Nintendo: 3DS price cut "sacrificed our profitability"

By Fred Dutton Published 31 October, 2011

But Iwata expects business as usual next year.

Nintendo deliberately sacrificed any chance of turning a profit this year in order to build momentum behind the 3DS, CEO Satoru Iwata has revealed.

However, he expects the cash to start rolling in again come 2012.

In an investor Q&A published on Nintendo's official site, Iwata explained that the recent 3DS price cut was vital in ensuring the system's long-term success.

"As far as the current term, ending in March 2012, is concerned, we have decided that driving the sales of Nintendo 3DS hardware is our main priority, and in a sense, we can say that by doing this, we have sacrificed our profitability for this fiscal year," he said.

"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."

Iwata added that the company shouldn't have to make such an unprecedented loss-leading moving again in the near future.

"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."

As revealed last week, Nintendo reported losses of around £580 million for the last six months and expects to post a £165 million loss for the fiscal year as a whole.

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About Fred Dutton

Fred Dutton is Eurogamer's US news editor, based in Washington DC.

Read more articles from Fred by visiting the Fred Dutton archive page.

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Comments (19) Latest comment 7 months ago

Comments for this article are now closed, but please feel free to continue chatting on the forum!

  • kangarootoo #1 7 months ago

    Ninty haven't price cut so soon to boost sales of a new product since 1994 (I think, unless my memory of what I read the other day is failing).

    Expect to see a wave of Brain Training and romantic/detective story hidden object games in the near future to rbing profits into line.

  • jonbwfc #2 7 months ago

    Hmm.. He expects people to be buying enough Nintendo products in 2012 that will get them back to their former levels of profitability even given the slashed profit margin on their newest product? That's putting a pretty heavy weight of expectation on the Wii-U's shoulders isn't it?

  • weebl #3 7 months ago

    Stating the obvious "sacrificed the ability of readers to understand things by themselves"

  • geox30 #4 7 months ago

    Being an early adopter sacrificed my profitability.

  • Zackv4861 #5 7 months ago

    Ah it was a wise move and if they produce the software anything like what they did with the DS software it will take off i'm sure. As for the Wii U i'm just can't call that one yet.

  • Rogueywon #6 7 months ago

    The problem isn't just the price of the hardware. They're going to need to have a very serious think about the price of the games as well. While there are a tiny number of handheld games out there that justify a price tag over £30 (as opposed to £10-£20), they are few and far between.

    And I'm not sure the 3DS has any of them yet.

    In the past, people puckered up and paid because there wasn't much choice. But the app store - as well as (to a lesser extent) XBLA and PSN downloadables - are shifting expectations around price at the lower end of the market. The Vita may or may not fare better - early previews suggest its games are closer to the "full sized" console experience - but only time will tell.

  • ubergine #7 7 months ago

    They were showing compelling new IP for the DS well before it came out, I remember being rabidly interested in Nintendogs and Electroplankton. There's nothing new to see with 3DS. Hey great, have a price drop. There's still no particular reason for its existence.

    Why the hell isn't there an AR game with collectible pokemon cards? They aren't even doing the most obvious money-spinners with the features they made a big deal about. What is paralysing Nintendo's management? I wonder if the success of the Wii and DS actually sent them into a panic, like a deer staring I to headlights, no longer able to act rationally.

  • Haunted_Tree #8 7 months ago

    I know that Nintendo can seemingly do miracles but expecting to turn a profit with stagnant Wii sales, stuttering DS / 3DS hardware and software returns and a huge marketing push for Wii U is going to be tough.

    I think customers are questioning why they need another Wii or DS - the latter is especially pertinent if the market is so dominated by mobiles and the iPod touch. Kids are going to find it hard to justify the difference between the new stuff to their parents (that is, if they still care about the brand). Even Nintendo had a tough job at E3 trying to work out what the Wii U actually was and how they could sell it.

    The days of the £30 handheld game are rapidly fading. Maybe Mario, Monster Hunter, Pokemon and Zelda are the exceptions but 3rd parties in a recession hit economy increasingly prefer the low cost / high gain that Apple or Android can give them.

    We always complain when Nintendo tend to stick to their old reliables - same old Mario, same old console. We smirk when the big announcement is that the DS is given a new paint job. This may have worked in the past, but I think the game had changed and Nintendo has failed to keep up to speed.

  • makeamazing #9 7 months ago

    Well the other problem with the 3DS is that it can run DS games, so people are not too bothered about any expensive 3DS games that are currently coming out... when they can just go and buy really cheap DS games to run on it.

    They need some big games and they need them quick. Otherwise they would have been better getting profit over sales numbers, especially this year.

  • omniscient #10 7 months ago

    Nintendo: 3DS price cut "sacrificed our profitability"

    ohh ..........ok then .......I guess I'm the only one of the opinion, that creating hardware based on a gimmick whilst using old tech is what sacrificed profits. Sooner or later everyone realises that 3D (for games) is like masturbation, good at first but soon after you can't help put shake the feeling of emptiness.
    Edited by omniscient at 31/10/11 @ 19:12

  • mcmothercruncher #11 7 months ago

    There IS no profitability if no-one is buying your product.

  • Marshall2008 #12 7 months ago

    It's a shame it hasn't worked. Sales are still flagging even after he price cuts.

  • ajaxpliskin #13 7 months ago

    Next time, launch your new handheld console just before Christmas, not 2 months after, and not months before your launch titles are ready. It's not neuro-science, is it Iwata?

  • smelly #14 7 months ago

    >Sales are still flagging even after he price cuts.


    Er.. It's outselling the DS in the same time period.. But dont let little things like "facts' get in the way of your posts...

  • ubergine #15 7 months ago

    @smelly
    I'm not so much disagreeing but want to point out that it is not a direct correlation or indication of "success" for the 3DS. Sales have shot up but at a loss, so now attach rate becomes vastly more important, and it was already vital!

    But also, the DS faced an uphill battle in its first year before skyrocketing. DS began as an untested, poorly understood product in a retail environment which was favoring PSP. Since that time the dual-screen touch-screen gaming device has been proven and popular, so that hard slog for gaining market should be out of the way, and the 100 million + people who took interest in DS should have taken interest in 3DS. A better comparison would be between sales of the iPhone 3GS and the iPhone 4, or 4 and 4S. iPhone has only gained momentum with each iteration.

    Comparing 3DS's numbers to DS only shows that the progress made has come to very little. Remember also that the DS didn't find it's astonishing level of success until its second iteration, the DSlite. Some consumers (like myself) may be waiting for the fixed version of the 3DS, or they may have simply grown out of it or were only there for the short-term fad aspect anyway.
    Edited by ubergine at 01/11/11 @ 07:49

  • Serebii #16 7 months ago

    @Marshall2008 No they aren't. Almost every week since the price cut, the 3DS has been outselling everything worldwide

  • skunkfish #17 7 months ago

    @omniscient

    If the 3DS was like masturbation I'd be playing it right now...

  • omniscient #18 7 months ago

    @skunkfish I never knew the 3DS could be played with one hand.

  • smelly #19 7 months ago

    I notice no-one is going on about sony being doomed - when they've just posted a loss for the 3rd year running.... And are hell bent on copying every single one of nintendos ideas...