Japanese news site, The Nikkei, has had the chance to chat with Nintendo president, Shuntaro Furukawa, about the increasing production and shipping costs for technology firms as a result of the global chip shortage and the pandemic. Mr. Furukawa was asked whether the Kyoto-based company had plans to slightly increase hardware prices to offset the cost. He replied by saying that isn’t something they are looking to do. He also mentioned that software is a big driver for hardware and they plan to continue steadily releasing quality titles. Switch sales have slumped 23% on the year by volume in the April-June quarter.
Are price increases an option?
We’re not considering that at this point, for two reasons. In order to offer unique entertainment to a wide range of customers, we want to avoid pricing people out. Our competition is the variety of entertainment in the world, and we always think about pricing in terms of the value of the fun we offer.
Our products also include software. Nintendo has sold more than 100 million Switch units so far, and it’s important to maintain the momentum of our overall business. Generally speaking, a weak yen makes domestic Switch sales less profitable.
Can Nintendo absorb the rising costs of materials and shipping?
For the time being, our OLED model will continue to be less profitable than our other models. Costs have undoubtedly increased for shipping not only by air, but also by sea. We’re thinking about what we can do.
The weak yen may be seen as a benefit for Nintendo, since such a large share of our sales comes from abroad, but our overseas promotional and staff costs also go up. We’re making more inventory purchases in foreign currencies to counter that.
Thanks to Greatsong1 for sending in the news tip!