smart enough to know exactly why, but you can bet there are a lot of interested people at Blackberry trying to find out the answer. And so are their rivals.
Sometimes technology just doesnt belong together. You could manufacture a combined toaster and espresso machine, but I dont know how many people would pay to have that in their kitchen. For Nintendo and Sony and every other player in the handheld wireless world, this issue is central: What technologies belong together, how do we make them work together, and what will people pay for it? The second issue is content transportability. For whatever reason, there is no history of hit software maintaining its popularity once it leaves its native technology. A few quick examples: I imagine there might be someone out there who once-upon-a-time after a few too many beers dropped a few too many quarters in Pac-Man and Pong machines in a local watering hole. But those same games never significantly drove sales of any home game system. Why does flight simulator seem to work on PC but have little or no value anywhere else? Tetris was a phenomenal success on Game Boy
but a lesser success elsewhere.
What this says to manufacturers of new game devices is that its terribly risky hoping that hits from any existing system will help establish a new one. Native technology seems to demand native content. That doesnt mean the games cant have familiar names, but that character or challenge has to be presented in a fresh and compelling way.
Third, there is the issue of the older demographic. Everyone understands that over the years, the largest demographic of Game Boy users has been younger players. Sony has been very gentlemanly in saying that they dont intend to compete for that audience, that their sights are set on players from the older teen years and up. And in fact, we aim to have the DS markedly increase the average player age when compared to the traditional Game Boy. But the key question is this: what do those older players want from a portable game machine if, indeed, they want a portable game machine at all? We believe Sony is choosing to hedge its bets with the inclusion of video and music playback in the PSP, a game machine, perhaps, for those who really arent that much into games. But to be clear, Im not implying that that approach doesnt make sense.
On the other hand, if we are talking about a hard core 20-something gamer, the question of consumer desire becomes more pertinent: just what, exactly, does that avid player want? The initial thought is pretty obviousif they love Grand Theft Auto on their Playstations, they should love it just as much on the PSP, right? Well, leaving aside the issue of specific content not jumping platforms very well, game developers have to consider how these older consumers will play.
The vast majority of older hard-core players have made a leisure time commitment to gaming. Your mother may play solitaire or hearts for ten minutes at a time; your most passionate gaming buddies probably play for entire nights or weekends at a time, because thats what they love. Now, consider those games they play to immersion: Halo, Grand Theft Auto, Madden, Zelda, and ask yourself this: are they away from home for sufficient blocks of uninterrupted free time to repeat that immersion on a handheld device? How many 20-year-olds really take regularly three-hour plane flights? Eleven-year-olds spend half-day car trips in the back seat playing Game Boy, 21-year-olds spend half-day car trips in the front seat, driving. Even if those blocks of time were available to them, how many older gamers wouldnt really rather wait and play those games at home, lying on the couch, blasting away on their big screens?
The less obvious answer herebut perhaps the more accurate oneis that older gamers may well expect and accept a different kind of game experience on their portable. Probably games that offer limited but still exciting play sessions and ones that dont pretend to match the environment of their high tech living room setups. We call this inter-tainment, action occupying short bursts of time between other activities, which leads to the final issue: the wow factor itself.
If history is any teacher, no matter how the crowds at E3 reacted to the double screens of the DS or the design of the PSP, once theyve had those devices at home for more than a day, the enduring thrills are going to come only from the games.
(pause)
With this preamble then, let me explain how Nintendo is approaching our future with DS. On the issue of multifunctionality, our intent is to market the DS clearly as a portable game-playing device, just as we have done with Game Boy. But there will be one important distinction this time, and that difference is the socialization factor. The DS will be equipped to wirelessly connect 16 players in close proximity to a single game. This, to us, marries the same excitement of competing side by side with your friends in Goldeneyebut expands it fourfold. Its such a good idea, in fact, that even Sony has paid it the sincerest form of flattery.
The DS will also be equipped to allow long distance connections via wireless Internet browser, but as we know, were still some time away from actually having wireless head-to-head play in any contemporary game sense. So, our answer on multifunctionality is pretty simple: its designed to expand the sole function of playing games in compelling new ways.
On the issue of native content, many of you know we recently released the list of more than 60 Nintendo DS games in development from more than two-dozen companies in Japan, and today were issuing a companion list for games underway here in the western hemisphere. Among more than 75 games in total, there are familiar names: Final Fantasy and Madden and Castlevania and Harvest Moon, and familiar genres: sports and racing and role-playing and adventure.
But what isnt represented in those lists are the novel ways in which those games will play on Nintendo DS. Fresh approaches owe to the way these games are reinvented by the technical innovations of DS. Because the interface is altered by the inclusion of two screens, one of them a touch screen, and wireless multiplayer, and the possibility of voice command, that means that you can literally experience these adventures like never before, no matter how long youve been playing games.
Developers feel like theyve been given a new canvas to paint on. Theyre jazzed. And if theyre saying wow right now, gamers will be doing the same thing very soon. On the issue of older gamers, were aiming squarely at those who clearly put game play first, those who are most hungry for a new approach. The earliest adopters for DS will be those who are also the freest thinkers. The trendsetters. The same people, I guess you could say, who were first to snap up their Blackberries and iPods.
On the last issuegamesId like to give you a sneak preview of the great things that are already in store for our DS launch this year. But hey, Ive got bills to pay too! Thus, I regret to inform you that youre just going to have to wait a little longer for a full preview of DS software. But with more than 75 games in development worldwide, with brand new player interface and brand new player interaction, I can promise you youll see things youve never seen before.
A recent online poll by gamefaqs.com puts buying intent for Nintendo DS at twice that for our new rival. But like the upcoming election, its still too soon to make any firm predictions.
What I can tell you is this: For the next fifteen years, just like the last 15, handheld gaming will be known by one name: Nintendo, because Nintendo has always made handheld players say the same thing, wow!
Thanks so much for your attention.