Nintendo's David Yarnton

The UK general manager discusses 3DS pricing, launch units, marketing and piracy

Nintendo announced today solid details for the launch of the 3DS, with the console set for release in Europe on March 25 and two days later in the US. While the company committed to a price of $249 in the US, in Europe it has only set a trade price, leaving retailers to tag the console with a price of 219-229.

Following up the announcement, sat down with UK general manager David Yarnton to further discuss pricing strategies, allocation of launch units, marketing strategies and anti-piracy measures to make the console more secure than the DS.

Q: Have you left consumers and retailers disappointed because you're unable to commit to a price for the 3DS in the UK?

David Yarnton: Well, we don't set a price. What we're seeing online with some of the retailers is that are few of them are going 229, to about 219. It's something that we can't set.

Q: Is it frustrating that you can't set a universal price?

David Yarnton: Different markets are all competitive. But we can't do that and we don't try to do that. We give our retailers a cost price and it's up to them what price they sell it at.

Q: What's the cost price?

David Yarnton: I can't tell you that, it's commercially sensitive.

Q: If it's priced at 229 with a game on top then it's going past 250 and that's a lot of money. Don't you think it's priced too high?

David Yarnton: If you look at the value proposition, there's not a 3D entertainment device in the market at that price point. Not only a device that you can play games on but as a communication device, being able to download content with some of our partners like Eurosport and Sky. With Sky, not only will you be able to get sports in 3D but also the Arts and other broadcasts in 3D. The opportunity in terms of an entertainment device in 3D is big.

Q: But it will be compared to smartphones, the PSP and the other DS consoles and compared to those it's very highly priced.

David Yarnton: Indications that we've had so far from retail is that they are really happy with the price and demand indicates it will be our biggest launch in terms of hardware. The DS for us was huge in 2005 and in 2006 the Wii was even bigger. Retailers - especially with the environment they are in - are right behind it. It's a new format. In the last ten years, the innovation that we've bought to the market, people may have looked at the price to begin with but it was soon forgotten because of the quality of the product and the content that's available.

Q: Can we expect to see any official bundles for the day one launch?

David Yarnton: No, we're not planning any of that. It's just pure hardware to start with, no bundles as such although I'm sure retailers will do something. The other thing is when you buy it you get seven augmented reality cards and other games that are already built in. It's not just a piece of hardware to start with - and a 2GB memory card.

Q: Can you give an indication of how many units you have allocated for the UK launch?

David Yarnton: Mr Iwata has said there will be four million units for the launch period worldwide so we will obviously, touch wood, get our share. The company has been pretty fair as far as allocating round the stock. As far as we're concerned we've got a good amount of stock. We can never gauge and we can't promise unlimited stock because we wouldn't be able to have a worldwide launch. We're comfortable with the stock we've got and retailers are too.

Q: What's the feedback from retail and the indication so far of pre-orders?

David Yarnton: More than what we can probably supply, at this stage. But we haven't given them full indication yet of the levels we're going to get. We've only just announced details and we've got meetings lined up with them for next week, so we're still looking at allocations of stock and marketing plans for launch.

Q: Would you recommend that consumers get pre-orders in to guarantee a console on launch day?

David Yarnton: One of the things we're working with retail on, and is really important as far as we're concerned, is pre-orders with our customers so that we can make sure the stock is in the right places and we don't just go and give stock willy-nilly to the market. We need to make sure we can satisfy that consumer demand. So pre-orders are really important and that's how we're looking to allocate second chances of stock based on the retailer pre-orders. We're pretty confident we'll be able to guarantee whatever they pre-order.

Q: People that don't pre-order and turn up on day one, are they going to be going home disappointed?

David Yarnton: As we get closer to launch we'll have a better indication. We know some of our customers have already got quite significant pre-orders and deposits paid and we hadn't even given them a price or anything like that. In our presentation today they got a good indication of price and they're going up online now with prices that consumers will understand. In one place we saw pre-orders at 300 and they were still taking orders so for those guys it's come down. As we get closer we'll get a better indication of that.

Q: Are you confident you can keep the supply constant so we don't see stock shortages as there were with the Wii?

David Yarnton: If we go back historically and look at things like Wii and even the DS, the demand for the product has just been so huge, any manufacturing company would probably have trouble keeping up with it. If you look at the numbers that Wii's done, especially in 2008 and 2009, it was just phenomenal. No one could have forecast those numbers. I think we did a really good job in meeting the demand out there. Now, there's no guarantee but we've also got the DS, the DSi and the DSXL so there's a lot of product to sell.

Q: Are you going to be cutting into the sales of your different handheld by introducing a fourth console?

David Yarnton: If you look at the different systems there are entry points for different consumers. There are the late adopters that never jump into the new products straight away. There will also be a lot more people who aren't necessarily gamers who are into their technology and will see that what 3DS offers is an experience they can't get anywhere else.

A lot of late adopters are only just coming into the market with the DSi and the DS XL. I think last year the DS was the top-selling hardware unit for over 30 weeks of the year. We still see it as an entry point and an opportunity to develop.

Q: What are the marketing plans for the 3DS? Obviously you can only really appreciate the 3D screen by getting it in your hands...

David Yarnton: We've had huge sampling experiences on Wii and DS in the past and we properly started that whole touring the product, we've been doing that for years. With 3DS it's going to be the biggest sampling campaign that we've ever done. We're looking at between 400,000-500,000 consumer samples up to Easter this year.

And because we're doing a combination of not only interactive in stores but also consumer events, and then samples in shopping centres... we see the opportunity as so important. How do we explain the 3D? We can paint a picture but until you actually experience it you're not going to see the full value of it. Sampling is huge, it's a major investment for us.

Q: Is the initial marketing campaign aimed at the hardcore early adopters or the more casual user you've grown through the Wii and DS?

David Yarnton: Early on our promotion is towards the early adopters and we're actually starting our campaigns five or six weeks before launch, which is quite early for us. Normally we don't start a lot of our advertising until much later. As we get closer to launch we'll broaden it out as well. There are games there that will appeal to everyone and for the core there's quite a lot of product that we wouldn't normally have at launch.

Q: What kind of piracy measures are you adopting to tackle piracy, because the DS has suffered terribly from the R4 cartridge and the piracy scene?

David Yarnton: I don't know the technical side of things and we wouldn't normally publish what those are. We're still pretty confident we'll have a lot more security in place with the launch of the 3DS - not that the others were necessarily bad - but 3DS is going to be a lot more secure.

David Yarnton is the GM for Nintendo UK. Interview by Matt Martin.

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