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 Ľ6bn from Ľ20bn.