After a sluggish sales start for both 3DS and Wii U that led to three consecutive years of operating losses, Nintendo has been working hard to turn their fortunes around, and they’ve recently returned to profitability. During this time, their strategy has been notably different from their competitors. Nintendo is far less aggressive in terms of TV advertisements, and they opted not to cut Wii U’s price this past holiday season when many speculated that they should or would. Nintendo CEO Satoru Iwata has addressed this situation in a Q and A session with investors. Here’s what he had to say.
“The notion that products sell well if we run big TV advertisements or make attractive (discount) offers in sales seasons is no longer accepted. We are in the process of trying our utmost to push forward the change with the firm understanding that the channels in which people obtain information and the conditions to convince consumers are changing greatly, and so we must also change. So far, we have only been able to show partial results, and we need to reflect on a number of issues from the year-end sales season last year.”
— Satoru Iwata
Iwata believes that TV advertisements and discounts are no longer effective as a means of selling products. As such, Nintendo is exploring new ways to improve sales, including utilizing Nintendo Direct presentations instead of TV advertising. Iwata went on to say that the quality of the product is a bigger factor in sales than the quality of advertising or the price tag, and TV advertising doesn’t properly convey the quality of the product.
“I believe that although the traditional practice of selling things and the belief that products will sell well if you advertise broadly and make attractive discount offers, worked five or ten years ago, it is no longer applicable in this present day.
“Consumers will purchase high quality products even if they are expensive, or in other words, even if there are slightly reasonable discount offers, consumers will not purchase products unless they truly understand and are satisfied with the quality. Also, product appeal must be properly communicated to consumers, but advertisements that are pushed on consumers are gradually losing their effect, and we have to take the approach that encourages consumers to retrieve information at their own will.”
— Satoru Iwata
Iwata’s views certainly explain the sharp decline in Nintendo’s TV advertising in recent years. Do you agree with his assessment of the situation, or do you think dialing back on the advertising is a bad choice for Nintendo? Leave us your thoughts in the comments!