Why Nintendo is losing money on each Wii U launch unit

ARS - Company is counting on strong software sales to turn a profit this year.

[DeadlyFire]

I say its the WiiU gamepad as the only thing causing them to lose money, but with WiiU Pro and WiiU motion(Wii controller) also out there I expect them to make it up with those sales too.

[guitarded77]

Yeah, they made their money back off me already. I got a Deluxe, which they took a loss on, but bought a pro controller, a wand, a navi and 2 games, which they turned a profit on. Counting down the days... it's going to be gamers paradise with BlOps 2 coming the 13th, Wii U the 18th and PSABR on the 20th. The big three will all be getting money from me over the course of that week.

[ZoyosJD]

LOL

Big 3 = Nintendo, PS, Activision...

Sad, but Activision practically owns MS's game division with their timed exclusive content.

[guitarded77]

@ ZoyosJD

LOL, yeah, I think I was thinking about Halo 4 the week before instead of BlOps 2 when refering to the big 3. Cut me some slack, it's the weekend. But yeah, I see the ridiculous part of my statement.

[ABizzel1]

If they are selling at a loss it's so incremental that selling just one game with the console is causing them to break even. All the tech in the system alone should be around $200 - $250 and the controller was rumored to cost only $50 to produce ($250 - $300).

So selling just 1 game will allow Nintendo to break even on the console Day 1. Nintendo does not sale hardware for a loss, and generally speaking their hardware is always priced significantly greater than the retail sale price (DS, Wii, 3DS, Wii-U).

simply search manufacturing / production cost for these consoles and handhelds and do a bit of research for individual parts, and you'll find more often then not you're getting the short end of the stick. You're paying for coding that prevents these consoles from being standard PC's and the OS.

You can make a PC that runs console graphics in 1080p @ 60fps right now for $400 or less.

@ZoyosJD

LMAO

[Outside_ofthe_Box]

"***You can make a PC that runs console graphics in 1080p @ 60fps right now for $400 or less."***

Can I make a PC that runs console exclusives though? That's what I thought. Get out with that PC rubbish nonsense.

[ABizzel1]

@Outside of the box

There's always one.

The purpose of that comment was to show that the Wii-U shouldn't be sold at a loss by comparing it to superior hardware that cost less than $100 more. There are several reports that show that the tablet controller for the Wii-U only cost around $50 to make, but it'll probably cost gamers $69.99 - $99.99 to buy because it's another way to bring in profit (once they go on sale).

It had nothing to do with what system has what games. The Wii-U in total should cost NINTENDO no more than $250 to produce, whereas the average consume can go out an build a Wii-U PC for around $299. So once again that's why I said Nintendo shouldn't be taking a loss on the console Day 1, especially since most people who buy the console are going to buy at least 1 game.

[cannon8800]

Someone from Nintendo already said this a few weeks ago that they're selling at a loss.

[ronin4life]

The story itself is old I think. In it they reference the investors briefing as being "yesterday" when it was a while ago.

[Deku-Johnny]

Actually a couple of months ago the Wii U would have made a profit on every system. It's the change in the exchange rate across all regions that has made it sell at a loss.

[Realplaya]

I say the whole system is causing the to lose money. 3ds is sold for a loss and it's half the cost and has 20 percent of the technology used in the WIIU.

[Ck1x]

The 3ds isnt selling at a loss anymore and I thought that Nintendo specified that it is the basic model that is losing them money, because the system is currently costing more than $299.99 to manufacture.

[WiiUalpha]

How can they b losing money on the basic but not the deluxe when its the deluxe that offered so much more for only 50? Im thinking u meant deluxe not basic

[Realplaya]

I was saying the 3ds is losing moey I'm saying from a technolgy perspective the 3ds isn't on the same level and when they priced it where they would make money. They didn't sell so they had to drop the price and take a loss. Remember how much they 3ds cost at launch?

The WIIU is a different beast and what we forget is that video games systems utilize older tech and less comparable tech than pc's but to produce a system that doesn't break down and performs as intended is a different story.

With that being said you facter in manufacturing cost and the the fact that the controller is a cross between a Vita and a 3ds without a independent processer and you have a system that's processing for two independent systems. That right there tells you the system is both capable and powerful.

[Burning_Finger]

I Believed that Nintendo are just saying that their losing money on each Wii U sold due to manufacturing cost. They want the public to believed that they are spending money on "tech" that has been available for years and costing them a fortune to developed. Supply and demands, Investors and Tech enthusiast are Nintendo's business scheme.

Also, If you think Nintendo are losing money on each Wii U sold. Investors would likely cash out and not Invest on Nintendo's stocks at all. It's a big risk in the business world.

[greenpowerz]

I have to agree with you as a possibility. well said.

I might just add that we have no idea what that tablet controller costs hardware wise or R&D

7th generation controllers are often $40-$65 so would it be hard to imagine the tablet is that of $100 or more in value? It is the most advanced controller a console has ever had. Plus the console hardware is still more advanced despite not being to your standards.

Possible Nintendo mind games again? Probably not.

What I said could nullify your theory in the end.

[eferreira]

I doubt the game pad costs so much to produce. The thing isn't hd and gesture touch. It's pretty basic for a screen

[FlairSomewhere]

It's still a respectable screen, though, pixel density wise.
It's about 158 ppi.
Compare it to these : http://en.wikipedia.org/wik...

It's more pixel dense than an iPad 2 screen and a few pixels shy of where the iPad mini sits.

By no means Retina, sure, but nothing to be laughed at as shoddy.

This controller also has infrared sensors, a camera, gyroscopes, geo magnetic sensors, microphones, rechargeable batteries, a screen, buttons, NFC reader, and whatever transmitting hardware exists to facilitate the video streaming.

All to a build quality that satisfies Nintendo.

I could see that adding up...

Using exchange rates, I think Japan is selling GamePads at $172 a pop.
But I think that's a bit high, and it doesn't equate properly, and still, that's just the price charged to consumers.

Retailers purchase the product from the manufacturer (for cheaper).

Money is made on Nintendo's end before we even buy it.

Now the retailer wants to make money too, so that's how it gets even higher.

It's also interesting to note that when people look at Nintendo selling the WiiU at a loss, they think first of the $299 & $349 packages, those numbers.

Even though their money isn't made (in this case lost) from you buying their system, it is from providing systems to the retailers.

Without a disclosed loss, I can't guess it's production cost.

[cee773]

its not ips or oled the screen is nothing special you can add all the ppi's the screen tech is still behind ipad 2 the res is low the screen is almost 4 inches smaller than ipad so of cource the ppi is better but is the viewing angles, colors and contrast better? no way any samoled or ips screen no matter the res will be better than the wii's u's screen pull out your dal core smart phone and compare the screen to wii U or ds hell pull the vita out its screen put both 3ds and wii U diplays to shame

[cee773]

I'd assume Nintendo loses no more than $50 each system sold for the 8gb and lesser on the 32gb model and the gamepad don't appear to be that expensive its a 480p tft low res 1 point touch screen with no CPU , GPU, ram etc the screen should be way cheaper than even the Vita's screen

[metroid32]

Calm down m8 the wiiu is very powerful thats why there loosing money and the gamepad supports 480p because thats all any gpgpu supports when gaming in full HD on a tv ? Dumb git.plus its next gen graphics being streamed not vita or 3ds graphics or ipad graphics its much nicer and cleaner even with a WVGA res because of the graphics on screen ie think Aliens on that thing.

[WiiUalpha]

They lose less on the system that offers more? How does that even make sense? They give u 100 or more worth of stuff for only 50 more but are taking les in losses by giving u more? Okay....

[DivineAssault]

relax buddy.. U are way too defensive about the subject.. Some ppl dont like the wii u, get over it.. Its nintendos job to convince ppl its price & features are worth getting.. Its working on its fans because they can do no wrong in their eyes but everyone else knows their bs..

Orbis & Durango will be shown soon enough & after thats said n done, more ppl will make up their minds on wether or not wii u is a worthy purchase... From my view point, wii u has nothing to offer that PS3/360 doesnt offer already..

[cee773]

@wiiu alpha

The only difference between the sku's is the memory and a controller dock and Nintendoland be serious those COST's almost nothing

Its a simple bait and switch just like the launch model ps3 Sony lost more on the 20gb than the 60gb

32gb of flash is not much more than a 8gb of flash look it up
Google did it with the nexus 7 8gb and 16gb cost about the same that's why the nexus is now 16 and 32gb and yet they cost the same as when it launched ninety is using flash not ssd not HDD flash is cheaper than ever the core and die hards will lean towards the 32gb thus making Nintendo more money so in other words yes they are losing less for the system that offers more apple has done this for ages its gadgets that contain flash memory

[herbs]

People need to realize that screen clarity has to do with resolution in relation to screen size, it's called pixel density also known as ppi (pixels per square inch) The Wii U gamepad has a ppi of 163, in comparison a 50" 1080p TV has a ppi of 43 although you would be viewing the TV from a greater distance. What I'm getting at is the gamepad will have a very nice screen and to say that its only 480p low res is invalid.

[FlairSomewhere]

Atta boy, rational thought :)

It's 158 ppi btw ;)

Square root of (pixel width squared plus pixel height squared)
Which is then divided by diagonal length (in inches)

[herbs]

Your math is correct FlairSomewhere but infact the gamepad ppi is 163 because the resolution is actually 854 x 480 Thanks for the intelligent comment :)

[FlairSomewhere]

Lol I actually used 854 x 480 ...

Yay for being smart, everybody wins, I guess.

[herbs]

Lol here I am trying to sound all smart, next time I will double check my maths. Like they say assumption is the mother of all fuck ups. Thanks again for the corrections ha ha ;)

[Jek_Porkins]

Isn't the R&D cost included when the first consoles are sold? I think if Nintendo operates at a loss, they probably wont for long. They really need to offer a Metroid or Zelda game within the Wii U's first two years.

[Realplaya]

So would you make up your mind to buy a mercedes benz because the cadillac hasn't come out with a new model yet. Nope you buy it because you like it regardless of what the other manufacturer does.

[TheUndertaker85]

What you're talking about is impulse buying.

What happens when you look at the newest model of the Mercedes Benz but realize that the new model of Cadillac isn't far off and you're considering both? If the Cadillac comes out and offers more than the Benz for near the same cost you'll feel like an ass if you bought the Benz.

[MasterCratosKong66]

I see the points both of you are trying to make but impulse buying and using cars in general. For one a purchase that costs thousands of dollars would require more thought seeing as how most people on this site could realistically save enough disposable income to purchase all 3 of the new systems over 2-3 years (mostly assuming PS4 and Nextbox don't launch with a $600 price tag) but probably not the same for 2 luxury brand vehicles. Also the presence of exclusive software and uniqu ways to play (mostly Nintendo on that one) gives each a chance to differentiate from each other in a way that warrants purchasing each (in my opinion)