Nintendo sales chief Cammie Dunaway on the quest for a broader game market

Hardcore gamers threw a fit when Nintendo didn’t talk much about hardcore games at its E3 press conference in Los Angeles. But the company has bigger fish to fry, as its choice of executives suggests. Cammie Dunaway joined Nintendo of America in November 2007 as executive vice president of sales and marketing. She led off the Nintendo press conference at E3 with a chat about breaking her wrist while snowboarding and a demo of the Shaun White snowboarding game for the Nintendo Wii coming from Ubisoft. Before joining Nintendo, she was chief marketing officer for Yahoo. Here’s an interview with Dunaway from the recent E3 show.

VB: How is Nintendo working out for you?
CD: It’s going well. It’s fun for me because it’s the first time that I’ve been here (for Nintendo). It’s quite different from how it’s been in the past. I was here at E3 with Yahoo Games four years ago. But it was still the big, wild, craziness.

VB: How did you interpret the pricing moves by the competitors? At first, Sony was at $600 and the Wii was at $249. Do you feel now that the spread is smaller, with them at $399, that you have to lower your price?
CD: No, we really don’t. For us, it’s the what is the right value proposition to put in front of consumers. Even now, with our capacity increases that we’ve seen, the Wii still stays on the shelf a matter of hours at most retailers.

VB: Pricing is unlike any other generation. The initial price has never held up so long. The demand has never held up this long. Do you simply say that the price should be the same as long as it is selling?
CD: It’s a whole new paradigm. The old life cycle thinking doesn’t really apply. Price is one piece of the equation, but only one piece. What has made the Wii the fastest selling console of all time is the unique interface. You have written about that yourself. It’s so fun for people at all levels of experience.

VB: In some ways, by keeping your price high, you defeat one of the ambitions you have to expand the gaming market. If the price were more accessible to larger numbers of people, you would broaden the market more easily.
CD: I think $249 is a pretty accessible price point.

VB: It’s a good price but it’s higher than you would expect in a normal generation. By now, you would expect to have to cut your introductory price.
CD: That’s exactly the point. This is a new paradigm. It doesn’t follow the old rules. New people are discovering Nintendo every day. We saw with Wii sports that a lot of traditional gamers bought the system and new people in the household were using it. We saw with Wii Fit that there are whole new audiences coming in. Wii Music will continue that trend. As long as there are new audiences discovering the product, we’ll be satisfied with the pricing equation.
VB: How do you describe the accessory strategy?
CD: I would describe it as continuing to provide unique interfaces that expand the definition of what a video game is. The Wii Balance Board, expanded by scales for Sumo wrestlers, is now being used as a snowboard in a Shaun White game and as a sled in a Rayman Rabbids game. It leads to unique and creative experiences. There are a lot of great accessories we have announced at the show. The microphone for Wii Speak will take the community experience inherent in Animal Crossing so that you have a room of people talking to another room of people.

VB: The old rules for accessories were that only 20 percent of the people who owned the consoles would ever buy an accessory. And if they bought them, they would buy a controller. What are the new rules?
CD: I don’t think we know the rules yet. We haven’t released all the numbers. But the sales of something like the Wii Wheel with the Mario Kart Wii game have exceeded the traditional thinking.

VB: Bundling them with a game is the way to do it.
CD: It’s a great way to give them the whole experience. With Animal Crossing, we will sell the Wii Speak microphone separately. You don’t need it to have fun with the game. But it’s an enhancement for people who really want to have this community experience.

VB: If you introduce an accessory, it’s not just for one game. It’s a platform?
CD: Absolutely. It’s gratifying when third party game companies embrace this broader tool kit. The Call of Duty game with the Wii Zapper is a fun way to play that game.

VB: Do you walk on eggshells here? Consumers may feel they have to shell out extra for all of these accessories. Why don’t you just bundle them into a complete package?
CD: I think that the answer is that we always have to have a breadth of choices available. There are times when we will bundle the accessory. The Wii Motion Plus will come free with Wii Sports Resort because it enables the full range of motion in activities like sword play and tossing a disk.

VB: To me, that accessory seemed to have a technology that should have been in the original. It’s more accurate pointing.
CD: When you think of activities like bowling, it’s big motion. It’s not as necessary to get all of the angles of movement. It worked at the time.

VB: It was the best available and now there is more accurate technology?
CD: We are always looking to surprise and delight people and expand the experience.

VB: How far do you go with the motion sensing? 3DV in Israel has a motion-detection camera where you wave your arms in front of a camera. That’s an immersive experience.
CD: I’m sure there is a place for those kinds of technologies. But having simple and intuitive interfaces has been one of the secrets of the Wii and the DS.

VB: So even in this area, it’s a matter of choosing technology that gets you simplicity instead of the highest-end technology.
CD: Yes, and really the technology that allows you to capture the most fun in the game play.

VB: Does it surprise you that Microsoft didn’t announce a motion-sensitive controller?
CD: There were certainly a lot of rumors that they were going to go into the territory that Nintendo is successfully pioneering. I wouldn’t speculate on their strategy. I’m glad I’m sitting in my chair instead of the Microsoft offices.

VB: The Entertainment Software Association released numbers that said that 38 percent of households in the U.S. were game console households.
CD: I don’t think we should be looking at household penetration. We should be looking at user penetration. Traditional gamers were the ones who bought the Wiis and stayed out until midnight to get them. But once the Wii got into the household, people who had never touched a gaming device or hadn’t touched one in years started using it. The story isn’t a household penetration story but a user-penetration story and average numbers of users per household. Even with the DS. People share the DS. The parent shares it and says, “whoa, this is fun. I want to get one of my own.”

VB: So the data is coming in to support that?
CD: Yes. I showed charts that showed the shift in gender from 70 percent male to 30 percent female with the DS to 50-50. There is also a shift in the average numbers of households on the increase.

VB: Do you have a sense for the people who are out of reach?
CD: One thing about Nintendo is that we don’t take our success for granted and never assume more success is around the corner. We have been fortunate so far to appeal to a wide range of ages and abilities. One compelling figure is that there are 19 titles for the Wii that have sold more than 400,000 copies from third parties. Those titles are a pretty broad mix of ratings and genres. There are mature titles, sports titles, and teen titles. We are offering an experience that can be enjoyed by everyone. We’ll continue to put our take on things like Wii Music, a completely different experience than a Guitar Hero or a Rock Band. I wouldn’t think that people would choose one or the other. It’s a different kind of game to have an improvisational jam session.

VB: I always thought those game makers were leaving money on the table there because my kids would often fail out of songs in Rock Band. That doesn’t happen in Wii Music.
CD: Yes. It’s apparent there is a sense of creativity and education that you can get from playing Wii Music. You can experiment with different instruments. Different arrangements. It’s just a different genre.

VB: Does it appeal to adults as well?
CD: I definitely think so because there is creativity in all of us. Guitar Hero is about mastery. Wii Music is about uninhibited creativity. You will see skill come into play. There will be amazing Wii Music that will get shared. But anyone will be able to jump in and have an experience that is satisfying.

VB: The titles seem to be taking a long time to make. That is Nintendo’s style. The games look so simple. But they take a long time to perfect.
CD: As a newcomer, I have a lot of respect for that. We don’t launch until Mr. Iwata and Mr. Miyamoto say it’s perfect. It can be frustrating because we all want more sooner. But once we get the game, we are assured of having an amazing experience. Our retailers know that Nintendo games will get a response out of consumers.

VB: Sega’s strategy is interesting because they divorced themselves from hardware and took their brands wherever they could go. I wonder why Nintendo didn’t do the same. Like take Mario to the cell phone. And reach those people who won’t buy a game device.
CD: Fortunately, we are getting a lot of people to buy game devices that we never thought would buy game devices. There are 70 million DS units around the world. It’s more like how do we take a device and add functions and unique uses to it? Who would have thought you would use the DS as a cookbook? It’s simple and powerful. I can watch a little video on the proper way to crush garlic. I won’t take a laptop and sit it on the counter. I could take my DS with me in a grocery store and shop for ingredients. That’s a way that we expand, adding functions to the DS.

VB: Do you think the recession is a force of gravity that will pull the game industry back to earth?
CD: I personally think that we will continue to see robust growth in the game industry. Historically, we have not been impacted by tough economic times. It’s back to the value equation. Compare the cost of taking your family to a theme park or going out to dinner and a movie with the hours of fun you can get playing a game like Mario Kart or Wii Music. People will see these products as great values in tough economic times.

VB: People can forget they’re in misery.
CD: (Laughs). We all need that.

VB: Is either the hardcore gamer or the broader market more sensitive to a recession?
CD: It’s a great question. Hopefully, as an overall industry, we’ll stay robust in these times. I’m on a board of a company in the boating industry. Yachts have a tough going right now. But video games will stay strong.

If you liked this Q&A, please check out our others:

Byron Acohido, author, “Zero Day Threat”, on who to blame for identity theft

Bob Aniello, marketing chief at THQ, on mass market video games

John Antal, chief of staff and military/historical director at Gearbox Software, making “Brothers in Arms: Hell’s Highway”

Wagner James Au, author “The Making of Second Life”, on life in a virtual world

Robbie Bach, president of Microsoft’s Entertainment & Devices Group, on Zune

Robbie Bach, president of Microsoft’s Entertainment & Devices Group, on Xbox 360

Robbie Bach, president of Microsoft’s Entertainment & Devices Group, on Windows Mobile

Mark Bernstein, CEO of the Palo Alto Research Center, on life beyond Xerox

Jeff Boyd, CEO of Miles Electric Vehicle, on the future of cars

Lucy Bradshaw, vice president in charge of production at EA Maxis, on making Spore

Jim Crowley, CEO of Turbine, on keeping the online game machine humming

Gonzague de Vallois, senior vice president of publishing at Gameloft, on iPhone gaming

Vinod Dham, father of the Pentium, on a life of technology and venture investing

Jon Goldman, chairman Foundation 9, on game development as a model

Seth Goldstein, CEO Social Media, on social networking’s future

Mike Gallagher, head of the Entertainment Software Association, on E3 2008

Bing Gordon, former chief creative officer, Electronic Arts, future partner at Kleiner Perkins, on leaving EA

Todd Howard, executive producer of Fallout 3, on making a big role-playing game

Mark Jacobs, general manager of EA Mythic, wants to go to WAR

Steve Jurvetson, partner at Draper Fisher Jurvetson, on the cleantech revolution

Max Levchin, CEO of Slide, on social networking

John Lilly, CEO of Mozilla, on the hybrid nonprofit-for-profit business model

Marissa Mayer, vice president for search at Google, on social search

Paul Marcoux, Cisco vp of green engineering, on making data centers energy efficient

Ray Muzyka and Greg Zeschuk, co-founders of BioWare, on making great games

David Nordfors, director of Innovation Journalism program at Stanford, on teaching new journalism

PopCap Games top executives Dave Roberts and John Vechey, on making games fun

Steve Perlman, CEO of Rearden, on funding R&D for startups

Ted Price, head of Insomniac Games, on expanding a high-quality game development studio

Jeff Pulver, VOIP pioneer, on the future of voice

John Riccitiello, CEO of Electronic Arts, on EA’s focus on higher-quality games

Gordon Ritter, Emergence Capital, on software-as-a-service

Henk Rogers, Tetris pioneer, on saving the earth

Curt Schilling, founder of 38 Studios and Boston Red Sox pitcher, on starting a fantasy online game

Dwayne Spradlin, CEO of InnoCentive, on expanding R&D crowdsourcing

Bill Watkins, CEO of Seagate, on the storage business and roughing it with Eco Seagate

Strauss Zelnick, CEO of Take-Two Interactive, on managing creativity

Mark Zuckerberg, CEO of Facebook, on hiring an outsider as COO

Check out MobileBeat2008, our conference on July 24 in Silicion Valley that aims to help developers make sense of the significant changes going on in the mobile industry.