Wii U Just Needs to Sell One Title to Be Profitable

When Nintendo made the decision to leapfrog competitors Microsoft and Sony by announcing its next-generation console early, it also took on the risk of competing with much cheaper current generation hardware. One of the pressures that Nintendo was forced to face was keeping the costs of the Wii U low enough to keep it competitive with the Xbox 360 and PlayStation 3.

Back in October, the company revealed that it would be selling the Wii U at a loss, not only because of hardware costs, but because of the yen's appreciation. As a result, Nintendo's profit margin for that fiscal quarter wasn't quite as high as investors had hoped it to be and naysayers were already predicting the company's doom.

However, the loss in selling the Wii U hardware can be quickly turned into a profit. In a recent interview with Mercury News, Nintendo of America President Reggie Fils-Aime explained that though the Wii U was selling at a loss, "[…]as soon as we get the consumer to buy one piece of software, then that entire transaction becomes profit positive."

Since buyers of the Wii U are unlikely to leave the store with just a Wii U in hand and no games, virtually all sold consoles are a guaranteed profit. If Wii U sales manage to even somewhat resemble the Wii's sales, then Nintendo's got yet another moneymaker on its hands.

 

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  • If I do recall, the Wii's sale dropped off partially due to an overload of shovelware for the console.
    14
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  • Its not a bad system, but they need to get some of their titles on it, like Legend of Zelda and maybe Pikmin 3, get those out there and you're going to be selling a ton more
    6
  • I'm not into consoles but I like what Nintendo did with the Wii vs PS3 and Xbox360. They went in smart and slaughtered the competition in sales, especially the first few years when the consoles were sold at full price. Being able to dominate two competing consoles (Wii was beating both PS3 and 360 2:1 at one point) is one thing, but to do it with underpowered hardware and kiddie games really shows business sense and innovation that MS and Sony lacked.
    3
  • I agree until the new Legend of Zelda comes out there shall be no Wii U in my dwelling.
    2