Iwata talks on advertising 3DS, making sales a focus
The following comes from Satoru Iwata...
First of all, 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. 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. 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.
I’d like to take this opportunity to explain one more thing here. The advertising expenses that Nintendo has forecasted in this fiscal year are five billion yen less than our previous advertising expense forecast amount. Some of you may interpret it as though the company is cutting ad costs in order to secure annual operating income by any means, and such an assumption may be the background to the type of question I just received. Let me explain a bit about it: We disclose our advertising expenses in Japanese yen, and among the total advertising expenses, expenses denominated in foreign currencies decrease in Japanese yen value when the Japanese yen appreciates. This is one factor. Also, there are always the ad expenses that are linked to the sales, which are used for promotions. For example, a pre-determined percentage of the sales by an overseas retailer is invested into a fund created by Nintendo and the retailer, and this fund is used for promotional activities which are done in accordance with some pre-determined conditions. Because we made a downward revision to our annual sales forecast, the ad expenses linked to the sales decreased accordingly. In other words, we have not taken a conservative attitude towards advertising and promotion expenditures, which are needed to realize 16 million units of Nintendo 3DS hardware sales in this fiscal year. As a matter of fact, we are making rather aggressive investments in this field, and we have not changed our attitude. Of course, more investment in advertising does not necessarily mean more sales. We are taking cost efficiencies into consideration, and we are trying to spend money at appropriate times and on appropriate promotional activities such as when a strong software title is launched.
Link
First of all, 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. 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. 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.
I’d like to take this opportunity to explain one more thing here. The advertising expenses that Nintendo has forecasted in this fiscal year are five billion yen less than our previous advertising expense forecast amount. Some of you may interpret it as though the company is cutting ad costs in order to secure annual operating income by any means, and such an assumption may be the background to the type of question I just received. Let me explain a bit about it: We disclose our advertising expenses in Japanese yen, and among the total advertising expenses, expenses denominated in foreign currencies decrease in Japanese yen value when the Japanese yen appreciates. This is one factor. Also, there are always the ad expenses that are linked to the sales, which are used for promotions. For example, a pre-determined percentage of the sales by an overseas retailer is invested into a fund created by Nintendo and the retailer, and this fund is used for promotional activities which are done in accordance with some pre-determined conditions. Because we made a downward revision to our annual sales forecast, the ad expenses linked to the sales decreased accordingly. In other words, we have not taken a conservative attitude towards advertising and promotion expenditures, which are needed to realize 16 million units of Nintendo 3DS hardware sales in this fiscal year. As a matter of fact, we are making rather aggressive investments in this field, and we have not changed our attitude. Of course, more investment in advertising does not necessarily mean more sales. We are taking cost efficiencies into consideration, and we are trying to spend money at appropriate times and on appropriate promotional activities such as when a strong software title is launched.
Link
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