Nintendo revealed today that their new console, the Wii U will actually sell at a loss when it launches later this year.
Satoru Iwata, president and CEO of Nintendo disclosed the news today in an online presentation. The reason for the loss at launch is because the console is being sold “below cost”. That in turn reflects a reduced annual net profit for Nintendo which was announced yesterday.
Here is Iwata’s statement:
In addition to the yen’s continuous appreciation, 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. In this first half of the term before the launch of the Wii U, we were not able to make a profit on software for the system while we had to book a loss on the hardware, which is currently in production and will be sold below cost. Our loss has therefore widened during the second quarter in spite of bringing the Nintendo 3DS hardware back to profitability. Although we expect our financial performance to be revitalized, under these circumstances, unfortunately we cannot say that we will achieve “Nintendo-like” profits within this fiscal year.
According to Nintendo’s fiscal report, the firm will suffer a loss of around $351 million for the first half of it’s fiscal year. That said if everything goes well then 24 million units of Wii U are planned to be sold worldwide by the end of March 2013.