Nintendo’s Satoru Iwata announced during an earnings call yesterday that the Wii U will be selling below production cost, though he didn’t go into just how far below cost.
Historically, Nintendo has sold consoles and handhelds at a profit while its competitors sell at a loss. The Wii sold at a profit right from the beginning despite its low price. The 3DS, in fact, was the first Nintendo hardware I can think of the company has sold at a loss. Iwata did mention that the 3DS is once again selling at a profit as production costs have caught up to the price drops.
CNET mentions in its article that Nintendo also reported a 6.8 percent decline in revenue, making this news particularly poorly timed. Nintendo sales have dropped severely in the last couple years as the new gaming audience Nintendo discovered realizes it isn’t actually a gaming audience, something our own Joey Davidson talked about earlier today.
The 3DS selling at a loss was remarkable because it was the first time in memory Nintendo had done such a thing. The Wii U selling a loss is remarkable because it suggests a trend for the company of moving that much closer to the business model of its competitors.