This information comes from Nintendo president Tatsumi Kimishima, as stated during the company’s financial results briefing Q&A…
We priced the Nintendo Switch hardware to have no negative impact on overall earnings. As for the profitability of the hardware, our production quantities will need to reach a certain level before we see any cost reductions. Volume efficiencies will start to emerge once we produce the 10 million units we expect to ship this fiscal year, but we will not get the benefit of this right away. Looking ahead, we do expect that the number and variety of the Nintendo Switch accessories will help grow our business. With regards to promotional activities, it can be difficult for consumers to really get to realize how compelling the new play style Nintendo Switch offers is through traditional marketing. That is why we have launched new initiatives, including traveling to a variety of different locations to let consumers experience the unique fun of playing Nintendo Switch for themselves, while continuing to advertise proactively in this fiscal year. Our paid online service for Nintendo Switch is scheduled to start in the latter half of this fiscal year.
Again, we will not necessarily see results from these different strategies immediately at the outset of this fiscal year, but I believe we will see profitability continue to increase alongside the growth of our business as we move forward according to our sales strategy, especially if we do well during the year-end shopping season.
