Nintendo: One Game Sale Makes Wii U Profitable

Published 2 years ago by

Nintendo Wii U Profitable

Though Nintendo understandably had to take a major loss on 3DS handhelds after the initial response to the console’s release was unexpectedly tepid, their decision to do the same with the Wii U, prior to launch, has generated quite a bit of concern. While we’ve already documented that Nintendo’s sales number projections were in a near free fall after the 3DS launched, things have stabilized since then, but nonetheless Nintendo needs to right the ship fast.

Part of that strategy, it appears, has been to take a loss on each sale of the Wii U, but, conversely, make it so the sale of just one console game turns that loss into profit. Or at least that’s what Nintendo of America President Reggie Fils-Aime wants people to believe.

The initial decision to sell the Wii U at a loss was a byproduct of today’s casual game consumer — those who adopted the Wii despite never having owned a game console. In order to make a price tag that was both palatable and profitable just wasn’t going to happen, especially considering the Wii U’s revolutionary GamePad controller. The Wii could come in at an understandable price because the moving parts and tech were affordable — this GamePad controller alone, however, is not and could have inflated the Wii U price tag substantially.

And so Nintendo had to take a loss on each sale of the Wii U — which thus far seems to be selling quite well (if pre-order numbers are to be believed) — but with the aforementioned game sale swooping in to save the day.

As Fils-Aime explains, “As soon as [they] get the consumer to buy one piece of software, then that entire transaction becomes profit positive.” And since, except for the packaging of Nintendo Land with the Deluxe Set, all Wii U owners are going to need a game out of the gate, that essentially guarantees each Wii U sale will be profitable.

“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. And if we’re able to do that, then we will create significant profit for the company.”

It even goes much deeper than that, as Reggie explains in his quote above, but the most important thing to note is that Nintendo has created a contingency plan to combat the loss. Now hopefully they can keep interesting content coming beyond the 50+ launch window titles.

So Wii U owners, how many games did you purchase alongside your new console? Was it smart of Nintendo to deliver a more affordable price tag, but by extension take a loss?

The Wii U is available now.

Source: Mercury News


TAGS: Nintendo, Wii U

  • L2404

    I think it was the only way that they would try to appeal to us, the ones that have gone from nintendo to Xbox or PS3. And the people who are maybe considering upgrading from the wii.
    Hopefully, a new smash bros or Zelda will come out soon, those would definitely be safe profitable titles for nintendo.

    Although they may delay them until they have explored the potential of the Wii U deeper, and are able to deliver a game that takes full advantage of the console’s capacity. (e.I. Sort of what they are doing with GTA 5)

  • Stephen

    I bought three games alongside my Wii U, and I’m THRILLED with the console. As I usually say to Nintendo, SHUT UP AND TAKE MY MONEY!

    • Erik

      Im with this guy and i only got mario but its all i need right now

    • Poncho

      Me too. It seems like for the first time in a long time, I’ll only need a Nintendo console for the generation. Well, that depends on if I’ll still be interested in Halo when the next one releases.

    • Valithin

      I still prefer the old nintendo systems, the games and such. SNES ftw lol

  • Daniel Carlson

    seems like the author of the article has his own prejudices about the wii u. and im seeing a lot of skepticism as well. The article is written like we’re supposed to question the things nintendo says

  • Dante

    I don’t know about you, but I’ve been skeptical of big N for years.

    Actions like misrepresenting demand by under-supplying units are shady. Using conflict minerals – and doing NOTHING to stop it. Oh yeah, how about some child labor?

    I also question them because, as much as I used to love them, I find it hard to see their systems as anything but for children.

    Now some may say they are trying to win back the older gamers with titles like ZombiU and 3rd Party big names, like Batman AC, ME3, AC3, etc.

    However, I am seeing more of the same, the 3rd party titles are clearly the most inferior versions (how many sites have said they look awful for a supposed “next gen” system?). They use the GamePad in predictable and superfluous ways – seriously nothing there that strikes me as groundbreaking – ooh look a map!

    In a year or two, when the Wii U is underpowered, 3rd party developers will once again turn to their bread & butter systems – the latest & greatest from Sony & Microsoft. And what then happens to the Wii U?

    I consider myself a fairly savvy consumer and the Wii U just isn’t a smart buy for me, now if I had a couple rugrats – maybe, but in my experience Jr. wants to play what Dad is playing – so maybe not.

    • Erik

      I agree with some of the things you said but in the end all i care about is nintendo exclusives

      But again you made some good points

    • Poncho

      First of all, there is no proof of them under-supplying. I’ll give you the conflict mineral thing, because that seriously troubles me as well. That shouldn’t affect the quality of their products, though. And you’re seriously bringing up the child labor thing when Sony, Microsoft, Apple, etc etc use Foxconn? Yeah, it’s a terrible thing, but Nintendo are not the only ones guilty here.

      The fact that you used to love them, but now consider their products for children, sounds more of a personal problem than Nintendo’s fault.

      As for the third party games being the “inferior” versions, how is Nintendo responsible? It’s the developer’s job to optimize the game for the platform they’re porting to. If that’s not the case, then it’s all Sony’s fault Bethesda can’t get Dawngaurd on the PS3. I personally have not had issues with Black Ops 2. It runs just as fine as the Xbox version for me(my brother has the Xbox version, and I play with him when I’m over). Also, developers are not REQUIRED to use the Gamepad. If that were the case, you’d be criticizing Nintendo for putting devs under such strict requirements. Plus, these are ports, not new, original games built around the concept of the Wii U. The expectation for these games to have groundbreaking Gamepad features is unreasonable.

      And if the Wii U is underpowered, it won’t be by a large margin. In fact, the Wii U will be the most powerful console of next gen. Sony and Microsoft will fail to meet the unreasonable expectations of the internet and will disappoint everyone. Actually, Sony will make the PS2 the new PS4. They won’t even have to spend anything on developing a new console. The PS2.2 with Blu-Ray and Move!1!!1 All hail Nintendo! Also, Microsoft will drop out of the console race and develop Halo 10: ODSReach Anniversary on the PS2.2. -My response, in the same vein, to your second to last paragraph. Pure conjecture. We know absolutely nothing about Sony and Microsoft’s next consoles.

      It seems to me that you’re less skeptical of Nintendo than you are disinterested in them. Which is fine. To each their own. Some of your skepticisms, however, are unfounded.

      • Erik

        bro… Nice B)
        I know who im calling if i need a lawyer xD

        Ps excuse my grammar but this is something casual for me and dont feel the need to be pro

      • Matt

        The Wii U is underpowered, though. It’s barely, if it all, better than the PS3 and Xbox 360 in terms of hardware. So when the PS4 and Xbox 720 come out, they’ll be way more powerful than the Wii U. And of course, PCs have way better hardware than both current-gen and next-gen consoles.

        • Poncho

          Oh lord, the conjecture. It hurts. I have no doubt that the Wii U is better, in terms of hardware, than the PS3 and 360. Not barely, but significantly. And I also have no doubt that the Nextbox and PS4 will be better, in terms of hardware, than the Wii U. But by how much, NO ONE can say. I would like to see the spec sheet you have of Microsoft’s and Sony’s next consoles where it shows it will be X times more powerful than the Wii U.

          And PCs? Yeah bro! PCs! I can’t believe people actually think consoles are good gaming systems. PC is the only system worth having! I just spent $24334 setting up my new rig, bro. It’s so 1337, screw console gamers. My game has the prettiest looking ladybugs! Look at that detail, bro! I seriously bought this game to stare at this ladybug. It’s so detailed and textured. Oh crap, is it next year yet? Haha who cares, look at those console losers! They can’t have ladybugs THIS textured! My PC is so godly I’m going to ridicule the console gamers about their inferior hardware instead of gaming on my ultra sweet PC. Damn, I love my PC. I just wish I could turn myself into a PC, so people can ogle at my graphics and stuff. Maybe I could even marry my PC. Man, I love my PC so much. Console gamers can suck my big, fat, mouse and keyboard. Maybe one day science could turn me into a PC. *Wistful sigh*

          • Shalkowski

            I’ve said this once and i’ll say it again, Nintendo is still behind. By this time next year, no one will care about the Wii U. Why? Because the new Xbox will be announced and details will be flooding in. The Wii U is not significantly more powerful than the PS3. Maybe more so for the Xbox but thats still not saying much.

            As for PC gaming, great you spent $20,000 upgrading it. No sane person would do that for two reasons. One, no matter how much you upgrade it, the game itself still has a cap on the graphics so even still you have to wait for next gen consuls. Two, you just spent $20,000. That is a ridiculous amount of money to spend on a PC. Consuls you don’t have to do that because its already all there and you don’t have to spend that outrageous amount of money. That is your personal opinion that gaming is better for PC so don’t say it as fact.

          • Matt

            I’m not a PC fanboy. I do have an awesome gaming PC, but I don’t hate on consoles because I have it.

            You’re right that the Wii U is significantly better than the PS3 and Xbox 360, but that’s not saying much. Sony and Microsoft aren’t going to go soft on us and barely upgrade their consoles. They’re going to seriously upgrade their next-gen consoles. No less than 8GB RAM, and probably quad-core processors. Not to mention the GPUs.


            That’s how we know how much RAM the Xbox 720 will have. 8GB for sure, maybe even 12GB. And you know Sony’s going to match that.

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    • Erik

      Man you dont just wreck it you obliterate it

  • Jak Frost

    The wii u is really stupid

    • Jak Frost

      and its not stronger than the xbox