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Nintendo president Satoru Iwata delivered his keynote speech Thursday morning at the Game Developers Conference in San Francisco. The company head talked in detail about his entry into the videogame industry, shared philosophies about game design, and spoke on the future of the industry. He also revealed several important details about the new Zelda, Nintendo DS, and the publisher's forthcoming Revolution console.

IGN has the full keynote transcript for readers below:

On my business card, I am a corporate president. In my mind, I am a game developer. But in my heart, I am a gamer.

Today I'd like to speak to you from my heart about jobs and about our industry. I remember the first videogame I ever played. It was Pong - and I loved it! By the time I was in high school, I was the first person in my class to buy an early Hewlitt Packard Pocket Calculator. I think I was one of the original early adopters. But where most people used their calculators for higher mathematics, I used mine to program videogames. My first creation was a baseball game. I don't think anyone can say it had bad graphics because it had no graphics. Gameplay was represented only by numbers. But when I saw my friends playing that game and having fun, it made me feel proud. To me, this was a source of energy and passion. As that passion for games began to blossom, I think my life course was set.

In 1978 I entered the Tokyo Institute of Technology. I would have loved to study videogame programming, but nobody was teaching it then. So I went to classes on engineering and early computer science. But after class, when my friends went back to their rooms to study, I took off on my motorcycle for one retail store in Tokyo. This was the first store to have a department entirely dedicated to personal computers. That was my hangout - and I was not alone. There were others there who also looked at those early computers, and thought the same thing I did: how could we play games on them?

Nintendo president Satoru Iwata We became friends, formed a club, and soon rented an apartment in the Akihabara district of Tokyo, where we began designing our own games. We worked until midnight or later every night, and that group of friends is what became the company known as HAL today. The name came from the computer in the movie 2001: Space Odyssey. We thought that name was very cool. Also, this is what I looked like back then. [Points to picture of self, much younger, on a motorcycle] Like all game creators, I was extremely cool, too.

I don't really remember how, but I managed to keep up with my class work and graduated from the institute. When it came time to take a job, I had the distinction of joining the smallest company of any graduate in my class. I left to become only the fifth full-time employee of HAL and when I told my father this, you can image, it was not the happiest moment in the history of my family.

Iwata plays Nintendo DS Mario Kart People sometimes ask me what I did when I was hired at HAL. The answer is that I was a programmer. And an engineer. And a designer. And I marketed our games. I also ordered food. And I helped clean up. And, it was all great fun.

Perhaps the biggest moment in the history of HAL came when we heard the rumor that Nintendo was developing a machine capable of incredible new graphics: The Famicom, or NES, as it was called here in the States. We knew that this machine was for us. So we used every contact we could to get a meeting with Nintendo, sure that one of our ideas would become an instant hit. Yes, Nintendo did hire us, but not to amaze the world with one of our projects. Instead, they told us to fix on of their projects, a game that had fallen seriously behind schedule. Instead of creating a game, we repaired a game, and it was eventually released as NES Pinball. That experience taught us that even artists must know the business side of game development. After all, if a game never comes to market, there is very little chance of it making any money.

Working in those days was also instructive in another way. Because graphics were so primitive by today's standards, we asked ourselves how we could spur the players' imaginations as a substitute for what we couldn't display on the screen. Think about this: someday our games won't look any better. What will we do then?

Iwata, 20 years younger, poses for a picture on his motorcycle

Well, our work was satisfactory enough that we formed a close association with Nintendo. And as HAL invented a couple of early franchises, we also learned other lessons. Our first Kirby game taught us the value of teamwork. Since not everybody can be a Miyamoto, we discovered that ideas can come from several team members, building on each other, to make something superior to what one person could invent. Then we worked with the Famous Japanese creator Shigesato Itoi, who was already an avid gamer himself, to develop his first idea for a game. That series, called Mother in Japan and released in America as Earthbound, proved to us that ideas take on a special appeal when they become interactive.

Many years and many projects later I went to work for Nintendo full time, and then one day, about three years ago, Mr. Yamauchi appointed me to succeed him as company president. Of course, this was a great honor, but it was also a great challenge. I knew this would require committing much more time and assuming much more responsibility. But unfortunately, game developers are familiar with such things.

So I'd like to move on this morning and answer two questions that I'm often asked, now that I've had two decades of experience in the videogame world. First, over the last 20 years as a developer, what things have changed? And second, what things have stayed the same?

One thing that has not changed - and will not change - is our nature as a form of entertainment. Like any other entertainment medium, we must create an emotional response in order to succeed. Laughter, fear, joy, affection, surprise, and - most of all - accomplishment. In the end, triggering these feelings from our players is the true judgment of our work. This is the bottom line measurement of success.

Secondly, we must always weigh challenge and reward. How much work and frustration a player is willing to withstand depends on the personality and skill of the payer. Core gamers have a huge appetite for challenge and casual gamers want less difficulty. At Nintendo, we believe it is our responsibility to make games for all skill levels. And that includes people who are not playing our games now.

The third thing that has not changes is the importance of the idea. Of course, it is valuable to devise an offshoot of a current idea. But it is invaluable to come up with a brand new idea of what a game can be. I'm sure there are a few of you out there in the audience today with such creativity, and our industry needs you!

Fourth - and this never changes - software sells hardware. People buy games to play the games they love. I agree with Steve Jobs, the head of Apple, when he says, "Software is the user experience. Software is the driving technology not just of computers, but of all consumer electronics."

Finally, what has not changes it the value of intellectual property. If it is true that software sells hardware, it is truer than ever that franchises sell software. While our industry has made hit games with names like Superman and James Bond and NFL Football, I think we should be proud that our best games are those whose heroes and world we invented ourselves.

So then, on the other side of the coin, what do I think of when I consider what has changed. One word immediately comes to mind: bigger! Especially here in the Western hemisphere, the business is bigger; the North American retail markets alone are worth approximately $17 billion dollars. In the US, game sales were up another 8% over last year. There are games in your living room, you office, on your PDA, your cell phone, and of course, best of all, on your Nintendo DS.
Many in the media are shocked to learn that young men spend more time playing games than watching television. I think those of us in this room could have told them that a long time ago.

Of course, these games themselves have become much bigger in several ways. That, in turn, requires bigger teams, bigger budgets, bigger challenges in meeting deadlines. This also means that big game companies are getting bigger - by consuming smaller ones. We know that in the next generation, budgets for triple-A consoles games will regularly move into eight digits - and that's before any marketing money is spent. Only they biggest companies can afford such costs.

Not surprisingly, the success of our industry and the profit margins for hit games has again draw big interest from larger entertainment companies. But we may not be compatible. Their books, movies and TV shows are exactly the same for every user. But our games let players help write their own screenplays and their own endings.

Now I don't think any of this is news - bigger budgets, bigger staffs and bigger companies. It's there for all of us to see. Big is obvious.

On the other hand, what's more prominent in my thinking these days is how our industry is getting smaller. We are smaller in the amount of risk we're willing to accept. We are also smaller in how we define videogames. The list of genres seems fixed - shooters, sports, platformers, puzzles, and so on. When is the last time we invented a new genre? But as importantly, even within these genres, we have reduced the environments we use. The racing tracks, the sound tracks, the bosses, the heroes, are starting to look more and more alike. Consider Tiger Woods Gold and Mario Golf - each a successful franchise, but using two different looks for this game genre. Such variety is becoming harder and harder to find.

[Bill Trinen demonstrates DS software]

We are even getting smaller in how we define progress. Making games look more photorealistic is not the only means of improving the game experience. I know, on this point I risk being misunderstood, so remember, I am a man who once programmed a baseball game with no baseball players. If anyone appreciates graphics, it's me! But my point is that this is just one path to improved game. We need to find others. Improvement has more than one definition.

Finally, I am most concerned with what we think of as a gamer. As we spend more time and money chasing exactly the same players, who are we leaving behind? Are we creating games just for each other? Do you have friends and family members who do not play videogames? Well, why don't they? And, I would ask this: how often have you challenged yourself to create a game that you might not play? I think these questions for an important challenge for all of us.

So I have preached more than enough about the state of our industry. You may be wondering, how does Nintendo plan to respond? Let me answer a couple of things in a straightforward way. First, has Nintendo turned its back on the hardcore gamer? I don't believe so. If we were not interested in core games, we would not have packed in Metroid Prime Hunters for each of you when you went out and bought your Nintendo DS. This is not just excellent game entertainment, but also a signal that we want the DS to be for core gamers, too. We would not have partnered with n-Space in order to take a new look at shooters in the game Geist, which is coming exclusively to GameCube. It will move your emotions and move your definitions of this genre. And if we were not interested in core gamers, GameCube would not be home to the first big hit of 2005 here in America, Capcom's Resident Evil 4. It's a sign that not only do we care about core gamers, but core gamers care about Nintendo.

Bill Trinen demonstrates DS software Most of all, we would not be finishing the most anticipated game in our industry this year, a brand new Legend of Zelda. I would love to tell you all about it, but actions speak louder than words. We have chosen you to see the first new footage of Zelda since E3 10 months ago.

[Footage rolls]

A new look is only one part of the Zelda story. Much more of the mystery will be revealed at E3. This latest Zelda adventure will appeal to core gamers - and all gamers - just like very previous version.

The reason, I believe, is that it meets the standards we set for all software we develop. We call these standards the Four Is. First, is it truly innovative - something different from what has come before? Second, is it intuitive? Do the control of the game and the direction of gameplay seem natural? Third, is it inviting? Do you want to spend time in this world? And finally, how does it measure up in terms of interface? Can the player connect in new ways?

Certainly, few games can score perfectly in each of these areas, but at Nintendo, this is how we measure ourselves. And while we apply these standards to our software projects, there is also an obviously hardware example, too: Nintendo DS. It was designed to demonstrate both innovation and new forms of interface, to be both intuitive and inviting. So far, people seem to have decided that it does all of that. As of today, we have shipped four million DS systems to Japan and North America, in just 16 weeks since launch. And those numbers do not include Europe, where Nintendo DS begins selling tomorrow.

I know that you are familiar with the novel aspects of DS gameplay. Incorporating the two screens, the touch screen and the microphone. What you may not have much knowledge of yet is wireless gameplay. We are now finishing up a game, Mario Kart, that will allow eight players to connect simultaneously. Yes, gamers already know that Mario Kart is fun. But does the DS version make it even more fun? Well, let's find out. Let me ask you this: is there anybody out there who is celebrating a birthday today? If so, please stand up.

[Audience members stand. Iwata then asks if anybody is celebrating a birthday this week. More stand, and take the stage. Nintendo of America's Bill Trinen also takes the stage in order to demonstrate Mario Kart gameplay on DS. A brief, but impressive demo ensues.]

These days, I spend so much of my time on meetings and interviews and traveling that I sometimes forget how much fun I have playing games -- I liked that! Well, the demonstration of wireless Mario Kart brings us to the present moment. This is a product that we will bring to the market later this year.

But I would like to spend the rest of my time today on what is perhaps the next logical question: where does Nintendo go from here? Let me try to explain it first with an image. In the universe of interactive entertainment, there is a planet we call videogames. It is the one we know best. But it is only one. Also in our inverse are other planets which entertain, but in different ways from current games. It is this part of the universe that we are anxious to explore.

This idea creates the dual passions of Nintendo. On one hand, we work every day to make what we describe as videogames better. We want to give players what they want. But at the same time, we are intent on finding out what else we can use to entertain. Our second goal is to show players something new, something they may not even know they want. You already are familiar with a good example of this philosophy. It's called Pokemon. At its core, Pokemon is a wonderful role-playing game. But it's also much more. Players will collect and trade Pokemon, maybe the same way you once collected and traded bottle caps or baseball cards. Pokemon expanded RPGs to places they hadn't gone before.
Another example was our decision to put Pictochat into the DS. It's not a game, not a competition, but a way for us to better understand how communicating wireless might also entertain. And Pictochat, as a wireless function, also represents just the latest step in something much larger for Nintendo.

I want to announce today that, following the groundbreaking work we have always done in connecting players, we will aggressively pursue Wi-Fi connections beginning with Nintendo DS. The original Game Boy connected two players with a cable and then four players on Game Boy Advance. We put four controller ports on our consoles and then made our controllers wireless. With Pokemon Fire and Leaf Green, we packed wireless adapters with the games that introduced unfamiliar players over large distances. This is all part of a unifying philosophy that continues with Nintendo DS.

An official slide-shot from Iwata's GDC keynote Every aspect of DS is designed to be friendly to all audiences. Therefore, Wi-Fi should be easy for everyone, too. Our goal is to make this process simple and seamless. Users shouldn't have to give it a thought. Wi-Fi connections will feel like local area network connections because they will use a common API. We will let DS owners enjoy Wi-Fi without the difficulty of entertaining as SS-ID or WEP key. And maybe most importantly, we will remove the most important consumer barrier - Nintendo's Wi-Fi connections will be free. As I said, simple and seamless.

You may want to know, is this infrastructure ready to go? Almost. What about development? Where are the development kits? By E3, you won't be asking that question. Well then, what about entertainment? I can say today that you will be playing Wi-Fi games on DS this year. What we are developing internally, and externally with a number of people, is very exciting to me. At least one of the project, I believe, will be groundbreaking. And we look forward to your Wi-Fi games, too.

Let me give you one example of what we're working on. Internally, we're developing Animal Crossing Wi-Fi. We chose this property for a number of reasons. First, it is one of those non-game games I mentioned; a form of entertainment that really doesn't have a winner, or even a real conclusion. And because of its unrestrained pace of action, it avoids wireless latency issues. Before, you could take Animal Crossing to a different village. Now, with Wi-Fi you can take it around the world.

So we feel that our form of free and easy wireless play helps move our industry in a new direction. But we are making similar moves in software as well. I want again to bring Bill Trinen out to demonstrate two other things that come from a different part of the interactive entertainment universe. But even before we show them, I can tell you now that they may seem unusual because they are something different. This first one is the current passion of Mr. Miyamoto.

[Bill Trinen demonstrates the DS title Nintendogs. The crowd cheers and laughs to the demo.]

Iwata makes a point at his GDC 2005 keynote

This product will expand our audience to players who currently are not satisfied with what we've been offering them. I'm also going to ask Bill to show you one other software project we're calling Electroplankton. That sounds different and it looks different, too. The idea here is that creativity should not just belong to developers, but to players as well.

[Bill Trinen demonstrates Electroplankton to more cheers and laughs.]

This game is different. It's designed to produce harmony, not adrenaline. So far, we are seeing different kinds of reactions to Electroplanktin. Some test players are confused; they keep looking for their score or the next enemy.

[Bill Trinen continues to play the game on the stage, seemingly unaware that Iwata has moved on with his keynote.]

But others are hypnotized. There are people who simply refuse to turn the game off. No matter what your reaction, I think we can agree that this is definitely not from the world we currently call videogames. Thank you Bill!

[Trinen appears to become aware that Iwata is speaking once more and then retreats from the stage to laughter from the audience.]

So this is Nintendo's plan. Make our existing game world much better. Better Zeldas, better Marios, better partnerships creating games like Resident Evil 4. But also, exploring other worlds in interactive entertainment. For us, this is a passion. This is a mission of adventure. And most importantly, we want you - the creative heart for our entire industry - to take that journey with us.

You may remember from E3 last year that we explained DS had two meanings: dual screen and developer system. And Nintendo Revolution is a developer system, too.

With IBM, we are creating Revolution's core processor, which we have codenamed Broadway because Broadway is the capital of live entertainment. With ATI, we are developing the graphics chipset, codenamed Hollywood because Hollywood is the capital of movie entertainment. With Revolution, we are determined to create the new capital of interactive entertainment.

Now, a couple of specifics. First, contrary to much speculation, I can announce today that Revolution will be backward compatible. The best of the Nintendo GameCube library will still be enjoyed by players years from now. Second, as I said earlier, we intend to incorporate wireless technology in all we do. Therefore, Nintendo Revolution will be Wi-Fi enables, built into every system. And third, even though the game experience enjoyed by players will be far different on Revolution, developing for it will be familiar. It will not require a steep new learning curve. In this way, just like Nintendo DS, it's a place where the best ideas - not the biggest budgets - will win.

And make no mistake. We expect third party publishers will be fully supportive of what we're doing. From this point forward, in support of all of our product lines, Nintendo will be expanding our development reach. Some of these new games will come from larger internal teams. Some from the kinds of game partnerships we've formed with third parties over recent years. Maybe some day, we'll work on a game together. I'd like that.

If you don't mind, I will finish today with memories from one more franchise in my development career - Super Smash Bros. At the time it was being developed for Nintendo GameCube, I was already working full time for Nintendo. But my heart told me I was still a developer. So, as president, I assigned myself to HAL to rejoin the team finishing the game. Once again, I was living on the developer's diet of chips, pizza and rice balls, and working through the night. From their offices, it was possible to see Mt. Fuji, which many say is most impressive if you're willing to wake up and see it at dawn. But during this period, just as years before with our Kirby Games, we at HAL would see the sun shining on the mountain before we ever went to bed. May say the sight of first light on Mt. Fuji inspires them. But for me, I hope I never see it again! [Laughs]

I also remember the first version of Smash Bros. developed for Nintendo 64. The concept for this game, as you know, was to take the classic, friendly Nintendo franchise characters and have them - as you say in America - beat the heck out of each other. The ideas not brand new - there certainly have been a lot of fighting games. And the characters looked pretty much the same way they always had. So when we brought the idea to Nintendo, the concept did not sound hip or cool or revolutionary. And because of all this, there were people both inside and outside Nintendo who did not strongly favor the idea. And this was the environment that we worked under.

That attitude remained until the moment of truth -- the moment when testers began picking up the controllers and actually playing the game. This is what happened. People smiled. They laughed. Then began shouting at each other. That was the moment when everything for Smash Bros. changed. And I must tell you, this was also one of the proudest moments in my development career. Yes, the Smash Bros. series has become a great worldwide success because it's sold more than 10 million copies. But the memory of that first moment when the testers began to play stays with me always. That is the moment I call success.

We at HAL found a way to bring our idea to life. Our team believed deeply in the concept and we did not waver in our approach. So in this important sense, we at HAL - we're just like every one of you. Even if we come from different sides of the world, speak different languages, even if we eat too many chips or rice balls, even if we have different tastes in games, every one of us here today is identical in the most important way: each one of us has the heart of a gamer.

Thank you for your attention.