Reggie is 'misinformed,' says ngmoco's Young

In an interview with Forbes earlier this week, Nintendo president and COO Reggie Fils-Aimé made a number of comments that were quite contradictory to many of the dominant themes of the Game Developers Conference, which is wrapping up this weekend in San Francisco. Of note were comments he made about the iPhone and iPod Touch, regarding their encroachment upon the DS' business, and his opinion of virtual goods and microtransactions.

Of the former, he stated "there's been no data to suggest an encroachment on our business. The iPhone has been out on the marketplace for just a couple of years. In the last two years we've set records on our DS business ... there's been no evidence that we've lost any business to that competitor."

Of online virtual goods and microtransactions, something that is fueling the social web game space to the tune of millions of dollars every day, and driving the iPhone and iPod Touch market to new heights (while also helping stem the rampant piracy problems) Fils-Aimé stated, "We don't think it's an idea that creates value for the customer. Consumers love to make Mii's and that has been core to the Wii experience. We don't believe selling clothes or hats is something that consumers will find valuable. And candidly, if you really challenge the competitors who are playing this space, I think they would be hard-pressed to show any true value from a consumer standpoint."

While speaking with ngmoco co-founder Neil Young this week, we raised these comments from Nintendo, and challenged his strategy of moving his company's business to a primarily "freemium" and virtual goods-based model. "That's just misinformed," he told us. "Both of those two things are. Certainly what we see, and this has been proven in Asia and also I believe it's the experience that Microsoft has had too, is that self-expression is a really important part of monetizing virtual goods. In Asia I think it's been a fairly long-held, data-driven opinion is that about a third of the revenue generated there is from things that allow users to express themselves."

Indeed, we're seeing evidence of Xbox Avatars clothing driving more and more incremental revenue for third party publishers, particularly for high profile titles. Earlier this week, a representative for Ubisoft intimated that the $2 (160 Microsoft points) Assassin's Creed 2 hoodie has sold nearly 300,000 units - that's $600,000 in revenue from a single item that users are clearly prepared to invest in.

"With regard to the iPod Touch versus the DS, I don't know if there's been a direct impact on hardware sales," Young said, "but I have absolutely no doubt that there has been an impact on the amount of time that kids spend playing DS games, versus playing iPod Touch games. In my household, we care about Nintendo's franchises far more than we care about their hardware now, and we'll buy their hardware to play their franchises, but we're no longer buying their hardware to get access to a library of software. The iPod Touch serves up an almost infinite library of software."