Everyone knows Mario. But who’s Satoru Iwata? As chief executive of Nintendo Co., it’s his job to make sure Mario rescues Princess Peach and Kirby saves Dream Land. During his 10 years at the helm of Nintendo, Iwata pulled the fabled Japanese company out of its GameCube funk and into a blaze of Wii glory. But it’s been a hard couple of years: Wii game console sales fell off a cliff after peaking in 2009, and in 2011 the company’s new handheld 3DS console got off to a rocky start when it launched in February. Amid slow sales, Iwata made a dramatic move to ax the 3DS price by a third in August last year.
The move pulled Nintendo into the red for the first time, and Iwata fell on the grenade at least symbolically — taking a 50% pay cut for the year. Throughout Nintendo’s ups and downs, the 52-year-old plain-speaking Japanese executive exuded quiet optimism. Yet Iwata has adhered to a strict Nintendo policy against drawing attention to oneself. (Less is publicly known about Iwata than, say, a minor character in a Mario Bros. game.) The chief executive has turned down all requests for interviews about his personal views — until now. He agreed to such a request from the L.A. Times, but only after the matter had been weighed by his staff for more than six months. You can read a profile of Iwata in The Times’ Business section. Here is an edited transcript of the interview.
HC: How do you approach product development at Nintendo?
SI: The most important thing in the entertainment business is to surprise consumers in meaningful ways. This is the biggest difference between our business and those that provide commodities or daily essentials. To provide the consumers with meaningful surprises, we actually have to defy their expectations, but in a good way. At the same time we need to respond to consumer expectations…but also move beyond them. To realize this, of course at Nintendo we sometimes run afoul of what many in the industry consider common sense. For example, when we first announced Nintendo DS, the general reaction was what’s the point in having two screens for a portable game machine? When I first introduced the Wii Remote at the 2005 Tokyo Game Show keynote speech, not everyone believed that Wii would spread to the world as it has today. And when we first showed Wii Fit, a number of people thought, can weighing yourself and exercising every day really become a video game?
The paramount concern in our product development is answering the question: can what we’re proposing really be called a unique entertainment experience? At the same time, we also ask ourselves, will this include an idea that can simultaneously solve several of the challenges that face us?
HC: How did you funnel that philosophy with the development of the Wii U?
SI: To develop Wii U, of course we maintained the goal we set with Wii in attempting to expand the universe of gamers. At the same time, we also tried to adapt to changing circumstances that emerged during the Wii lifespan. Specifically, we needed to comply with the changing ways that people consume TV entertainment, and the new forms of social connection among people.
While making Wii compatible with high definition, or HD, was something our consumers wanted us to realize, we didn’t believe doing so by itself would sufficiently surprise them in a meaningful way. So, in addition to HD, we have developed the new Wii U GamePad with an integrated second screen, and created a new game-based network service. We believe that the Wii U GamePad is a genuine idea that can solve several challenges at once. It will free the home video gaming experience from the TV, allow new forms of entertainment because of the availability of two screens, encourage owners to turn on the platform every day and become a social window to connect multiple living rooms in a new way.
HC: What aspects of the Wii U will change the way players think of games?
SI: Certainly showing concrete examples of new forms of game play is exactly what we are aiming to achieve at this E3. After all, any brand new form of entertainment experience can’t be fully understood unless people actually have hands-on time. Let me talk about two things. The first is how gaming experiences can change by utilizing two screens – the one on the Wii U GamePad in addition to your TV set. This alone will change home video games.
When several people play together, one player will control the Wii U GamePad, and others will use the Wii Remote. This is asymmetry, and our developers are leveraging it to create new game structures. In one of them, a player may deliberately be placed in an advantageous or disadvantageous position and, as a result, that person will have an entirely different purpose or role in the game. I think about a game that most children learn around the world: tag. One child is chasing all the others. They’re all involved in the game…but one person has a different function and goal — to tag another player, right? So this is something different from any game where all players have the same equipment, the same goal and the same opportunity to win. We are not just asking that the best player wins — we are asking one to win the game in a different way. Because the “Nintendo Land” game we’ll announce at our E3 Presentation at the Nokia Theater is a showcase for new game structures utilizing the two screens, I really hope you’ll try it out.
The second area I’ll mention is the social interaction among gamers. Certainly we live in a changing world where people are connected in an ongoing sense like never before, thanks to mobile devices and social networks. With the Wii U system, we have decided to prepare a place for a new social interchange, based on gaming. It is exclusively designed for Wii U as a way for people not only to share game-related information, but also to empathize with others. All Wii U games can take advantage of this. Because all Wii U hardware comes with the Wii U GamePad, a controller that has its own integrated screen, exchanging texts and handwritten messages becomes a lot easier when compared to the existing consoles. The Wii U GamePad can act as a social window that connects your living room with others’.
HC: At Nintendo, do you listen to what your customers say in developing products? Or do you look elsewhere for inspiration?
SI: As a matter of course, Nintendo’s developers always listen to our consumers, but we believe just doing that is not enough. Because we provide our consumers with entertainment, the most important mission for us is to surprise them in meaningful ways. If we just focus on listening to our consumers’ desires, we could never come up with unexpected proposals that would really surprise and please them. Consumers can always express a desire or an expectation, but if what we show them is only part of their expectations, there is no real delight.
For example, 150 years ago you might have asked people how they would like to improve the lighting in their homes. They probably would have asked for better ways to ignite their gas lamps, how to make them brighter or safer. But they would not have told you they wanted an electric light bulb, because it had not yet been invented, and they could not imagine it. So in my opinion, what makes a good game developer is the ability to observe and listen to consumers, and to imagine what latent demands they may have in the back of their minds but are not yet aware of — and then to find ways to meet those demands.
HC: Many analysts express doubts about the 3DS, comparing it to how well tablets and touch devices are selling and how many games are being played on those devices. Is this a fair comparison? How well has the 3DS been selling?
SI: In Japan people focus more attention on portable game machines, and as a result the speed at which new portable platforms spread into that market is quicker. Here in the U.S., even though it is a much bigger market, the proliferation of Nintendo 3DS may not seem as quick. But I hope you understand that Nintendo 3DS in this country is spreading at a faster sales rate than Nintendo DS did, even though there were no smartphones or tablets back then. Nintendo 3DS was specifically designed for gaming, and includes unique ways to enjoy games, and I’m convinced sales will continue to accelerate.
HC: Last year during a keynote at the Game Developers Conference, you spoke about the proliferation of game applications as something that potentially cheapens the industry. What did you mean by that?
SI: If I may, please allow me to correct the premise behind your question. That day, speaking directly to the developers in attendance at GDC, I was not criticizing any type of game, calling anything unworthy or primitive. In fact, if you saw the first video game I ever developed, you would understand that I have a real understanding and appreciation for primitive! My point was this: Some games can be created by a single person over a short amount of time. Some games require hundreds of people to work for several years. Even though they may be entirely different in appearance and nature, they are all video games, and they all have intrinsic value. Wonderful games have been created using every type of approach.
My message was to warn about forfeiting the value of your game, no matter what kind it is. And a way to do this is to accept free distribution of your work. Certainly a minority of developers will realize adequate revenues from payment later on…or maybe they simply want to create games as a hobby. But game development as an industry cannot survive on this business model. Consumers may decide some games are worth $60, and some are worth $1. But if they are trained to expect that all games are free, then I am concerned. In my experience, the percentage of game developers willing to work without a salary is very small. Similarly, the number of publishers willing to invest tens of millions of dollars in development costs on the simple hope of a return is virtually non-existent.
HC: Also at GDC in 2005, you shared details of your early years as a programmer. Can you tell us the first game you developed? How did it do? How did you first get into Nintendo? What led you to join Nintendo?
SI: There are some people in the world who set out from their school years to become CEOs.This is their goal, this is what they study and work to achieve. But that does not describe me. While I love my job, it is never what I envisioned. I am an engineer by education and a game developer by training, and only later did executive functions become a part of my work. So this may give me a different perspective from some other executives in the video game industry. I am happiest when I can talk to other engineers and game producers inside Nintendo about our products. And I think this may also give me a different perspective on the people who use our products — maybe I relate to them in a different way.
What I mean is that my default consideration is not how well a product will sell, or how it compares to other games on the market, but rather the reaction from the gamers who are playing it. How much will they enjoy this? How can we make it better? As I said in that GDC keynote in 2005, in my heart, I’m still a gamer. I must admit — I love video games!
– Alex Pham
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