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Fils-Aime: Nintendo is always thinking games, it doesn't sell TVs or operating systems

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Last month, I wrote that Nintendo should kill off the console. Not the idea of video game consoles in general, but the business model and concept of video game consoles as we see them today and as they were conceived decades ago.

The reaction to that thought was, for the most part, overwhelmingly negative.

But I couldn't leave it alone, so when I sat down to chat with Nintendo of America president Reggie Fils-Aime at E3 last week I had to ask him his thoughts. Specifically, I wanted to know not only what he thought of my premise that consoles had evolved past a lot of the things they were designed to fix and continue to do in their current form, but more importantly, that I suspect Nintendo's NX project will be that big leap to a new form of console gaming.

Nintendo is in front of the curve, I told Fils-Aime, in terms of when a company might next release a next-gen console. And, I added, the company has a long history of taking big chances while innovating in video games.

"So, bad news for you, Brian, I've got nothing to share specifically about NX," he said. But then launched into what he characterized as observations about that article.

"One element of your premise is that Nintendo as a company has a history of being innovative and driving innovation," he said. "You look at the DS with the incorporation of the touch screen. You look at what we did with Wii. We're constantly trying to innovate. So to frame it as ‘Here's a company with a history of innovating. I'd love for them to innovate more.' We accept that and that is part of our DNA.

"The other thing I would say is that, we see in our existing business, and we anticipate looking into the future, how this gaming industry is going to continue to evolve. And absolutely, our challenge is to think about what that future looks like and create a business model, technology approach and consumer messaging approach that brings it all together to a successful platform and a successful platform launch.

"We're constantly thinking about that."

While Fils-Aime is likely to field a lot of questions about NX, and says he won't be answering any of them, he still thinks it was the right call for Nintendo president Satoru Iwata to announce that the company was working on the next gaming system when he did, during an investor meeting earlier this year.

"The fact of the matter is, Nintendo is always thinking about new systems as soon as we launch the existing system," he said. "Why? Because this is the only business we're in. We don't sell TV sets, we don't sell operating systems. We are in the video game entertainment space. So we have to constantly be thinking about what's next, what the future? In always thinking about the future there always is the risk that there is going to be some slip or inadvertent disclosure.

"From Mr. Iwata's perspective, as we were announcing our partnership with [mobile game company] DENA, it was important to reinforce that we are continue to be committed to the dedicated gaming business. Now our job is to continue driving the existing business. Our job back in Kyoto is to continue pushing on our new innovations to be announced later and to continue to drive this business forward."

Do you think that Nintendo needs a physical console to continue as a business, I asked Fils-Aime. Do physical gaming consoles still need to exist?

"Let me put it this way," he said, after a long pause, "As we look at our software business, I find it startling, but once you think about it, not surprising that the digital mix of software is different game-by-game-by-game."

Fils-Aime says that Nintendo has found that games designed for people to play in short bursts, the sort of games you might always want to have with you, like Animal Crossing and Tomodachi Life, tend to do much better as digital sales than physical ones.

"Consumers want to have it, they don't want to be swapping out cards," he said. "Conversely, games like Smash Bros. 3DS, a game where consumers invest a lot of time mastering move sets and really becoming an expert with a particular character. While it would never happen, the consumer is afraid they're going to lose the data and so it's in a physical form because they feel more secure having the card."

The end result is that a game like Smash Bros. has a lower than average digital sales ratio.

"I do think that consumers find a sense of security in having the physical thing, and given that, I think the option of the physical thing always needs to be there. How that manifests itself in our future development we'll see. But it is an observation based on sales whether it's on our 3DS or Wii U, the wide range of digital sales is pretty striking."