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Iwata: Wii U "will be sold below cost"

Iwata: Wii U "will be sold below cost"

Thu 25 Oct 2012 9:19am GMT / 5:19am EDT / 2:19am PDT
HardwareFinancial

Nintendo president sets 5.5 million target for console's first year

Satoru Iwata, president of Nintendo, has revealed the Wii U will be sold below cost in the company's most recent financial results briefing.

"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," he said.

"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."

"We were not able to make a profit on software for the system, while we had to book a loss on the hardware"

He added this would prevent the company achieving "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."

He also revealed that the company was aiming to ship 5.5 million consoles this fiscal year, and 24 million units of Wii U software. Targets lower than the Wii's previous figures of 5.84 million units of hardware and 28.84 million units of software.

Yesterday Nintendo announced it was cutting its full-year profit predictions to 6bn from 20bn.

11 Comments

Daniel Hughes Studying PhD Literary Modernism, Bangor University

436 496 1.1
"Targets lower than the Wii's previous figures of 5.84 million units of hardware and 28.84 million units of software"

Did Iwata mention why these targets were lower? Is it an intentional move by Nintendo, who by now have recognised that Wii's rocket-like start compromised their ability to support a huge userbase that sprang up almost from nowhere? Not likely, of course, even though I think it would be better for Nintendo if Wii U's sales curve isn't quite as front-loaded as Wii's was.

Much more likely this is simply a case that Nintendo can 'only' manufacture and ship 5.5 million within those first few months. That figure also seems somewhat conservative based against analyst expectations. Is it possible that Nintendo are being deliberately conservative with their estimates, so they can avoid the damaging appearance their over-optimistic 3DS forecasts have created?

Posted:2 years ago

#1

Klaus Preisinger Freelance Writing

1,135 1,171 1.0
WiiU, or the question of how long can alternating between looking up to your TV and down on your controller really be an improvement of immersive gameplay. I think they can sell 5 million units simply based on all the buzz they create among mainstream media jumping on the bandwagon to do a piece on the Wii successor. But the software sales sound rather optimistic, even considering that Easter 2013 is before the end of the financial year and will add to revenues.

Posted:2 years ago

#2

Craig Page Programmer

384 220 0.6
I guess we won't be seeing any Wii U price drops in February if they're losing money at the current prices...

Posted:2 years ago

#3

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
Even if they were being sold at profit, we wouldn't see a price drop 3 months post launch.

Posted:2 years ago

#4

Henry Toliver Network Analyst I, Windstream

8 0 0.0
I don't think we will see a price drop until the "so-called" next-next gen consoles are released. By this time, they are actually making a decent profit and will drop the price to stay relevant to the competition.

Edit: The way MS and Sony talk, that will be a LONG ways away.

Edited 1 times. Last edit by Henry Toliver on 25th October 2012 6:49pm

Posted:2 years ago

#5

Greg Wilcox Creator, Destroy All Fanboys!

2,193 1,170 0.5
I have the feeling they're intentionally underestimating that 5.5 million figure just so things look better if they manage to go over it even by a few dozen units or so. The key thing (at least for me) is how this will play out when the extra GamePad prices are revealed and consumers have to accept that they're going to have to shell out a premium for that touchscreen (which, even if sold at a loss, will be quite expensive for most families on budgets who are interested in the Wii U and have one already pre-ordered or plan to get one next early year)...

Eh, as always, we shall see...

Posted:2 years ago

#6

Nicholas Pantazis Senior Editor, VGChartz Ltd

1,020 1,467 1.4
@ Klaus Er... never played a DS? But yeah, you're right. Immersion is much better with a massive, intrussive HUD showing bullet count, minimap, equipped weapon, health bar, pausing to make swaps, and pausing to look at maps. Much more immersive.

Edited 1 times. Last edit by Nicholas Pantazis on 25th October 2012 10:35pm

Posted:2 years ago

#7

Cale Barnett Animator

29 31 1.1
Who are you and what have you done with Nintendo???
This company used to have a policy of using old technology in innovative ways and making profits on hardware.
Now they seem to be chasing the trends with 3D screens and tablet-like controllers while selling at a loss!

Posted:A year ago

#8

Adam Campbell Associate Producer, Miniclip Ltd

1,183 973 0.8
I wonder what that cost will actually be.

Its a strategy not seem from Nintendo since the N64 days but I guess they will be desperate to get market share from what is a very risky console right now. Not just looking at the console industry but other technologies out there, particularly portables.

Posted:A year ago

#9

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
Cale, the Yen to USD exchange rate all but guarantees that anything they sell in the US is going to be sold at a loss.

Posted:A year ago

#10

Patrick Frost QA Project Monitor

400 196 0.5
@ Greg - I really don't think that developers are going to be designing games for more than one pad in a hurry for that reason and because of the reported performance hit. Maybe once there is market penetration and people could bring their pad over to a friends then there will be an opportunity but it will have to be an option rather than a large feature mechanic/game mode.

Posted:A year ago

#11

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