Some have stated that the Wii U’s starting price is too high for the console, especially with so much still unknown floats out there (How online game play works?). Despite the launch pricing, Nintendo has stated that the console will be sold at a loss.
“In addition to the yen’s continuous appreciation, 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.” Iwata told investors. “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. Our loss has therefore widened during the second quarter in spite of bringing the Nintendo 3DS hardware back to profitability.”
It is not entirely uncommon to sell a console at a loss in order to get it into the hands of the fans. Much of the profits will be made from the games themselves, and with an estimated 5.5 million Wii U consoles to be sold by the end of the fiscal year, Nintendo has a huge profit potential from the game sales.
“The launch schedule is better than we had initially expected, with notable launch day titles including Activision Blizzard’s Call of Duty: Black Ops II, EA Sports’ FIFA Soccer 13, Nintendo’s New Super Mario Bros. U and Nintendo Land, and Ubisoft’s Assassin’s Creed III and ZombiU. However, demand will probably wane once Nintendo’s core fan base has purchased the first 5-6m units, negatively impacting long-term hardware and software sales as well.”
What are your thoughts on the console selling at a loss, and do you believe there will be an adequate supply to meet the 5.5 Million goal?
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