News: Nintendo Sacrificing Profits for 3DS Success
Posted 01 Nov 2011 at 07:49 by Ashley Jones
In a Q&A with investors Satoru Iwata has claimed that Nintendo will put the 3DS' success ahead of profits.
Following last week's semi-annual financial results investors meeting, which saw Nintendo offer up details about an eShop expansion and claimed the Wii U would return next E3, the investors sat down with company president Satoru Iwata for a Q&A session to further expand on what Mr. Iwata had discussed.
During the discussion one investor asked Satoru Iwata whether or not it is more important to Nintendo for the company to "accelerate the sales of the Nintendo 3DS by allocating more financial resources to its promotion". Satoru Iwata's response shows that the company is completely committed to the future of the Nintendo 3DS, describing the console as their "main focus" for this fiscal year and promises that software will help build a momentum:
"We came to the conclusion that we needed to make that bold investment, instead of focusing just on this term's profitability, so that we would be able to make the Nintendo 3DS an important foundation for Nintendo for years to come. During the fiscal year ending March 2013, we are expecting the profitability of Nintendo 3DS hardware to improve significantly. In other words, we are not anticipating a situation where we must expand the hardware by generating a large loss on the sales of the hardware. As long as we can create sufficient momentum, I think we will be able to come close to our usual course of business operations in the next fiscal year."
Satoru Iwata then moved quickly onto their advertising projections, noting that while the forecast expenditure was down by five million yen this was not to be interpreted as they are cutting advertising expenditure because they don't see its importance. Mr. Iwata notes that the reason for the decreased projection is twofold; it is a result of foreign currency exchange loss and downward revisions.
Explaining what this means to investors Mr. Iwata notes that due to foreign currencies decreasing while the yen appreciates the advertising targets, published in yen, are affected. Furthermore advertising expenditure is linked to sales and overseas budgets are negotiated between Nintendo and retailers set on a number of pre-determined factors, one of which is sales. Thus, he explains, the lowered advertising projection is due to downward revisions and even claims that Nintendo is "making rather aggressive investments" in advertising.