Nintendo hasn’t been doing too hot lately, revealing that this fiscal year’s net income may be 6 billion yen, almost a quarter of the 20 billion yen estimate. Even worse, Nintendo has recently confirmed that it will be making a loss on every sale of its upcoming gaming console, the Wii U.
Nintendo hopes to sell 5.5 million units of the Wii U during the fiscal year, at $300 each. According to senior managing director, Yoshihiro Mori, “Manufacturing costs are expensive, and [Nintendo] priced the machine at a level customers would accept.”
So how does Nintendo plan to profit? The idea is that they will eventually make money through add-on sales (such as extra controllers and video games), and possibly cutting manufacturing costs in the future. This isn’t a strategy that’s unheard of; Sony and Microsoft had a similar strategy with their PS3 and Xbox 360, respectively.
Although this strategy may be somewhat risky, there’s no better time to release the Wii U than now (November 18), considering the holidays are just around the corner. Plus, Nintendo will have an early-game advantage against rivals Sony and Microsoft, who are just starting to release big news on their upcoming consoles.
References:
http://ca.ign.com/articles/2012/10/24/nintendo-will-sell-wii-u-at-a-loss
http://www.bbc.co.uk/news/technology-20095125
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