Following the price cut on its 3DS console, reports claim Nintendo is now incurring a loss for every system sold, noting that this is a necessary move.
Nintendo typically avoids selling its hardware at a loss, while console gaming competitors Sony and Microsoft initially sell their consoles at a loss and offset those losses through software royalties.
The company announced yesterday that it will cut the price of its 3DS console in all regions on August 12, down from the current suggested retail price of $249.99 to $169.99 in the US.
At a press conference in Osaka, and as translated by Andriasang, Nintendo CEO Satoru Iwata reportedly said that the price cut was justified.
He noted that, although the company is now reportedly making a loss on each 3DS handheld sold, Nintendo believes this will help to improve its financial performance. Gamasutra expects further information on the alleged loss-per-console from Nintendo's earnings conference this week.
While the report claims that Nintendo is taking a loss on each 3DS sold, a hardware teardown of the device earlier this year estimated the handheld's bill of materials to be just over $100.
Following on from the 3DS price cut, Nintendo modified its financial forecast for the current fiscal year ending March 31, 2012, reducing its expected profits for the fiscal year by a hefty 81.8 percent.
The company also revealed today that its share price has fallen to its lowest in nearly six years following the announcement that its 3DS console will receive a price slash next month.
Not even slightly. Unlike Sony/Microsoft, Nintendo has always sold their hardware at a profit - look up "lateral thinking with withered technology" for more details.
With this new price point and the slew of games to be released this year they should be fine. The 3DS lessons are ones I hope transfer over to the Wii U. They need a well rounded, killer lineup for its launch. The more exclusives/new IP the better imo.
Apparently "at a loss" is wholesale, that is Nintendo isn't lossing money per-se they are selling at the break even point and lossing profits and revenue, but not going into debt. A reliable source tells me there's no way the hardware is so expensive they are actually incurring debt for this. But still, it's not the best way to do business.
Nintendo is at a risky time. They need better games, better online/digital strategy and more honesty and focus in marketing in order to weather the current storm. A good way to start is by reaching out to 3rd party devs, listen to them and help them. Especially indies, since they do not have the resources to reach out to big companies like Nintendo that have lots of barriers to entry.
Nintendo is at a risky time. They need better games, better online/digital strategy and more honesty and focus in marketing in order to weather the current storm. A good way to start is by reaching out to 3rd party devs, listen to them and help them. Especially indies, since they do not have the resources to reach out to big companies like Nintendo that have lots of barriers to entry.