Nintendo CEO Satoru Iwata and other executives recently met with their investors to field questions and discuss the future of the company. Unsurprisingly, one of the investors asked about Nintendo’s plans to cut costs and be more profitable in the future.
Iwata re-affirmed his stance that downsizing is not the answer (although Nintendo did opt to downsize and restructure in Europe), but instead explained that Nintendo looks to be more efficient in research and development. However, the biggest cost-cutting measure Nintendo looks to take is in marketing and advertising. Here’s Iwata’s statements on the issue:
While TV media advertising was considered the only way to reach the mass audience in the past, even without TV ads these days, many consumers are proactive about obtaining information from us thanks to the popularization of the Internet and smart devices. For example, when Nintendo produces a film to introduce games or makes new TV commercials, consumers take the time to view our YouTube programs or visit the Nintendo websites. Also, we put effort into “Nintendo Direct” and one of our video productions called “The Cat Mario Show,” which can be viewed on the Web and is regularly updated, has become so popular that many people watch this video program.
Many consumers in Japan now make the conscious choice to view our video programs in the Nintendo eShop of Nintendo 3DS every week. Unlike TV commercials for games that suddenly appear on your TV screens without notice, consumers actually pay attention to our programs, so the effect of one viewing is much larger. By having consumers watch our TV commercials and encouraging them to proactively view our programs by creating interesting content on the Web, they might become excited about certain topics and share that information through social media, resulting in others, who were not originally interested in our offerings, watching our programs.
Our marketing activities for games can still become more efficient. As an additional note, with the recent depreciation of the yen on a period-average basis for this fiscal year so far compared to the previous year, marketing expenses in the overseas markets, when they were converted to yen, have increased. Please understand that while it’s difficult to grasp the spending in local currencies after such amount is converted into yen, we have improved profitability by making marketing activities more efficient in the second quarter compared to the first quarter of this fiscal year.
— Satoru Iwata
In short, Nintendo is aiming to spend less money on TV advertising to a large, diverse audience. Instead, they want to focus on advertising to the more dedicated fans with things like Nintendo Direct. By exciting these loyal Nintendo customers, they hope to reach a larger, more general audience with social media sharing.