Forbes contributor Matt Perez recently got a chance to speak with Nintendo of America president Reggie Fils-Aime in regard to various topics. You can read a few excerpts below:
Matt Perez: Starting with the Switch: So you forecasted selling 20 million Switch consoles for the fiscal year. What are the challenges to hitting that number, and what are you doing to avoid a sophomore slump?
Reggie Fils-Aimé: For us, making sure that we drive toward our forecasts and achieve them is going to be based on a handful of things. First, we need to maintain momentum for the hardware. We’re going to do that through a steady pace of launches, starting with Mario Tennis Aces that’ll launch next Friday, continuing through the summer with Octopath Traveler. From third parties, Monster Hunter Generations Ultimate will be coming out this summer, and then obviously, the holiday is so critically important, and we’re in a fortunate position where we have three really big titles. Super Mario Party coming in October, Pokémon: Let’s Go Pikachu! and Let’s Go Eevvee! coming right before Black Friday, and then Super Smash Bros. Ultimate coming out December 7. So we think that the momentum of our business is quite strong, and that’s visualized right now by looking at the Amazon Best Sellers list, where last I looked just before this interview, we had the five top sellers on Amazon right now.
The second part of driving our performance is making sure that we have strong engagement with the consumers that own the hardware. And I think here, the best example is what we were able to achieve with Fortnite over its first 24 hours with over 2 million global downloads for this game.
And thirdly, we need to make sure that we continue driving our digital monetization. We announced yesterday that the Splatoon 2: Octo Expansion would be available this summer. We’ve got DLC for Xenoblade Chronicles 2. But we’re doing a lot of interesting things here in the Americas on the digital front. We’ve enabled our retailers to sell digital codes right there in their four walls, and this for us is great for consumers who want to buy digital content but maybe don’t have access to a credit card to participate with this content. The other thing we’ve done here in the Americas is literally today, we’re opening two new digital shops in our Latin American territories, one in Brazil, which is a huge market, as well as in Columbia.
So for us, we are very focused on driving our performance and to make sure that we achieve the high targets that we’ve set for ourselves.
Perez: You mentioned before that part of the strategy was also expanding the customer base and bringing in new people who may not necessarily be playing games. Do you see games like Nintendo Labo and Let’s Go Pikachu! working toward that goal?
Fils-Aimé: Absolutely. And really, those two are great examples. I would say Mario Tennis Aces is another example of that. This is a game that is very much pick-up-and-play, and yet it has depth and the online capabilities that will excite longtime fans of Nintendo as well. So we’re constantly looking to make sure we have a balance of games that are exciting for our core consumers but also bring new entrants into the platform.
Perez: I know it’s a question often asked, but do you see the 3DS helping Switch sales or are they beginning to bump heads at all?
Fils-Aimé: No, we see our dedicated handheld business with the Nintendo 2DS and 3DS as a key overall business driver here in the Americas. A couple statistics to put this in perspective. Last December, our 2DS and 3DS hardware business grew 27% versus the December the prior year. So far this calendar year, our 2DS and 3DS business is up 10% versus last year. We believe those are a result of our focus on younger consumers and their parents; essentially for 2DS and 3DS to be the first gaming device for 5, 6, 7-year-olds. From a parental perspective, our devices offer great value. There are over a 1,000 games, so you’re certainly going to find something that your child will be excited about and from a Nintendo business philosophy, the 5-, 6-, 7-year-olds of today are going to be the 14-, 15-, 16-year-olds of tomorrow, and having them get a great experience with a Super Mario game or a Donkey Kong game or a Smash Bros. game on our dedicated handheld business is great for our future.
Perez: Regarding Super Smash Bros. Ultimate, Masahiro Sakurai was talking about very minute mechanics during the Direct, and of course, you held the invitational at E3. Would it be fair to say Nintendo is opening up more to Smash’s competitive scene? You’re seeing more and more focus and infrastructure for esports. Would that be an area that you’d want to be more involved in when it comes to tournaments like EVO and the pro scene around Smash Bros.?
Fils-Aimé: So, let me take your question and break it into two parts. First, we did go into a lot of detail on Super Smash Bros. Ultimate, and we did that to make sure consumers across the globe really understood that this is a brand-new Smash Bros. game, with every character from past Smash Bros. games included with updates to the gameplay mechanics. It was very important to drive home that message. That said, the unique thing about Smash Bros. is that it’s a great couch co-op game for consumers who aren’t all that familiar with the game. They can very much pick up and start smashing right away.
But to the second part of your question, the competitive scene: We have been doing more and more with the competitive Smash scene. We’ve supported EVO, we’ve supported a number of the other tournaments. And the Nintendo philosophy is this: We want to first obviously provide a game that really is well-suited for the competitive activity. Certainly Super Smash Bros. Ultimate, we believe, will deliver on that regard. But the other thing that we worked with the EVOs of the world is to have some consistency in the format of the tournaments to make sure that the best players do have an opportunity to compete. And those activities will continue. We believe that letting the communities grow around Smash Bros. as a competitive experience is good for Nintendo and it’s good for the pro players of Smash Bros.
Perez: Nintendo’s talked about wanting to expand its smartphone business and make it a significant revenue segment. What are your thoughts on the monetization strategies within the mobile space? You’ve tried different ways, in particular Fire Emblem Heroes is doing very well, your new partner Cygames has been very successful with its strategies, I’m curious your thoughts on that moving forward.
Fils-Aimé: Our mobile business is doing quite well, and the way we look at it is certainly, there’s a monetization aspect to the mobile business. As you touched on, Fire Emblem Heroes is monetizing exceptionally well. The other piece we look at, though, is the ability of mobile to drive consumers into our dedicated games business after they’ve had a first taste of a particular franchise in mobile. We saw that be quite effective with Pokémon Go. Our dedicated handheld business two summers ago after the launch of Pokémon Go was extremely strong, and consumers are gravitating toward the device to play those great Pokémon games that were available only for a Nintendo 2DS and 3DS. We believe we’ll see that similarly when we launch Fire Emblem: Three Houses next year, with all of the consumers that are experiencing Fire Emblem now and the ability to transition them to a dedicated games device. We think also with Pokémon: Let’s Go Pikachu!, Let’s Go Eevee!, the transition from the Pokémon players on mobile to playing a Pokémon experience on Nintendo Switch is going to be very powerful.
So the strategy’s working. We are continuing to experiment with a variety of different monetization schemes. And we believe that monetization needs to be tied to the gameplay mechanic itself. For Super Mario Run, we believed that the best monetization was one price for the entire content available. For other games, whether it’s Animal Crossing: Pocket Camp or Fire Emblem Heroes, we’re taking a different strategy. We’ve announced that Mario Kart Tour is in development and that will launch in our current fiscal year. We haven’t announced the specifics of the monetization scheme for that, but rest assured that monetization will be consistent with the gameplay that we offer.
And then lastly, you mentioned Cygames. We’re excited about the partnership with Cygames. The game that they’re working on, Dragalia Lost, we’ve announced will be launched first in Japan and the Asia markets. And personally, it’s a game that I’ve had a chance to play and I’m very excited about it. I think it actually is a title that could do well on a global basis. So, mobile is continuing for us. It’s an area that we’ll continue to launch two to three new apps a year as well as maintain support for the existing mobile games. And it is something that we see being quite effective for us as a business to motivate consumers as well as drive financial results.