Most consoles, when they’re first launched, are sold at a loss, but in this regard Nintendo has mostly gone against the grain, utilising affordable technology to create consoles that sold at a profit from day one. It’s been a strategy that served them well. Previously we’d been informed that the Wii U — most likely because of the expense of the new GamePad — was being sold at a loss. But Nintendo of America’s president Reggie Fils-Aime has now revealed that it’s pretty tight. If you buy one single game with your Wii U, it puts Nintendo back in black!
“The business model doesn’t change dramatically, in that as soon as we get the consumer to buy one piece of software, then that entire transaction becomes profit positive,” Reggie said, speaking to Mercury News.
“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’s an interesting strategy. The business model of Sony and Microsoft is to sell consoles at a loss and make dollars in video game sales. As time passes and components become cheaper the losses reduce, or even turn to profit. Nintendo has always worked a little differently. The Wii U represents a slight change in this regard, but the fact that one game sale turns the transaction positive is interesting — no-one buys a console without a game to play on it — do they?
Mercury News Interview: Nintendo’s Fils-Aime talks Wii U on eve of launch [Mercury News]
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