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Discussion Nintendo: "Switch business has exceeded our expectations", plans to expand game development capability by $900m, $2.7bn for theme parks, stores

Atheerios

Atheerios

Poké Maniac
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I'd now like to take this opportunity to talk about new fields where we will utilize our cash.

As a company that brings smiles through entertainment, Nintendo's goal has always been to create original entertainment. In a business with extreme fluctuations like the entertainment business, the basic policy of our financial activities has been to secure cash and other liquid assets so we can continually offer products and services that constantly deliver new surprises.

While this basic policy will not change, the Nintendo Switch business has exceeded our expectations, putting us in a strong cash position in these last few years and presenting a good opportunity to reconsider how to most effectively utilize our cash in a variety of strategic and meaningful ways.

Let me describe the fields we plan to actively focus on from a mid- to long- term perspective, given the changes in our current business environment.

These efforts will be made in addition to our conventional research and development and capital expenditures. The new fields where we will utilize our cash can be broadly classified under two themes: building software assets and building a foundation for maintaining and expanding relationships with consumers.

These software assets include games, and we aim to expand our game development frameworks inside the Nintendo group. We are not dismissing the possibility of M&A activities, but our first priority is to organically expand our own organization to continue Nintendo's creative culture. In addition, we will pursue opportunities in non-game entertainment businesses that have high affinity with the game business. To that end, we will work to build software assets in fields other than games. We will also work to develop new video content, following on from the Super Mario movie.

Our other theme, of building a foundation for maintaining and expanding relationships with consumers, will center on expanding the ways that Nintendo Accounts can serve as the foundation for providing consumers with better experiences and better services, and for creating new added value. The aim is not to simply promote the shift to digital, but to build a uniquely Nintendo service infrastructure based on our integrated hardware-software business. To maintain and expand relationships with consumers, we will work to enhance the My Nintendo service, discussed before, and the My Nintendo Store.

Our efforts will also include initiatives to increase the ways to deliver Nintendo software, following the new Nintendo Shops for Asia and South America that we opened after the launch of Nintendo Switch. In addition, we will consider enhancing our direct touchpoints with consumers through efforts such as adding more physical stores, as represented by Nintendo TOKYO, both in Japan and overseas Along with our integrated hardware-software business, which is at the center of everything we do, we also consider utilizing our cash in the research and development of technologies for delivering our software assets, and in the formation of new partnerships that can help bring that about.
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From:
 
OK but where’s Earthbound and F-Zero and Pikmin 4 and Nintendogs and Wario Land and Mario Strikers and
 
Beard said:
Expanding first party development….very exciting stuff.
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my heart skipped a beat when I read that. SUPER exciting even though we probably won’t see the fruits of it for a while.

Hopefully “more video content” means stuff besides Mario.
 
These software assets include games, and we aim to expand our game development frameworks inside the Nintendo group. We are not dismissing the possibility of M&A activities, but our first priority is to organically expand our own organization to continue Nintendo's creative culture.
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This one seems important to highlight. Focus will be on EPD and their other internal studios.
 
Maybe this expansion can help create a Mario RPG team again. Just Paper Mario isn’t enough! A dedicated Pikmin team would be nice too. Also expanding the Zelda team so they don’t need to rely on Monolith as much.

I’d be very happy with more Nintendo animated films and anime. Something Zelda related is a must. Give me Xenoblade the anime movie series please lol. I’m surprised they haven’t done a Tokyo Mirage Sessions anime considering how many Atlus shows there are already. (We also need a TMS2!)

Also give us a Nintendo store on the West Coast! (Nintendo Los Angeles maybe?)
 
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The most crucial thing for Nintendo is to not have any software gaps towards the end of a console generation and sometimes even at the start. The Wii, Wii U and 3DS all suffered from this one way or another.
 
The 300 billion yen on expanding infrastructure surrounding customer engagement... I'm not so foolish that I think this is related to NSO, but I imagine there's some spill-over there. That has me aching my eyebrow the most, actually.
 
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Time to buy and expand Treasure. S&P 3

License the Goemon ip from Konami and give it to Good Feel to develop.
 
Good news! This'll impact the Switch 2 more than the current console, but I'm looking forward to what comes of it.. Spread some of these additional resources to Game Freak as well so Pokemon can improve too please.
 
I really like that they're going to be expanding their merchandising. I like stuff, and buying that stuff! Set up more Nintendo Stores across America, please!

Maybe the exansion of their first party division will incentivize them to play around with their lesser used franchises or even develop new IPS. The only two recent new IPs of note I can remember are Splatoon and Arms, so seeing Nintendo develop even more unique IPs would be great to see.
 
It's good to see Nintendo investing in and expanding their dev teams. With so many of their IPs still sitting on the shelf it'll be good to have another team or two onboard to further bulk out their output. Maybe even another new IP or two.

Veeery interesting about their plans to expand outside the gaming sphere further. They seem really confident in the Mario Movie, and maybe if it does do well we'll see some of their other IPs get represented in new media, be it film or TV or whatever.
 
GoGoDezmo said:
I really like that they're going to be expanding their merchandising. I like stuff, and buying that stuff! Set up more Nintendo Stores across America, please!

Maybe the exansion of their first party division will incentivize them to play around with their lesser used franchises or even develop new IPS. The only two recent new IPs of note I can remember are Splatoon and Arms, so seeing Nintendo develop even more unique IPs would be great to see.
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At least one store in Europe would be great too. When we can‘t have a Universal Theme Park over here :(
 
lexony said:
Were this shorts and other stuff like the parental controls made internally? The Smash Ultimate Stuff was made extern company for example.
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They were made in cooperation with 2 other Japanese companies. I don't know about parental controls though
 
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While this is a mighty number, I'm lacking a bit of context. What's the timeframe for this spend? And what does current spend on game development look like for them?
 
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Chris Walken said:
You know whats next Nintendo, stop creating gymmic new consoles, focus on what works and people want and expand your software input by increasingyour developers or acquiring new ones.
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So what's next for us? With the new Nintendo Gymmic you'll get to create your own console out of thin air! We managed to lower the costs of everything all in the name of creativity! We watched kids play imaginary games while thinking of this new innovative concept. You'll love it
 
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Obligatory omg, they can finally afford to implement folders!!!

But seriously, $900 million into Nintendo Group game development frameworks means new hires, entirely new internal groups, and key acquisitions. I believe that means in addition to earmarking additional funds to further cultivate third-party support? Either way, thanks Animal Crossing :p

Really looking forward to seeing how the investments break down. This choice quote:

We are not dismissing the possibility of M&A activities, but our first priority is to organically expand our own organization to continue Nintendo's creative culture.
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really fires up the imagination. Have they already been in exploratory talks with companies? If so, who?
Are they prioritizing expanding the Japanese development force, or looking to expand Retro in the US or next Level in Canada? Or maybe even setting up a new studio in Europe? Or China?
 
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It's lovely to read that they're dropping almost a billion into their own dev branch.

New (young) talent, better tools and work enviroment, you can do a lot with that amount.
 
I still totally trust them to somehow abruptly totally shit the bed because they launched some weird ass thing that nobody asked for. But that wouldn't really be Nintendo if they didn't do that.
 
Bonejack said:
It's lovely to read that they're dropping almost a billion into their own dev branch.

New (young) talent, better tools and work enviroment, you can do a lot with that amount.
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Yeah that bit is especially exciting. Who knows how many cool gameplay mechanics that kind of money and men can cook up.
 
To put the 900 mn USD number into perspective, the amount Nintendo spent to acquire NLG was rumored by Nikkei to be in billions of yens, which is likely under 10 bn JPY ~ 100 mn USD. So yeah, that mountain of cash is gigantic, and I wonder what's their plan to spent such amount in the next decade.
 
Good news. Send some of that money the way of NERD, iQue and NST and get them working as internal production groups.
Mercury_Sagit said:
To put the 900 mn USD number into perspective, the amount Nintendo spent to acquire NLG was rumored by Nikkei to be in billions of yens, which is likely under 10 bn JPY ~ 100 mn USD. So yeah, that mountain of cash is gigantic, and I wonder what's their plan to spent such amount in the next decade.
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Nine Level Games confirmed.
 
Furukawa needs to pump up those numbers.

Can't buy Koei Tecmo with that small of a fund.
 
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I think that the investment in EPD and expanding creative talent is a testament to their happiness with the young blood talent that came up during the past 10 years or so.
 
To that end, we will work to build software assets in fields other than games.
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This part I find most intriguing.

Mario Teaches Typing 2: Here'a We Go!
Louvre Guide HD: de retour avec vengeance!
Pokemon Vitality Sensor: Blood Pressure Adventures!
Captain Falcon's sick Calendar app for Android and iPhone!
LABO: Hydroponics Home Circuit!
 
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It's going to be interesting to see how much of an increase this actually is, over what timespan and in which areas. Nintendo has seen steady growth over the Switch era: NCL went from 2133 at the launch of the system to 2621 today, globally they went from ~5000 to ~6700 in the same timespan. As for specific examples, we already know that Monolith Soft and to a lesser extent Retro Studios have grown during this time. Obviously, the acquisition of NLG also meant an increase of their workforce. This additional investment is quite large but the wording makes it hard to predict how soon we're going to see its effects. Is this over 5 years? 10 years? More? edit: according to Nikkei it's over a 5 year span. That is pretty exciting.

One large focus is obviously going to be EPD itself. We've known about some projects stalling or being put aside due to their lower priority. But people at Nintendo have also warned against explosive growth because they fear it would dilute their culture. It's going to be a challenge to balance this with the necessary growth but the unprecedented strength of their games in legacy IP like Mario and Zelda plus their ability to make 10m+ sellers like Splatoon and Ring Fit definitely warrants more investment. And if the rumours about an EPD-developed Donkey Kong are true it indicates that they are bringing some larger IP back into the fold.

Even though they don't rule out M&As, I think it's pretty unlikely that this money will go towards them simply because none of their current partners warrant an acquisition. Of course, this can change at any time if the owners want to sell as it was the case with NLG. But I don't think you can plan for that unless one of their partners has already expressed interest in selling. There are several potential partners that could be great fits but we already know that Nintendo is acquisition-averse.

Personally I hope that they continue investing in NST, Retro and Next Level Games. I already said back when NLG was acquired that they have the chance to create a network of developers that they can flexibly place on projects as they see fit, the same way they do in Japan already. In Tokyo I see a lot of potential in EPD 8 sharing a building with Game Freak and HAL (as well as PTD and 1-Up Studio).
 
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efyu_lemonardo said:
This part I find most intriguing.

Mario Teaches Typing 2: Here'a We Go!
Louvre Guide HD: de retour avec vengeance!
Pokemon Vitality Sensor: Blood Pressure Adventures!
Captain Falcon's sick Calendar app for Android and iPhone!
LABO: Hydroponics Home Circuit!
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Curses, you beat me by seconds with a Vitality Sensor 2 joke (Flawless Vitality)

In all seriousness, maybe animation to accompany some of their games? They've done it before with the likes of Kid Icarus and Starfox. Something along the lines of limited anime series for Fire Emblem/Xenoblade etc. They'll have paid attention to what Netflix has done with Castlevania for sure
 
I personally hope they don't acquire external studios and rather invest into existing ones to such a degree they can actually afford to make multiple games at once.

Expand existing ones into several locations too. Retro Studios can open an office in some other place, stuff like that.
 
@Dardan Sandiego I don’t think “acquisition-averse” is the correct framing. They engage in conditional acquisitions, which is important for the reasons they engage in them.
For Nintendo, M&As aren’t about IPs or patents or even technologies. They’re about talent and expertise. So when you engage in M&As for those reasons, you have to be able to keep the whole reason to acquire. That means quality talent that wants to work with Nintendo and is eager for acquisition.
This is why NLG was acquired, ownership was ready to sell and NLG had already decided to only take contracts with Nintendo as far back as 2014(?), so the talent was eager, obviously capable and the opportunity arose.

So long as conditions are met, no M&A is out of bounds, but those conditions are not always easy to meet. When they are, though? Yeah, they do it with little to no second thought.

And there’s nothing stopping them from building new studios outside Kyoto, either, albeit carefully.
 
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Dark Cloud said:
To me this is most important. EPD is cool and all, but I want every western studio buffed. NLG has damn good talent. Them and Retro should have 2 teams. NST can get there too as they continue to grow.
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Right. Even though I didn't grow up with N64, it's a deep shame how they largely abandoned having a western network that helped them so much. Genre and IP diversity is important and I believe NST, Retro, and NGL can offer so much if grow organically. Matter of fact, have N.E.R.D. open a game development studio and steal the Mario Rabbits team away from Ubisoft.
 
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Chris Walken said:
You know whats next Nintendo, stop creating gymmic new consoles, focus on what works and people want and expand your software input by increasingyour developers or acquiring new ones.
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The Switch is a gimmick console though, and it's exactly what people want
 
I'm not educated in this area so maybe I'm just not understanding the business sense in investing billions of dollars in retail when retail is dying. They want to be Apple so bad.

Chris Walken said:
You know whats next Nintendo, stop creating gymmic new consoles, focus on what works and people want and expand your software input by increasingyour developers or acquiring new ones.
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lol
 
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