Nintendo Sacrificing Profits for 3DS Expansion
CEO expects things to return to normal next year.
During a Q&A session that followed last friday's earnings briefing, Nintendo CEO Satoru Iwata was asked by an investor if the company's priorities are being placed the spread of 3DS hardware, or on earnings. Does Nintendo consider it more important to push the 3DS system's further expansion by spending additional promotional costs, or do they consider it more important to protect earnings?
Iwata was pretty direct in his response. "Regarding the current fiscal year, we've decided to place the priority on the spread of the 3DS hardware, so in a sense you can say that we've sacrificed earnings for this term."
Nintendo's reasoning for placing the priority on hardware expansion, going so far as to drop the system's price before hardware costs had been cut, is that they believed unflinching investment was necessary now in order to develop 3DS into one leg of its business.
For the following fiscal year, though, Iwata believes that, if they're able to heat things up this year, they should be able to reach a more standard business form. The 3DS hardware will be far more profitable than it is now, he said, so Nintendo will not be in a position where it will have to continue taking major losses on hardware in order to help the system spread.
[via Nintendo's earnings Q&A]