14 DAY TRIAL // Satoru Iwata, the president of Nintendo, admits that the upcoming Wii U home console will be sold at a loss initially, despite a number of claims from other company sources that have maintained that it will create a profit from its first day on the market.
The executive tells investors that, “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.”
Confirmation that the Wii U will initially be sold at a loss came from Yoshihiro Mori, a managing senior director at Nintendo.
Iwata adds that, “Although we expect our financial performance to be revitalised, under these circumstances, unfortunately we cannot say that we will achieve 'Nintendo-like' profits within this fiscal year.”
Nintendo has been well known for the fact that it insisted on selling all its hardware at a profit since launch and then reaping profits from the games that are linked to each platform.
This philosophy worked well for the Wii home console, which quickly rose to dominate the current generation of home console during its first few years.
For Nintendo, problems started after the hurried reveal and launch of the 3DS, which failed to sell satisfactorily and forced the company to deliver a significant price cut to spur demand.
This led to Nintendo posting its first ever overall yearly loss and it seems that the problems will be increased by the launch of the Wii U.
Profitability will return to the Wii U once technology and manufacturing processes improve.
The company still plans to make a profit from the video games that will launch alongside its new home console.
After the late November – early December launch of the Wii U, the Japanese organization wants to see 5.5 million of them moved to gamers before March 31, 2013.