"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."
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.
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.
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 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.
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.
"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."
To me it's more if the next Xbox and PlayStation consoles arrive and I can easily imagine, in the case these technological meisterwerke are on schedule, devs will having a hard time to convince publishers to support new technological platforms with tiny install bases but twice as high development costs - and when it comes to gamers, they are not enthusiastic about the GFLOP superiority called PS Vita.
@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.
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.
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.
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?
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.
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.
To me it's more if the next Xbox and PlayStation consoles arrive and I can easily imagine, in the case these technological meisterwerke are on schedule, devs will having a hard time to convince publishers to support new technological platforms with tiny install bases but twice as high development costs - and when it comes to gamers, they are not enthusiastic about the GFLOP superiority called PS Vita.
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.
If you don't like their products, just ignore them and buy from the competition.