An important truth to remember coming out of E3 2012: Nintendo is not interested in recapturing its past glory as the face of all video games. Wii U’s purpose isn’t to recapture the diehard gamer that can speed run Super Metroid and rack up record stats in Call of Duty: Black Ops, nor is it to lure back the simple player that abandoned Wii Sports Resort for Angry Birds and Draw Something. The Wii U has one purpose: To turn a profit for Nintendo.
Nintendo needs that profit now more than ever. The company reported its first ever annual loss after the end of the fiscal year in April. Dwindling Wii and Nintendo DS sales coupled with lower than expected Nintendo 3DS sales saw Nintendo’s sales drop 36 percent to below $8 billion for the year.
The company isn’t relying on its latest hardware alone to pull it up out of financial doldrums. Nintendo’s staff is feeling the pinch of lean times as well. Nikkei (via Develop) reported on Tuesday that Nintendo has cut summer employee bonuses by 20 percent this year. Executives within the company will also see bonuses cut this year, but Nikkei did not specify by how much.
This tightening of the belt over at Nintendo has been an ongoing process over the past twelve months. In July 2011, Nintendo made the emergency decision to drop the price of the Nintendo 3DS from $250 to $170 in an effort to spur sales of the then four-month-old handheld. Immediately afterward, Nintendo president Satoru Iwata took a staggering pay cut, halving his salary from around $2 million to $1 million. Nintendo’s other directors took a 30 percent pay cut while lower tier executives took a pay cut of 20%. Profitability is the goal, but Nintendo also seems committed to retaining its staff, even if that staff at all levels sees income decrease in expanding quantities.
Investor confidence in Nintendo is not high at this point though. Following Nintendo’s E3 2012 press conference on Jun. 5, shares in the company dropped 1.8 percent, adding to the more than 15 percent drop scene since January. The reason for the drop was the tepid and confused response to the Wii U’s second E3 showing from the press, fans, and retailers. All four of Digital Trends’ gaming writers agreed with Nintendo shareholders: It was not a good show for the Wii U.
Nintendo employees should brace themselves for further pay cuts if the company believes that those cuts are the best way to control its sales bleeding. The Wii U may not turn a profit for the company at all.
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