Wii U will sell at a loss from launch
The Wii U will sell at a loss when it launches, Nintendo revealed today. In an investor briefing, Nintendo President and CEO Satoru Iwata disclosed the console's price is "below cost," citing it as one of the reasons for the company's reduced annual net profit outlook announced yesterday. The 3DS, however, is now no longer selling at a loss, a turnaround Nintendo predicted earlier this year.
Iwata's statement reads:
"In addition to the yen's continuous appreciation, 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. 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. Our loss has therefore widened during the second quarter in spite of bringing the Nintendo 3DS hardware back to profitability. Although we expect our financial performance to be revitalized, under these circumstances, unfortunately we cannot say that we will achieve "Nintendo-like" profits within this fiscal year."
Nintendo revealed yesterday a loss of approximately $351 million for the first half of its fiscal year, along with predicted annual net profits of $75.2 million, down from $251 million. However, Nintendo expects to sell 24 million units of Wii U software worldwide by the end of March 2013, on the back of the 5.5 million consoles the company predicts it'll shift in that time. Iwata also noted GameStop has taken 250,000 Wii U pre-orders in North America, as of last week.
