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Nintendo Targets Sub-$250 Price For Wii As Profits Rise

Nintendo Targets Sub-$250 Price For Wii As Profits Rise

May 25, 2006 | By David Jenkins




Officials from Nintendo have announced details of the company’s financial results for the year ending March 31st, during which the company saw profits increase by 12.5 percent – boosted by both foreign exchange gains and positive demand for the Nintendo DS.

But perhaps the most interesting forecast in the company's results was of Wii hardware sales of 6 million by the end of the March 2007, the same numerical target as Sony for the PlayStation 3. A total of 17 million software sales for the Wii are projected for the same period. Nintendo senior managing director Yoshihiro Mori also indicated that the Wii would not sell for more than ¥25,000 ($223) in Japan and not more than $250 in the U.S., with a similar price being promised for Europe.

Net profit of the year was ¥98.4 billion ($879m), an increase on $87.4 billion ($781m) the previous year. Sales were down by 1.2 percent though to ¥509.2 billion ($4.55bn), following continued weak sales for the ailing GameCube format. Profits included a foreign currency gain of ¥45.5 billion ($406m) during the year, due to the weak yen. Nintendo’s profits often vacillate wildly according to currency markets, with the strengthening yen affecting the company’s forecasts for the coming year.

For the next year, Nintendo forecasts a lower profit of ¥65 billion ($580m), in part also due to research, development and manufacturing costs for the Wii. Sales, though, are projected to increase to ¥600 billion ($5.36bn). As a result of the lower profit forecasts, Nintendo shares actually fell by over 7 percent in Japan, despite gaining over 50 percent in the past year.

Having already sold 16 million units worldwide since its launch, the company’s projections for the DS Lite are bullish, with forecasts of 16 million additional sales by the end of the fiscal year in March 2007. Global sales for the Nintendogs franchise were put at 6.65 million units, Mario Kart DS at 4.22 million and Animal Crossing: Wild World (which launched more recently in Europe) at 3.56 million.

Global sales for the GameCube totaled just 2.35 million for the year, with no predictions being offered for the next fiscal year – presumably implying an end to production of the console. Sales of the Game Boy Advance were put at 8.3 million, for a lifetime total of 75 million. Only an additional 2.5 million sales were forecast for the next fiscal year.


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