As is usually the case with new consoles, Nintendo's Wii U will initially be sold at a loss to the company when it releases in November. Nintendo President Satoru Iwata confirmed during the company's financial results briefing this week that the Wii U would be sold for far less than it cost to make, but the conventional wisdom is that the company will make most of its money on software.
"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," he said. "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."
The company said during the briefing that it expects to sell 5.5 million units of the console by the end of its full fiscal year that ends in April 2013. Iwata also tried to explain how the company planned to realize "Nintendo-like" profits during the Wii U launch.
"We will make best efforts to retrieve 'Nintendo-like' profits by: boosting sales of the Nintendo 3DS system as a sound successor to Nintendo DS both in Japan and overseas during the year-end sales season, launching the Wii U system successfully in each part of the world in the year-end and maintaining the sales momentum next year, and, transforming our business structure in line with the times, including the expansion of our digital business to increase our business efficiency and profitability."