My question is on advertising expenses. Both 3DS and Wii U are expected to grow significantly in hardware and software sales this fiscal year, but advertising expenses are not expected to grow by a large amount. Does this mean that you are confident about the quality of your software, or are you trying to advertise your products more effectively? Or is it the case that when you break the figure down into the first and second half-year periods, you simply find that it is more concentrated towards the second? I would like you to talk about the expected return on advertising expenses by considering it in terms of efficiency and timing.
First, I don't think increasing advertising expenses necessarily increases hardware sales, and I don't think that decreasing advertising expenses necessarily decreases sales either. In particular, when we launch a new hardware system from scratch, we typically need to make intensive investments just to have the name of the system recognized, but we are not planning to launch new hardware this fiscal year, and therefore we will not need to invest in this type of activity.
Moreover, given that we are facing difficult financial results, we are devoting our energies to using our advertising expenses effectively. As I explained in the presentation before, when people view Nintendo Direct on the Nintendo eShop, it is a very effective advertisement, but it has only minimal media costs. What I mean by "minimal" is that whenever one wants to transmit information on the Internet, one needs to pay a CDN (content delivery network), where one is charged according to the flow volume of data, so it can never be cost-free. However, this is much more inexpensive than media such as television or print media for which we need to pay advertising costs. What's more, people who are interested in our games watch our videos for as long as 15 or 30 minutes. We can divide advertising media into two types, namely, activities more geared towards gaining awareness, including TV commercials where we need to explain one message in 15 or 30 seconds, and those which can be used to attract potential consumers and have them understand a product to the point where they make the decision to purchase it. We will continue to utilize TV commercials to raise awareness of our products, but we are now in a position to use different methods for product understanding and buying motivation. We initially launched Nintendo Direct in Japan, and we first began to receive positive feedback here, but this year we are also starting to get very positive reactions in the U.S. and Europe too, so I feel that our advertising activities will continue to change and become more effective. And I am not just talking about Nintendo Direct. We can say the same thing about social media marketing activities using Facebook and Twitter.
In terms of the breakdown into the half-year periods, we don't have any first-party key software for Wii U until July. We will, to some extent, concentrate our marketing activities from the summer towards the end of the year. With regard to Nintendo 3DS, in contrast, we will synchronize our promotional activities with the release of each much-anticipated title. By the nature of Nintendo's business structure, sales grow most significantly around the year-end sales season, and as consumers around this period do not necessarily seek information proactively, we need to employ fairly large-scale advertising activities. Instead of pursuing similar advertising endeavors throughout the year, we strive to adapt them accordingly.
Thoughts?
