After the success of the Wii and DS, it was quite surprising to see the 3DS faced with such a troubling launch. However, despite a rough start, Nintendo has announced they are no longer selling the system at a loss – a feat they haven’t been able to accomplish since the handheld first hit the market.
The rise in 3DS profitability can most likely be attributed to reduced production costs, which decreases over time as components become more affordable. The 3DS was originally sold for a profit, however slow hardware sales, forced Nintendo to invoke a drastic price cut – just months after launch. While sales spiked, this also meant that Nintendo, at that time, was selling the 3DS at a loss.
The price cut was an unprecedented move, especially because Nintendo’s business strategy typically involves selling hardware for a profit. This is in direct contrast to Mircosoft and Sony, who usually take a heavy hit on initial system sales, but make up the difference through software and subscriptions (Xbox Live/PlayStation Plus).
Recently, Nintendo expressed their desire to sell the 3DS for a profit by September 2012 - meaning they’ve hit the mark early.
Nintendo also revealed that the 3DS has sold over 19 million units worldwide, with software sales sitting at a cool 52.81 million units. Between April and June, Nintendo was able to sell 1,860,000 systems alone – quite a feat for a console that struggled during its first few months at retail. Unfortunately, even with the increased profitability, Nintendo still operated in the red this past quarter, earning a loss of 17.2 billion yen ($220.5 million USD). The game maker hopes that the launch of the Wii U will turn things around – suggesting their latest console will remain in line with previous endeavors and be sold for a profit.
Even if this success is somewhat bittersweet, the future is still quite bright for Nintendo’s handheld. The upcoming 3DS XL (which will also be sold for a profit) and the influx of popular games should keep the system selling for quite some time.
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