Nintendo confirms Wii U will be sold at a loss, Iwata comments on profits and more
Posted on October 24, 2012 by Brian(@NE_Brian) in 3DS, News, Wii U
Nintendo almost never sells its hardware at a loss. With the Wii U though, the company doesn’t have much of a choice.
Speaking during an investor’s meeting in Japan a short while ago, Nintendo president Satoru Iwata officially confirmed the Wii U will be sold at a loss.
Iwata spoke about this topic, overall profits, and more:
During the second quarter of this fiscal term, we have successfully eliminated the situation that we sell the Nintendo 3DS hardware below cost, which was the main reason our corporate profits fell in the last term. However, as we are in the phase of concentrating our development resources on software for the Nintendo 3DS system, which is still in an earlier stage of penetration than that of Nintendo DS, and as we have not yet launched the Wii U system, it is difficult to increase the total sales of software, which is generally profitable. 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. 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. Although we expect our financial performance to be revitalized, under these circumstances, unfortunately we cannot say that we will achieve ‘Nintendo-like’ profits within this fiscal year.
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.
