Nintendo last week surprised many by dropping the price of the 3DS from $250 to $170. It's a move that's expected to have quite an impact on Nintendo's profits. However, Nintendo management is ready to accept responsibility.
Following last week's earnings report and the news that the 3DS price was being dropped to $170, Nintendo president Satoru Iwata announced that management would be accepting a reduction in compensation.
Speaking during a financial results briefing, Iwata discussed the company's reasoning behind dropping the price of the 3DS. He also admitted that it's unusual for Nintendo to drop the price of a product less than six months after launch and accepted responsibility for "realizing both the short-term and the mid-to-long term profits."
"I feel greatly accountable for having to make the markdown shortly after the launch, for having damaged our consumers' trust, for having made a significant impact upon the financial forecasts, for the annual dividend now being expected to be significantly less than originally expected and for now forecasting that there will be no interim dividend," he said.
"(...) For the management to show its accountability for the level of the operating loss of this time and the prospect of no interim dividend, we decided at the directors' meeting yesterday that we would reduce the compensation we will receive as the directors of the company."
Iwata explained that the directors’ compensation of the company constitutes a fixed portion and a variable portion, which is decided by the actual results of the business performance.
"The decreased profit of the company is reflected as the decreased compensation in the variable portion or, more specifically, the bonus to be given at the end of this fiscal year," he said. "However, we understand that the management responsibility this time is heavier than usual, and we have decided to reduce the fixed compensation as well, by reducing it by 50 percent for the president, or me, a 30 percent reduction for the representative directors and a 20 percent reduction for the other directors."
Nintendo is expecting a strong software line for the 3DS towards the end of the year. This, combined with the price cut for the console and the always lucrative holiday season, should help boost sales. Are you tempted to purchase the 3DS now that it is significantly cheaper? Let us know in the comments below!