Wii U to be Sold at a Loss

http://www.insidegamingdaily.com/2012/10/25/nintendo-reveals-that-wii-u-will-be-sold-at-a-loss/



I didn’t expect this, but now that it’s been reported, I’m not too surprised: according to Nintendo president Satoru Iwata, each Wii U console will be sold at a loss.

Here’s what he said in the company’s latest financial report:

“”The Wii U hardware will have a negative impact on Nintendo’s profits early after the launch because rather than determining a price based on its manufacturing cost, we selected one that consumers would consider to be reasonable. In this first half of the term before the launch of the Wii U, we were not able to make a profit on software for the system while we had to book a loss on the hardware, which is currently in production and will be sold below cost. […]

We will make best efforts to retrieve ‘Nintendo-like’ profits by: boosting sales of the Nintendo 3DS system as a sound successor to Nintendo DS both in Japan and overseas during the year-end sales season, launching the Wii U system successfully in each part of the world in the year-end and maintaining the sales momentum next year, and, transforming our business structure in line with the times, including the expansion of our digital business to increase our business efficiency and profitability.”

Most new consoles that come out these days are sold at a loss, with video game companies making up the difference in game sales. It’s a tried and true strategy that’s worked out well enough for Sony and Microsoft for the last couple generations—but these are also companies that have lots of revenue coming in from other divisions to help offset the costs of doing so.

Nintendo, on the other hand, has been able to sell most of their consoles above the cost of manufacture, meaning they can make profit on each unit sold. This, I believe, is what got them into trouble with the initial launch of the 3DS, since it cost more than anyone was willing to pay. When they cut the price, they did so at a pretty big financial hit. It helped them create the install base they’d always needed, meaning that software sales finally took off. But the consequence, of course, was a financial loss for 2011—a hole they’re trying to dig themselves out of now.

The Wii U and its touchscreen GamePad controller seemed like it might cost a decent amount of money to make. And the $300 price tag isn’t terribly high, either, meaning Nintendo wants that install base more than they want the short term cash they would get from a higher priced system. This strategy is part of what’s led to the lower expectations for the company’s profits this year, which was reported yesterday. But the important factor here is that Nintendo does plan on making a profit, something Sony hasn’t been able to claim for a while.

And with Wii U pre-orders having pretty much sold out, chances look pretty good that Nintendo will make a good chunk of change on games this holiday season. But will they make enough for longterm sustainability, and to erase the memory of last year’s loss?

LMAO FOLKS!

nintendo still dont know how to make money off a system lmao they is dooomed

mrspaghetti wrote:LMAO FOLKS!

Nintendo still don't know how to make money off a system *Laughing My Ass Off* they're doomed

Shut it fool you no nothing of the business world.

mrspaghetti wrote:LMAO FOLKS!

Nintendo still don't know how to make money off a system lmao they is doomed

Don't try to act as if YOU know what you're talking about. Because you don't. (And, NO you're not like Albert Einstein or any other influential person in history, in case you were going to say that.) The only company ''doomed" here is Sony. In case you're bias hasn't allowed you to see, they've lost MUCH more money than Nintendo.

mrspaghetti wrote:LMAO FOLKS!

nintendo still dont know how to make money off a system lmao they is dooomed

I would suggest you get off this website. Shoke said no trolling, or flame wars. Because I know you haven't read the rules and home page, this is not a fanboy site, it is for gamers, and Nintendo FANS. (Mostly fans, not many fanboys here.) And if you want to discuss other systems, you can do that too. Go to the PlayStation forums since you love them so much. Or you can continue to troll, and get kicked off the website in a few days or weeks.

Question for Big Phaben:

Do you understand video game economics?

This is not even worthy news. Every game maker sells hardware at a loss and makes profit with software sales. This is basic, well-known economics, ever since the Atari 2600.

So you're stating the obvious.

mrspaghetti wrote:LMAO FOLKS!

nintendo still dont know how to make money off a system lmao they is dooomed

Well, lookie who we have here! The human punching bag with a dysfunctional temporal lobe. Do enlighten us.

Lupucillo wrote:Question for Big Phaben:

Do you understand video game economics?

This is not even worthy news. Every game maker sells hardware at a loss and makes profit with software sales. This is basic, well-known economics, ever since the Atari 2600.

So you're stating the obvious.

I know but I had nothing better to do at the time anyway.

And Thethunderara, Mr. Spaghettio's is not trolling I'm really really being serious here :\

So I think we can all agree this topic is about as pointless as a sandbox at the beach.

As for Mr. Spaguetti, I'm pretty sure the overlords will see to him.

Didn't the Wii make a profit from the start? Just wondering
This really isn't a surprise, expect the next xbox and Playstation to be sold at a loss also.

IAMERROR wrote:Didn't the Wii make a profit from the start? Just wondering
This really isn't a surprise, expect the next xbox and Playstation to be sold at a loss also.

Actually this is a surprise since the Wii U is Nintendo's first console to be sold at a loss :\

Lupucillo wrote:Question for Big Phaben:

Do you understand video game economics?

This is not even worthy news. Every game maker sells hardware at a loss and makes profit with software sales. This is basic, well-known economics, ever since the Atari 2600.

So you're stating the obvious.

This is the first time in history Nintendo has ever launched a console and sold it at a loss so this is very important and interesting news. Not to mention the fact that a little while Nintendo stated that in fact they wouldn't be selling the Wii U at a loss. Phaben beat me to it with this thread lol But in all seriousness this was pretty surprising news when I heard it. I hope they can start making a profit off of it soon after it releases.

Lupucillo wrote:So I think we can all agree this topic is about as pointless as a sandbox at the beach.

As for Mr. Spaguetti, I'm pretty sure the overlords will see to him.

If you know and love Nintendo then this isn't pointless. It's the exact opposite.

BigPhaben wrote:

IAMERROR wrote:Didn't the Wii make a profit from the start? Just wondering
This really isn't a surprise, expect the next xbox and Playstation to be sold at a loss also.

Actually this is a surprise since the Wii U is Nintendo's first console to be sold at a loss :\

Well to me it isn't cuz I was sure all next-gen systems are going to sold at a loss.

That's actually not true. They lost money on every game system on launch and for the first year-and-a-half to 2-years, except the Nintendo Wii. The Nintendo 64 had a freakin' Silicon Graphics chip inside it in 1996, yet they retailed it at $200. And that's straight from Hiroshi Yamauchi-san himself.

Sega practically gave away the Saturn, that thing is a beast with 2 Hitachi 32-bit chips and one Yamaha sound processor and a rock-solid Victor CD Drive. But they sold it at $400.

That's just the business model. When you invest in hardware, you'll always take a loss that year (3DS) then as soon as software starts flowing, you'll make back the investment money and see a profit. That's the cycle of investment.

It's basic economics.

But whatever, prattle on if you please. I'm due elsewhere.

And of course, we have the whole "Nintendo is doom" talk going on yet again lol. Man, if selling a system at a loss means auto death for the company, than how did ANY console manufacturer survive all this time?

Meh, they'll manage, probably.

Shokio wrote:And of course, we have the whole "Nintendo is doom" talk going on yet again lol. Man, if selling a system at a loss means auto death for the company, than how did ANY console manufacturer survive all this time?

My thoughts exactly.

Good Guy Nintendo
making it just right and not too much for us.

mrspaghetti wrote:LMAO FOLKS!

nintendo still dont know how to make money off a system lmao they is dooomed

Aren't these forums for people genuinely interested in the WII U? With that said, wth are you doing here.

GamerGuy1975 wrote:

mrspaghetti wrote:LMAO FOLKS!

nintendo still dont know how to make money off a system lmao they is dooomed

Aren't these forums for people genuinely interested in the WII U? With that said, wth are you doing here.

He's a troll just ignore him lmao.

This is good news, seeing as that means good things about the Wii-U's specs...

Now, before you guys all say GamePlay > Graphics, which I agree with, specs are still important. The Wii-U needs modern architecture and at least 1/2 of the power of the 720 in order for it to receive next-gen multiplatform titles and greater 3rd party support.

The good thing is, Nintendo can afford it. At the very least this means that it won't be completely underpowered. If they can get enough 3rd party support nailed down before the 720 launches, we'll get the 3rd party games and the 720 will get ports.

Not sure what Sony's doing.

ShinyChocobo wrote:The good thing is, Nintendo can afford it. At the very least this means that it won't be completely underpowered. If they can get enough 3rd party support nailed down before the 720 launches, we'll get the 3rd party games and the 720 will get ports.

Not sure what Sony's doing.

Oh just Releasing Dev Kits that's all

BigPhaben wrote:

ShinyChocobo wrote:The good thing is, Nintendo can afford it. At the very least this means that it won't be completely underpowered. If they can get enough 3rd party support nailed down before the 720 launches, we'll get the 3rd party games and the 720 will get ports.

Not sure what Sony's doing.

Oh just Releasing Dev Kits that's all

Lmao and that's all they're doing right now unfortunately :/