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.