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Each Wii U makes a profit with the sale of a single game
Each Wii U makes a profit with the sale of a single game
November 21, 2012 | By Mike Rose

November 21, 2012 | By Mike Rose
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    18 comments
More: Console/PC, Business/Marketing



"As soon as we get the consumer to buy one piece of software, then that entire transaction becomes profit positive."
- Nintendo of America President Reggie Fils-Aime says that, although the Wii U console is selling at a loss, it only takes one software purchase from a consumer to become profitable.

Nintendo revealed last month that the console sells at a loss - i.e. the cost to put the machine together is greater than that which the consumer purchases it for.

However, Fils-Aime's latest comments suggest that the console is extremely close to breaking even on that front, given that the purchase of a single retail game will cause a swing to profits.

"In the end, the business model is still to drive the install base of hardware, and then to drive a strong tie ratio with all of the other software and experiences for the consumer," he added. "And if we're able to do that, then we will create significant profit for the company."


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Comments


Thom Q
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So, the console packages All sell at a loss, but Nintendo's cut on 1 game turns that into a profit?

How much does Nintendo get for 1 game being sold. 10 / 20$

So the differences in the Wii-U bundles are all being sold with the exact same profit margin, what should be -10$ then?

David Marcum
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I bet he meant a Nintendo developed game.

E Zachary Knight
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That is pretty cool that even though the console itself is not sold at a profit, it is still very easy to make a profit. How many other consoles can boast that?

So I guess this means that they could have shaved another $50 off the console but it would have taken the sale of 4-5 games to make a profit on each one.

Nooh Ha
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"How many other consoles can boast that? "

Most if not all current 360 and PS3 SKUs are being sold at a profit and have been for years... However, all MS and Sony consoles are sold at a large loss during the first couple of years or so.

E Zachary Knight
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That was what I was getting at, that it took many years for Sony and Microsoft to make a profit on their consoles. However, Nintendo had always sold its consoles at a profit and when it found it couldn't with the WiiU, it made it as easy as possible to make a profit as soon as possible.

Harlan Sumgui
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pretty cool for Nintendo shareholders you mean, right?

Chris Hendricks
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@Harlan And for Nintendo as a company. I, for one, don't want to see them go under any time soon, and the fact that they are selling it for such a slight loss is reassuring to me.

Nuttachai Tipprasert
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For the industry as a whole, I guess. I don't think there's any better good news than seeing game companies making money from their games/hardware.

Kris Steele
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I'd rather have seen a more powerful console that took a few years to realize profits. The Wii U will very likely be underpowered when the next Xbox and PlayStation consoles arrive and I can't imagine that will do a lot to convince third party devs and gamers to support it.

Harlan Sumgui
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@CK, handheld market =/= set top/console market. not even close.

Nuttachai Tipprasert
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@Harlan but an underpower Wii also out performed both Xbox 360 and PS3 in this generation. How can you explain this phenomenon?

For console market, content is king. Processing power doesn't have that much impact on sale figure (it might have some, but not that much as most people believe). This has been proved for generations when PS, PS2 and Wii win the war against more powerful opponent like, Nintendo 64, Xbox, Xbox 360 and PS3.

Arnaud Clermonté
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Why would you want Nintendo to do the same as its competitors?
If you don't like their products, just ignore them and buy from the competition.

k s
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I guess Nintendo made a profit off me when I picked up Assassin's Creed III for my Wii U on sunday.

Ian Fisch
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With all the reports on the Wii U cpu being underpowered, it seems like this is a shortsighted strategy.

Giro Maioriello
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Whoops! Replied to the wrong post.

Jonathan Murphy
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So that's why Mario U isn't packaged in! I'm onto you Nintendo!

Eric Feliu
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Why is it every time Nintendo releases new hardware gamers want to predict the demise of Nintendo as a console maker? It really does get old in my opinion. So far things are looking good for the Wii U and there is no competing consoles on the market. I highly doubt we will see any next gen console from Sony or MS for holiday 2013 since there has been no solid information to date on these next gen consoles and these things take time to develop games for. So that basically gives Nintendo a whole year unchallenged in the next gen console market. That can only be good for Nintendo.

A W
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Well if they deliver the experience I would say it can be a good year alone for Nintendo. But Xbox360 did go a year unchallenged but I don't believe that year helped them much against the cheaper Wii. It made them even with the expensive PS3 though.


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