Nintendo not sure when Wii U will be sold at a profit
Nintendo isn’t making a profit with Wii U at launch. That almost never happens. Nintendo almost always sells its hardware for a profit, and maintains a philosophy of making money off its products.
So here’s the million dollar question: when exactly will the Wii U become profitable? Nintendo CEO Satoru Iwata can’t say for sure. But while speaking with investor’s at a briefing last week, he said that he’s “confident that in the next fiscal year we can improve our Wii U business to a level where the platform business as a whole”.
I do not yet have all the necessary information to be able to say exactly when Wii U hardware will start to be sold at a profit. If you just look at this fiscal year, I do not expect Wii U to make a big contribution to our profits since the software sales will be rather limited due to a rather limited installed base of the hardware and, even as a whole, we cannot be optimistic about their combined profit contribution either when we take into consideration the fact that we need to invest a lot into our advertising activities at first. However, in the next fiscal year, we will have a larger installed base. We will have a richer array of software and manufacturing costs will also decrease. Therefore I believe that, as opposed to simply asking when we will be able to sell Wii U at a profit, the focus should be on constructing a healthy profit structure for the business as a whole by launching a sufficient amount of quality software at fast enough a pace for our home console, on which we can look to achieve a higher tie ratio* than on handheld systems, and selling as many units of software as possible. I believe this is a goal we can achieve in the next fiscal year. While I cannot say exactly when the Wii U hardware will become profitable, I am confident that in the next fiscal year we can improve our Wii U business to a level where the platform business as a whole (when we include both the hardware and the software) makes solid contributions to our profits.
