The close of Nintendo's 2015 fiscal year coincided with its annual Japanese shareholders meeting, an event whose closing Q&A session has been transcribed, translated, and posted in English every year since 2010. This year saw the company talking frankly about its position in the gaming market, its slow transition into smartphone game development, and more.

Nintendo President Satoru Iwata fielded most of the questions, the first of which concerned downloadable game prices—and why they are higher than boxed ones. Iwata described the risks that big-box retailers take on when buying bulk inventory, then acknowledged that Nintendo "sets a different wholesale price for these two versions."

But he didn't speak to any efforts by Nintendo to adjust pricing for customers who don't care for the "business risk" issues that retailers face and just want a fair game price; instead, he hinted that the company's upcoming replacement for Club Nintendo, coming this fall, might include "a system where Nintendo can give (individual) offers to each consumer." Iwata confirmed that Nintendo's total downloadable game sales reached 31.3 billion yen—about $254 million—in revenue, which he said was a 30 percent increase from fiscal year 2014.

When a stockholder pressed Iwata about the Wii U's poor retail performance, the president offered as dire a corporate double-negative response as we've ever heard: "I cannot disagree with your indication that Wii U is experiencing the most unfavorable situation."

That response was a setup for talk about the upcoming "NX" console—which Iwata said wouldn't see a major, detailed reveal until 2016. In spite of a lack of details, Iwata continued to talk about NX being a successor to both Wii U and the 3DS, which leads us to wonder whether the system will be a hybrid device meant for both solo/portable and shared living room play.

Iwata admitted that the NX system was announced well in advance of its more official reveal to assure the public that Nintendo was still bullish on gaming's dedicated-device market. "More than a certain number of people thought that Nintendo would give up on the dedicated game system business and concentrate on smart device application development," Iwata said. "Such tone could be seen frequently through the media."

“We failed to excite fans”

Shareholders agreed with Ars' E3 2015 assessment—namely, that Nintendo had the worst showing of any major gaming company—and asked why the company showed off so few playable games at the June expo. Longtime Nintendo producer and designer Shigeru Miyamoto answered that this year's event saw a more narrow, games-coming-in-2015 focus "because compared to last year, we now see people in the US are gradually realizing the compelling nature of Wii U hardware"—meaning he saw less reason to show off projects like last year's "Giant Robot" demo.

However, neither of Miyamoto's 2014 demos resurfaced in 2015 as a larger title, and three of Nintendo's largest E3 2015 titles—Super Mario Maker, Yoshi's Wooly World and Super Smash Bros. for Wii U—had already been shown off in extensive form at prior expos. Miyamoto also addressed a severe lack of third-party content, and he made an overall assessment: "We acknowledge the criticism from our fans that we failed to excite them with new proposals." Iwata echoed that sentiment as well, saying, "We recognize that we have let down a number of the online viewers of this year’s E3, especially the avid Nintendo fans, because we did not show what they had expected"—a not-so-sly reference to the upcoming Wii U Zelda game being an E3 no-show this year.

Miyamoto also took a jab at Sony's Project Morpheus virtual reality system by name, telling shareholders, "I noticed a number of dream-like demonstrations for which the schedule and format for commercialization are unknown." He also criticized VR systems that "cannot be played simultaneously by multiple people"—even though we at Ars played Morpheus games that had multiplayer modes (ones that liberally cribbed from Wii U's Nintendoland, at that). Iwata shared this "pick-up-and-play" comparison point, and he told shareholders that "unlike the other booths in general, most of the visitors to our booth were smiling and actually picking up the controllers and playing with our games"—nevermind the fact that Nintendo actually had fewer individual games to play on the E3 showfloor than the other big publishers.

Smart about smartphone games?

When asked about the company's previously announced smartphone game plans, Iwata went on a semantic treatise about the term "free-to-play," and he told shareholders that Nintendo preferred the phrase "free-to-start"—which, as far as we can tell, means the same thing. Either way, Iwata strongly suggested that any Nintendo games on smartphones will rely on micro transactions: "The fact of the matter is, game software with a one-time payment system has not been doing a great job on smart devices," he said.

That's when Iwata spoke at incredible length about the various pricing models that smartphone games have adopted—even talking about games that use nasty tactics to induce "psychological excitement"—due to concerns that "Nintendo might shift to the notorious business model that asks a small number of people to pay excessive amounts of money and that Nintendo’s brand image might be hurt." In spite of that warning, however, Iwata didn't clarify exactly what pricing model the company might employ other than to insist that "since Nintendo wants to cherish the value of software, there will be a limit to how low of a price we might want to attach to our game applications."

He also insisted that the company was "not planning to release many game applications from this year (when our first smart device application will be released) to the next," and he explained that Nintendo smartphone games will be treated as a "service" as opposed to a "product."

"If the game cannot offer services that evolve even on a daily basis, it cannot entertain consumers over the long term," Iwata said. "Accordingly, we would like to spend sufficient time on the service aspect of each title, and we would like to grow each one of our small number of game applications with the objectives that I just mentioned."