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Iwata explains how Nintendo is going to have a record-breaking year

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Nintendo sold more than 3.22 million copies of Super Smash Bros. for Nintendo 3DS as of September and the company is "confident" that the game has plenty more sales in its future. More importantly, Nintendo president Satoru Iwata explains, that means the two new Pokemon games are going to be hits and perhaps lead to a historic run of multimillion-unit 3DS games for the publisher.

Don't understand why? Let's let Iwata, who walked a gathering through the company's theory on this during today's corporate management briefing in Japan, explain.

To start, you have to understand Nintendo's view on the importance of the recent success of Super Smash Bros. for Nintendo 3DS, which Iwata says has several implications.

"First of all, it proved that the 'Super Smash Bros.' series, which has been popular for home consoles, can have a strong presence for handheld devices," Iwata said. "Before the release, some in the video game industry were skeptical of the sales potential of 'Super Smash Bros.' for handheld devices, but now I can say that they were worrying about nothing.

"Secondly, the initial sales pace was faster than either Nintendo or anyone in the industry could expect and we are afraid that the lack of stock caused inconvenience for some consumers for some time after the release both in Japan and the U.S. After a vast number of consumers started this game at one time and it spread by word-of-mouth, Nintendo 3DS has been used more actively, and we have noticed increased attention and enthusiasm in the entire market for the device. Considering that the software was released just before the year-end sales season with many anticipated titles scheduled, we believe it has really contributed to improving the momentum of the Nintendo 3DS market.

"Furthermore, since characters from various Nintendo games appear in 'Super Smash Bros.,' consumers naturally get to know the entire lineup of Nintendo IP and this title could make them interested in other game franchises. In other words, the more this game is played, the higher the overall value of the Nintendo IP lineup becomes."

Iwata went on to explain that Nintendo believes that the surprisingly strong pre-orders for both Pokémon Omega Ruby and Pokémon Alpha Sapphire were in part thanks to the success of Super Smash Bros. That's because, Nintendo hypothesizes, both series have games of the same generation and players who enjoy both series overlap substantially.

Pokemon color palettes

"Those who were elementary school students when Super Smash Bros. Melee and Pokémon Ruby and Pokémon Sapphire were released have grown up and they are now 18 to 25 years old," Iwata explained. "Our research in each part of the world commonly indicates that consumers between the age of 18 and 25 represent a large percentage of those who purchased Super Smash Bros. for Nintendo 3DS in the release period. It is approximately 30 percent in Japan, which is twice the overall average of Nintendo 3DS software, and has even reached 50 percent in the U.S. and Europe. This great momentum for the game in the initial stage was supported by this generation. Thanks to Super Smash Bros. for Nintendo 3DS, consumers of this generation pay more attention to Nintendo 3DS and are likely to remember enjoying Pokémon Ruby and Pokémon Sapphire.

"We think this is why the pre-orders for Pokémon Omega Ruby and Pokémon Alpha Sapphire have been strong. They are now old enough to pay for their own expenses. They can afford to buy Nintendo 3DS to enjoy both Super Smash Bros. for Nintendo 3DS and Pokémon Omega Ruby and Pokémon Alpha Sapphire if they choose, and they might encourage their friends to play it with them too. We therefore see it important to stimulate their latent demand in the year-end sales season."

Got it?

Good.

With all of that in mind, Iwata told the gathering, Nintendo thinks that the two Pokémon games set to be released next month will have "more sales potential than just another remade game in the industry." In fact, he added, it wouldn't be surprising if the Pokémon games were "double-million" sellers in Japan, meaning they each sell more than 2 million copies. Given the success of a slew of previous titles this year (two versions of Japan-only Yokai Watch 2, Super Smash Bros. for Nintendo 3DS and Monster Hunter 4 Ultimate), it could mean that Nintendo would end up with four consecutive double-million sellers in Japan.

"Four double-million-selling titles in five months is a first in the history of the Japanese video game market," he said. "It is almost certain that the three titles I introduced before will become double-million sellers in four months, which is also a first.

"Furthermore, having three 'million' sellers in four months is so rare, even though it happened three times for Nintendo DS (in 2005, 2008 and 2009) and Nintendo 3DS (in 2011, 2013 and 2014), that the other platforms have never experienced it."

This, Iwata said in conclusion, is also proof that dedicated video game platforms still have ample business opportunities.