Reggie on Revolution, DS, Internet, Iwata and more

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Pushing the envelope to the next level with Reggie Fils-Aime.
by James Mielke

03/10/2005
With the Game Developer's Conference kicking into full swing today, 1UP
editors Sam Kennedy and James Mielke along with Electronic Gaming
Monthly's Dan Hsu and Bryan Intihar sat down with Nintendo executive
vice president of sales and marketing, Reggie Fils-Aime. We discussed
the competition (Microsoft and more specifically, the Sony PSP) as well
as the past, present and future of Nintendo. Envelopes were pushed,
bars were raised, and we were definitely taken to the next level. Want
to know how Reggie feels about the prospects of Nintendogs? Read on,
hungry gamer.

1UP: The boys at Microsoft are being proactive with getting information
out there on the Xenon/Xbox 2. Is Nintendo planning on coming forth
with information on your next-gen and DS plans in a similar manner?

RFA: I think in fairness, the entire world knows that they are on a
different development path than either we or Sony are on, so from that
standpoint it makes sense for them to be sharing a lot with you guys
given that they're trying to make the holidays. So, I think that when
it's more clear what our launch plans look like, we'll certainly be
able to sit with you guys in that same type of timing horizon and give
you real good access. I think what we can also think through is, if you
will, post-E3, while we will have made quite a few announcements, I
guess a range of opportunities. There may be some things we do together
then as well.

1UP: What do you think of Microsoft's strategy, going out launching
this year, versus what you guys might be doing?

RFA: I think that from their perspective, there's a number of things
they're trying to achieve, right. From a profitability standpoint, we
know that Xbox is hemorrhaging in terms of the hardware, from that
standpoint it makes sense to move early into the next system. They are
also thinking through how do they get a competitive advantage versus
us, versus Sony, and they think going first gives them that competitive
advantage. I think it remains to be seen given exactly what their
concept is, when it's all said and done, if in fact it represents, not
only for the core consumer but the casual consumer, a reason to spend
money on a whole new system. That's the million dollar question.

1UP: So you think launching a year later will make a difference for you
guys? What do you gain by waiting until 2006? If that is indeed what
you're doing.

RFA: (laughs) I was just gonna say "you're making an assumption," and I
just want to clarify that you've made an assumption, so I will respond
in kind against your assumption. But really for us, the way we look at
hardware, handheld or console, is that the inherent power of the
software is but a small part of the entire proposition. What do I mean
by that? Look at Nintendo DS. Certainly more powerful than SP, but what
makes that different? And arguably while we've sold almost 2.5 million
units, is because of two screens, touch screen, wireless, the voice
activation. It's that bundle of benefits that's motivating the
consumer.

1UP: But is different necessarily better? The DS has a lot of different
features, but the software hasn't yet produced that must-have killer
app. You guys have had a six month head-start, there's been a drought
of software.

RFA: You know, it's interesting. You look at the sales we've had of
Super Mario DS. Pretty damn strong. Look at the sales of Warioware,
exceptionally strong, three weeks into the mission. I think that,
personally, Need for Speed is quite provocative. Essentially you use
the touch-screen to trick out your car, which is pretty damn cool. You
can't do that on a PSP. For the hardcore fans: Advance Wars DS, Mario
Kart DS, 8-player LAN capability, you know, the games are comin'.

1UP: OK, they're coming, but do you feel like you might have missed an
opportunity with that six-month window. Maybe if Mario Kart was here in
January, could you have done it better?

RFA: I'll frame it this way: Would I love to be sitting here on a pile
of 100 great DS games, and be metering them out, once per month? I'd
love to do that, unfortunately that's not the way this business works.
What I can tell you, what I can tell the owner of a nice, shiny DS, is
that there are a number of great games that were at launch of the
system, there are a number of great games comin', across a range of
tastes. Everything from a puzzle-game like Polarium, which, you heard
it here, is gonna out-Tetris Tetris, in terms of being something that
just sticks in your brain and you just can't put down. I mean those
games are comin', as well as the big marquee games like Kart and
Metroid. We've got some other things up our sleeve, that we'll talk
about at E3, that wasn't really appropriate to share now. But we've got
more games comin' that really are gonna get that purchaser to say "a
worthwhile $150 bucks spent."

1UP: Any comment of what Mr. Iwata's going to say at his keynote
speech?

RFA: What I'll tell ya is this. Mr. Iwata, in addition to relating his
own personal development experiences, and that is one of the advantages
versus our competitors. You know, that head of our company is a
developer. He gets it. He knows what the life is like. But in addition
to that, yeah we're going to talk about DS, we're gonna talk about
wireless Internet gaming. We're gonna talk about that we're committed
to it, that we're bringing it to life this year. We're gonna talk about
Revolution, in terms of technology partners, we're gonna talk about how
we're doing some things to bring it to market in ways that Nintendo
hasn't done in the past. We're breaking the mold, we're breaking the
mold by having Mr. Iwata do this speech, we're breaking the mold in the
way that we're thinking about our next-generation platforms, including
DS. And we're also putting out there, for ours fans, the fact that
there's some things we could have done better on previous systems. The
whole Internet gaming piece, we missed the boat on GameCube. We won't
miss the boat in the future.


1UP: So is this an admission that you should have supported it more
heavily?

RFA: (laughs) You know what? This is Reggie Fils-Aime, a year with the
company, who wasn't around when those decisions were made. I can tell
you, as a consumer, I miss it on GameCube.

1UP: Launching the DS early was a nice tactic. But with the PSP
launching this month, we'd be hard pressed to say the PSP games don't
look better than DS games. How does Nintendo plan to counter the buzz
generating around PSP now?

RFA: We have a plan of attack which is all about giving our audience,
giving the gamer, great product for DS. Everything from a game like
Nintendogs, to Yoshi's Touch n Go, to Advance Wars, and Metroid Prime
Hunter. We think that in the end the consumer is going to make the
choice, not by how pretty the picture looks, but by what's the
gameplay? Is it involving? Is it a game that I just can't put down? And
we think we've got a number of games that deliver against that medium.

1UP: But you could say that same thing about past-generation Nintendo
systems: That you have the best software. But in the end, it comes down
to a lot of brand-power, and your marketing and your image. Everyone
could say GameCube has a TON of great games that you can't get anywhere
else, and yet the PS2 still kicks its ass in terms of hardware sales,
just because it's a cooler, slicker machine. It's a mainstream machine,
people get it. It's out there, involved with the entertainment industry
in various ways that the GameCube isn't. It's likely the PSP will
achieve similar success, because it's a cool, slick machine. And you
guys are obviously going for an older audience with the DS, what
happens when Sony comes along with this movie-playing machine, this
MP3-playing machine, and it outsells you guys, becomes the cool thing
to own, and you come in second place in handhelds?

RFA: That's a lot of "ifs" in that question. And frankly a lot of "ifs"
I reject. Believe me, my energies are all about how do we continue
driving DS? The first 2.5 million are in the bank. Where are the next
five million coming from? That's what we're focused on. How do we
continue to make sure SP sales are at a strong level so that DS is
larger than incremental? How do we make sure that both our brands and
our products are perceived much cooler than they have in the past?
Absolutely, spending a ton of time on that. And we're doing a lot of
things. We're doing some things with the hip-hop community. We're doing
some things from a music perspective. So I hear the comment of "Hey,
how do you make sure that the Nintendo image gets pushed in a proper
way?" So that we're perceived as cool, "with it," "gotta have it," I
hear ya. And we're working on it.

1UP: Can you do that with Mario Kart, and Princess Peach, and Yoshi?

RFA: I think you can definitely do it with Mario Kart. I think that you
can definitely do it with Metroid Prime Hunters. I think you can do it
with Advance Wars. Yoshi, Princess Peach, nuh uh. It's a different
consumer. But quite frankly, we want that consumer just as much as we
want the 21 year-old.

1UP: Hence, Pokemon Dash.

RFA: Hence, Pokemon Dash. There's a key part of the message, and this
is my language, not Mr. Iawata's language, is that Nintendo needs to be
an "And" company, and what I mean by that is that it's not either or.
Right. It's not core gamer or casual. It's not first-party or
third-party. It's an "and" company. We need to do both. We need to have
the best first-party games out there, and cultivate great relationships
with third-party publishers. We need to have the core gamer and the
casual gamer. It's not an either or proposition. It can't be.

1UP: Recently Mr Iwata has said "For next generation, we need third
parties." Do you think that was misinterpreted?

RFA: You know, I wasn't there when he made that comment, but I know Mr.
Iwata well enough and I know that he's got very strong relationship
with third-party publishers, I have to believe that that was a lost in
translation moment. The fact is that our systems by definition are
always pushing the envelope on innovation. You guys know this, if
you've been around the industry, creating games for systems that are
pushing the envelope on innovation is always tougher than strictly
something that looks beautiful or simply something that's based on a
really cool processor. I think what he meant to say that is because
we're pushing the envelope on innovation, it is a tougher proposition
for licensees to support our systems. I think that's what the intent
was, versus how it's been perceived here in the Western press.

1UP: So why distance yourselves so far from the competiton? Why not
move closer in the direction of, say, Sony, and design a system that
acknowledges the trends of the time, the technology of the time?

RFA: You know, that's interesting, and this is something that probably
doesn't interest the gamer all that much, but it certainly interests
the financial community, and the fact is that our strategy has been
hugely profitable. It is a sound business strategy. Differentiation is
a key to success. There's a reason Microsoft loses a shitload of money
on every system they sell today. They've gone down a path with no
differentiation, so they had to out-power what was out there on the
marketplace. You can't do that forever. Versus an innovation strategy
certainly works in the long run, and I'll give you a great example:
Apple Computer. Five years ago people were writing off Apple Computer.
"What are they doing? Why don't they give up their operating system and
embrace windows. Get on with life." And then the iPod came, and
everyone is saying how damn smart these people are.

1UP: A lot of that has to do with how sexy iPods are.

RFA: I don't disagree. And you know what? We're pushing the envelope in
making sure all of our products look sexy. SP is a sexy device. DS is a
sexy device! I will grant you that GameCube was not a sexy device.
(laughs) But you know what? We're smart people, we learn from our
mistakes. I will bet you a drink at the bar of your choice, that
Revolution will be a very sexy device.

1UP: How important is the DS versus PSP battle to Nintendo? The
handheld market has been, up to now, a practically uncontested arena.
No matter what place the N64, the GameCube came in, you always had the
handheld market to fall back on. This may change with the PSP.

RFA: Well, in fairness, we've had nine or ten different competitors try
and get into the handheld space. The issue is that we've beat back
every one of them. The new period that we're about to get into with
Sony entering the space, it's gonna be highly competitive. Highly
competitive. (Leans forward, deepens voice) And I'm a highly
competitive person. And so are we gonna be playing this game for keeps?
Absolutely. Are we working hard to create great first-party games?
Absolutely. Are we working hard to cultivate the best of third-party
development? Absolutely. It's gonna be a long-term tale. I'll tell you
this: I read the boards, I hear what consumers are sayin'. I see that
quite a few are saying that at $250 bucks, the PSP is not a cheap
proposition. That software is $50 bucks a pop, that's not a cheap
proposition. For music content, that's a year old, for it to be $20-25
bucks, that's not a cheap proposition. We'll see.

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