More Details Emerge As Iwata Responds To Investor Inquiries

Yesterday wasn’t exactly a good day for Nintendo.  If you missed the news, Nintendo posted record losses, drastically cut the 3DS’ retail price and announced current owners will receive 20 downloadable games as incentive to stick around.  Today we have some new details on what went down when Nintendo President Satoru Iwata address concerned shareholders.  I’ve recapped all the news that’s been released across multiple sites so I take no credit for this news myself.  Here are the highlights.

– Previous Nintendo President Hiroshi Yamauchi, who owns 10% of Nintendo, lost half a billion dollars yesterday thanks to the stock price plummet.  Ouch!

– The price reduction was done to assist retailers in moving more systems and to help convince developers to stay onboard.

– Because the price is being cut so drastically Iwata and other executives are also seeing their pays cut.  Iwata said:

“For cuts in fixed salaries, I’m taking a fifty percent cut, other representative directors are taking a 30 percent cut, and other execs are taking a 20 percent cut.”

– The reason why the price cut happened so early on in the 3DS’ life is because the company realized they kept the GameCube price too high and missed an opertunity to move more systems.  They didn’t want to make the same mistake again.

– Nintendo confirmed the 3DS is no longer a money-making platform for the company.  Every system they sell will be at a loss until the system starts ramping up mass production.

– Nintendo confirmed smartphones are a key factor in their strategy.  They must differentiate the 3DS from other mobile offerings if it is to survive.

– Nintendo will place emphasis on digital downloads moving forward.  Iwata confirmed Nintendo has been late to the party in this regard.

– Iwata-san ended with a scary message:

“We decided that if we take brave measures now there’s high likelihood that a many players can enjoy the Nintendo 3DS in the future.”

What do you all have to say about this news?  Can you imagine a North American CEO taking a 50% pay cut if their company had a bad quarter?  Yeah I don’t think so either.  Also keep in mind that Iwata-san only makes $2 million a year, which is peanuts compared to some of the American CEOs out there.  Personally I found it interesting how Nintendo acknowledges the smartphones market making an impact in their business and how they were essentially forced into a corner here.  This was a do or die situation for the platform, and it all comes down to new markets (mobile) and the overall lack of software.  Nintendo simply has to get the ball rolling in terms of getting AAA software on the platform.  This holiday season they appear to be doing just that, but will it be enough?  That’s the real question.

3 thoughts on “More Details Emerge As Iwata Responds To Investor Inquiries”

  1. I’m quite curious on their move to the download platform. The current name of the handheld poses a problem as it basically conveys and focuses on the 3D aspect. Makes me wonder if they’ll revise the name in a future iteration of the hardware.

    You sure they’re selling it in a loss now, Jarrod? I heard awhile back that it takes 150$ to compile the whole system. Is that true?

  2. Yeah Ahmed Iwata confirmed the hardware is no longer selling at a profit during the investor conference. I, too, thought it was being made for anywhere from $120 to $150. I suppose once you take into consideration worldwide marketing, etc, perhaps that is what he was referring to. His exact words were basically the 3DS is no longer a money making platform at this reduced price. So take that for what it’s worth my man.

    As for the title of the platform, I still think the 3D aspect is compelling enough to stick with it, but clearly they’re going to mix things up moving forward. Their new message for the time being will be games, games, games. That’s exactly what Sony did with the PS3 once it was clear the multimedia strategy wasn’t working. It took some time for them to turn their fortunes around, but eventually everything worked out. I’m very confident the same will happen here. I think Nintendo just needs to keep a very close eye on the situation because Vita’s launch is just around the corner.

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