LOS ANGELES — Reggie Fils-Aime has been at Nintendo of America for a decade, but the last three years have been tough as Nintendo, the parent company, hasn’t made an operating profit. The Wii U game console isn’t selling anywhere near as well as expected, especially compared to the prior Wii that sold more than 100 million systems. The 3DS handheld is selling, but mobile devices have eroded its market share.
To fix this, Nintendo is focusing on what it does best: making great games. Mario Kart 8 has helped Wii U sales. But will it be enough? Fils-Aime, the president of the publisher’s American branch, also says that Nintendo is embracing change as evidenced by its effort to create entertainment that improves “quality of life.” Will that arrive in time?
We caught up with Fils-Aime at this week’s Electronic Entertainment Expo (E3) trade show in Los Angeles.
Here’s an edited transcript of our interview.
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GamesBeat: We’ve looked at your booth. What are you excited about?
Reggie Fils-Aime: You need to play Smash Bros. 3DS. 60 frames per second. It looks gorgeous. We’re showing off a new mode called Smash Run. It’s a fabulous execution in the Smash Bros. library. We think the fans are going to really enjoy powering up their skills, powering up their characters, and then being able to take their characters into the Wii U version.
GamesBeat: Your approach to E3 hasn’t changed since last year, I take it? You’re focusing on the games.
Reggie: Always. This is my 10-year anniversary since my first E3. Since the first one I participated in back in 2004, we’ve always focused on the games. Even when we’ve launched new hardware, we’ve focused on the games as a way to bring that hardware to life. That continues to be our focus. We’re doing it in new and unique ways, creating content that’s consumable directly by the consumer and shareable as well, like what we did with the digital event. Things are going well.
The last three years for Nintendo have been operating profit negative. It’s a situation that we’ve never had before. For us, what that has done is brought into sharp focus the need for us to have compelling software to drive our hardware installed base, which will create an opportunity for independent developers to bring content to our system.
To break that down, the 3DS business is on a roll. We’ve been able to globally sell more than 40 million units. We’ve done that by having fantastic software, and not just our big franchises like Super Mario side-scrolling games or Mario Kart or a great new Zelda game. We’ve done it by having smaller games, whether they’re the next Fire Emblem, which did extremely well across the world, or new installments in the Kid Icarus series, as well as a very robust eShop.
On our Wii U business, we believe we began turning the corner during the holiday season with the launches of the new Donkey Kong game and Super Mario 3D World. That momentum continues with the launch of Mario Kart 8. We announced not just that we’ve sold 1.2 million units on a global basis, but we announced to the financial community here in the United States that Mario Kart 8 has increased the sell-through of the Wii U hardware business by a factor of four. In the two weeks prior to the launch, versus what we’ve seen now following the launch, we’re selling at a daily rate four times higher than where we were before.
Above: Nintendo booth at E3 2014
Now it’s about continuing that steady pace of sales. Hyrule Warriors. Bayonetta 2, with Bayonetta packed in as an added bonus for the consumer. The launch of Smash Bros., the launch of Captain Toad, following that next year with Splatoon and the Miyamoto projects. All of that is how we need to move forward from the current situation we see ourselves in today.
GamesBeat: There’s still a relative success, where people may expect you to achieve more. Mario Kart has shown good numbers, but it’s lower than it would have been if you had a higher installed base. There’s some good and there’s still some challenges.
Reggie: This is what makes us different from all the other publishers. We have launched Mario Kart 8 roughly a year and a half into the life of Wii U. That game is going to sell in big numbers now through the end of life. That’s a very different proposition than what many other publishers do. They annualize their content. They launch and the content is gone four months later. Because of the high quality of our software, because they really are system-selling must-have games, they sell for years and years.
We’re still selling Mario Kart DS when that product was launched in 2005. We’re still selling New Super Mario Bros. for the Wii. That was launched, I think, in 2008? We sell product for years. The argument of, boy, maybe Nintendo should have waited until the installed base was higher? No. These games drive our installed base.
Above: Mario goes to Nascar
GamesBeat: Do you feel more of a sense of urgency because of the operating profit situation? Are you accelerating some things, even though you want that high quality?
Reggie: We always have a sense of urgency. During the years where we were selling 10 million DSes and 10 million Wiis in the U.S., we still had a sense of urgency. Video games is the only business we’re in. We’re focused on driving the installed base of our two platforms. We’re focused on launching great software. We’re focused on building an installed base that entices the big third-party publishers to support the platform. We’re focused on creating an environment in our eShop where the small independent developer is bringing their best content. As long as we operate with that sense of urgency across all those different initiatives, then we will drive a positive return for our shareholders.