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Wii U will sell at a loss from launch
Wii U will sell at a loss from launch
October 25, 2012 | By Mike Rose

October 25, 2012 | By Mike Rose
Comments
    19 comments
More: Console/PC, Business/Marketing



As Nintendo finally begins to sell its 3DS handheld at a profit, the company has now stated that the upcoming Wii U console will sell at a loss.

As part of Nintendo's semi-annual financial results briefing, company president Satoru Iwata explained that the Wii U hardware will have a negative impact on Nintendo's profits during this upcoming quarter, because "rather than determining a price based on its manufacturing cost, we selected one that consumers would consider to be reasonable."

He continued, "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."

Nintendo rarely launches a console at such a price that it is not making a profit from the get-go, though the GameCube incurred a small loss with each sale initially.

The 3DS also began to make a loss on each unit sold after its price was discounted last year, but it became profitable again several months ago after Nintendo managed to reduce production costs.

[Update: Our article originally claimed the Wii U will be the first Nintendo console to sell at a loss when it launches. We have corrected it to note that the GameCube sold at a loss initially when it launched.]


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Comments


Michael Pianta
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This is bad news for Nintendo, I fear. Has selling hardware at a loss ever worked for them? I think most if not all of their biggest successes were sold at profit. I have trouble believing the software sales are going to be there for this to work. I hope it works though, Nintendo brings some much needed variety to gaming. It would be shame if they failed.

Curtiss Murphy
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It's at a loss? It's too expensive, it's a bland product, AND they are losing money... not a good combo.

William Johnson
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Nintendo set the standard of selling at a loss with the NES and SNES.

I did research on this once...and yet oddly I can't seem to find any information online to confirm this anymore... Hm...has the Ministry of Truth rewritten history? Has Nintendo always been at war with Microsoft and Sony?

Anyway, I'm pretty confident still that Nintendo set the standards with the tactics of loss leader, and it wasn't until more recent times that they've changed their stance.

You don't sell hardware to make money. You sell hardware to get people to buy over priced accessories and buy games to make money on licensing.

Dave Smith
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i think its a good idea, as long as its not a huge loss and the software library is there.

Jonathan Murphy
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Ok let me get this right. The console has 2gb ram, no decent HDD, a low end graphics card, can't push 1080 at 60fps, can't do voice chat for the most part, and is being produced in Foxconn China? How? How is this thing selling at a loss?! Is the controller that much of the cost?

Chris Hendricks
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The controller is crazy expensive, yes.

Where did you read that it can't do 1080 at 60 fps? I hadn't heard that before.

Zirani Jean-Sylvestre
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Perhaps if you take into account shipment, game pad and a 1st/3rd party game, they'll sell the pack at a loss. This without taking into account Marketing.

Perhaps this news is just intentional PR, it's not very important that they sell at a loss or not as long as everyone talks about it.

Patrick Davis
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Most of money is in the controller, but it's not like everything else in the system is low end. The system has proven it can do 1080p at 60 fps... no idea where you are pulling that nonsense from.

Eric Geer
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"can't push 1080 at 60fps" is not true...Activision as well as others have said that it can do this.

Zirani Jean-Sylvestre
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You are right, the WiiU can do 1080p at 60fps, but there's grounds to believe that it might struggle at providing a rocksolid 60fps at 1080p for this gen games

Source: http://timothylottes.blogspot.ca/2012/09/e6760.html

Zirani Jean-Sylvestre
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Dammit, Nintendo Defense Force arrived. Run away!!!

Jonathan Murphy
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I like how people focus on the comment that mattered the least. Yes the Wii U is underpowered enough that it will struggle at 60 fps. The source? The hardware itself. This will become a big deal for PS4/720 ports as they will push much higher textures and poly counts. Is 1080p 60fps possible? Anything is possible. Is it practical? Nope. You will see games dumped down to 720p or 30fps to compensate.

If you think the Wii U hardware is a shinning example of next gen tech, please wait 1 more year.

Chris Hendricks
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"I like how people focus on the comment that mattered the least."

I brought it up because it was the only one that I wasn't aware of. I knew about the others, and have no major disagreements with them. (Sure, there are many Wii U buyers who won't use up the hard drive space, but compared to other current gen consoles, it is not a decent HDD.)

Jonathan Murphy
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Muwhahaha. This must be a record for most replies ever! Look if I'm right we'll find out in a few months. If I'm wrong, boo hoo, hoo hoo hoo, boo on me.

If I feel like it I'll be back in a couple days to see how much more this thread can grow. I looked at the hardware, looked at Nintendo's track record of underpowered over hyped consoles cough N64, cough GC, cough Wii and theorized this was a logical outcome.

Eric Geer
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Nintendo will continue to be labeled as doomed and Nintendo will continue to prove everyone wrong. Preorders for the WiiU have basically sold out online...and I would expect that stat is spreading to retail locations as we get closer to release date. Selling at a loss is generally the game that most game hardware companies sell at--software is the bread and butter. I don't see what the big deal is.

Justin LeGrande
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If this legislation passes next week, console sellers may be able to reserve the right to prevent second-hand sales of consoles... DRM lovers may have the last laugh.

http://www.youvebeenowned.org/#alarm

http://www.theatlantic.com/national/archive/2012/06/if-youve-ever
-sold-a-used-ipod-you-may-have-violated-copyright-law/258276/

Chris Hendricks
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Not just that, I think the comment got posted on the wrong article.

Steven Christian
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But in Australia it will likely still be sold at double the cost price..
Funny that Nintendo reduced production costs on the 3DS and then the new broke that they were using child labour..

Chris Hendricks
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I quote, from Foxconn:

"Our investigation has shown that the interns in question, who ranged in age from 14 to 16, had worked in that campus for approximately three weeks."

Yep. That totally explains the decreased production costs.


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