Nintendo will sell Wii U at a loss, rely on games for profit

25th Oct 2012 | 21:07

Nintendo will sell Wii U at a loss, rely on games for profit

Expecting 24 million software sales in 2013

Nintendo's bad news on Wednesday, with projected profits for the rest of the year slashed by a third, was followed on Thursday by the news that the Japanese gaming giant will sell the new Wii U console at a loss.

Nintendo President Satoru Iwata released a statement detailing his plan to bring the company back to "'Nintendo-like profits," which involves getting the Wii U to as many people as possible to maximize profits via game sales.

Iwata's plan also includes increasing sales of the 3DS and 3DS XL handheld systems, launching the Wii U and prolonging its sales momentum, and expanding Nintendo's "digital business" to bring the company "in line with the times."

But Nintendo's hopes for the Wii U hinge on some generous sales forecasts - predictions that at least one seasoned analyst believes are unrealistic.

Wii U sales predictions

"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," Iwata said in his statement.

The Wii U will launch in the U.S. on Nov. 18 and Nov. 30 in the U.K., at $300 (£250) for the standard bundle or $350 (£300) for the premium package, with more storage, plastic stands, and the NintendoLand game.

Nintendo's aiming for 5.5 million Wii U consoles sold by April, with 24 million software units shipped in fiscal 2013.

Only those game sales will provide Nintendo with any profit, though, and Iwata said, "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."

Analyst shmanalyst

Wedbush Securities analyst Michael Pachter, who often comments on the video game industry, told investors on Wednesday that Nintendo's Wii U sales predictions are "highly unrealistic."

The Wii U launch window will see over 50 games released, though Nintendo's idea of a launch window stretches five months past the console's release in November.

Pachter called that launch window "murky," and said the Wii U's price is "steep." Those factors, combined with "compelling competitive devices," according to Pachter, make Nintendo's predictions unlikely to come true.

But hey, if you're still not sold on the Wii U, you can always pick up a Wii right now at a $20 discount.

Via GamesRadar

Nintendo Wii U Wii 3DS 3DS XL Michael Pachter Satoru Iwata
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