During a Q&A session with investors following Nintendo’s earnings briefing last week, CEO Satoru Iwata was posed the question as to whether the company was prioritising the spread of Nintendo 3DS hardware over profits. Is it more important for Nintendo to expand the audience through additional promotional costs, or to protect earnings?
In response, Iwata stated: “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 dropped the handheld’s price before they were able to cut hardware manufacture costs, as they believed that such investment was a necessity to establish the Nintendo 3DS as a further expansion of the company.
Next fiscal year, Iwata explained that if they were able to successfully push the Nintendo 3DS then the hardware would easily become more profitable than it is now. Nintendo would no longer need to continue to take major losses in order to expand the install base.