Topic: Reggie Admits that the Wii package is profitable

[GoldenPhoenix]

From gamespot.com:

"Nintendo, on the other hand, took a completely different approach, and didn't want to stay in the game only to take a financial loss from day one. Instead of focusing on high-definition graphics and some of the extras that make technophiles drool, the company opted to try to expand its reach through simplicity--that is, innovate and capture the attention of the mass-market crowd rather than the hardcore gamer who is willing to spend money on a console, HD setup, and other accessories.

The result of that choice, says Nintendo of America president Reggie Fils-Aime, is instant profit.

"We will make a profit on the entire Wii proposition out of the box--hardware and software," Fils-Aime told Reuters. "That really is a very different philosophy versus our competitors. We are a company that competes only in the interactive entertainment space, so we have to make a profit on everything we do."

Nintendo expects to sell 6 million Wiis through March of next year, but analysts expect even better numbers. Michael Pachter of Wedbush Morgan Securities told GameSpot, "I keep hearing that they will crush the 6 million unit number (by something like 2 to 3 million). That would be good for everyone."

I don't know about you guys but I don't think bragging about how Wii is not that great of a bargain is the smartest move. He is basically saying "The competition has more bang for your buck but we feel need to gouge the early adopters (mostly Nintendo fans) probaly more so than any NIntendo console before".  

[Requiem of Darcness]

Is this supposed to be a big deal? Nintendo always makes a profit off their hardware. They have never subscribed to the loss leader philosphy of Sony and MS.

[GoldenPhoenix]

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Originally posted by: Requiem of Darcness
Is this supposed to be a big deal? Nintendo always makes a profit off their hardware. They have never subscribed to the loss leader philosphy of Sony and MS.

True but I have a feeling they are making the most profits out of any other console before, I just don't see that package costing anywhere close to the 250$ they are asking.

[Arbok]

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Originally posted by: VGrevolution
True but I have a feeling they are making the most profits out of any other console before, I just don't see that package costing anywhere close to the 250$ they are asking.

Probably, although one could probably cite that due to Wii Sports being included, and Nintendo reaping what looks to be less, although still comparable, to the normal profit margin for a game release.

[GoldenPhoenix]

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Originally posted by: Arbok

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Originally posted by: VGrevolution
True but I have a feeling they are making the most profits out of any other console before, I just don't see that package costing anywhere close to the 250$ they are asking.

Probably, although one could probably cite that due to Wii Sports being included, and Nintendo reaping what looks to be less, although still comparable, to the normal profit margin for a game release.

That could be true, honestly I don't care so much about the profit they are making but to seemingly brag about it. I"m not sure that is a good message to send out into the public, it is almost in your face to those of us that buy one.

[Darkheart]

I SAY THIS, QUIT COMPLAINING BUY IT OR DONT


LOOK AT THESE FIGURES

600 Ps3 top model

500 Ps3 lower model

400 360 top model

300 360 low model

250 Wii


Now for all of you complaining that the system is 50 bucks from a 360 QUIT IT.  Nintendo has been pushing this all along.  They promised the Wii would NOT be another console and be doin its own thing,  those 2 other consoles can NOT do what the Wii can.  If this was just another cube Id complain but they kept their promise, the wii is the lowest next gen console on the market.   If you dont wanna pay then vote with your dollars and dont buy the damn thing but I cant stand all this whining goin on the whole past day about this.  Nintendo already said 250 would be their maximum theyd sell it for and they did just that.

[GoldenPhoenix]

Did I say anything about not buying it? I just don't think this is a smart move to be bragging about how profitable the Wii hardware is, it could have some terrible ramifications, that is reality not whining. I want Nintendo to suceed and I hate to see them do something that could potentially damage that.

[31 Flavas]

Also, Nintendo has indrectly rasied the price on us before. Gamecube and N64 both came with only 1 controller and no pack in game. Where as with the NES and SNES we got 2 controllers and a pack in (mario) game.

But that's beside the point, Nintendo doesn't have a major secondary business, like Sony and Microsoft do to subsidise the price of the system. So, while I am honestly a bit miffed at the (direct) $50 price increase... I don't hold it against them.

[GoldenPhoenix]

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Originally posted by: 31 Flavas
Also, Nintendo has indrectly rasied the price on us before. Gamecube and N64 both came with only 1 controller and no pack in game. Where as with the NES and SNES we got 2 controllers and a pack in (mario) game.

But that's beside the point, Nintendo doesn't have a major secondary business, like Sony and Microsoft do to subsidise the price of the system. So, while I am honestly a bit miffed at the (direct) $50 price increase... I don't hold it against them.

Does anyone have any figures on what NIntendo made/brokeeven/lost on their previous consoles? I could have sworn that they just broke even with GC (Maybe a SLIGHT profit) or a minor loss. Once again I want to reiterate what I sad, I am not complaining about the price but am concerned that being so blatant about it being profitable could look bad image wise. It is like they are saying the competition is giving you a better bang for your buck since they are losing while they are making profits.  

On a side note: I personally do not like the strategy of Sony and MS to take huge losses on systems, I am completely fine with no or profits wth a console, in fact I consider it good business. Hopefully like was suggested this profit is mainly coming from the the Wii sports being packed in and not necessarily the true production costs of each system package (even at that I still worry about the image these comments made by Reggie could make).

[Darkheart]

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Originally posted by: VGrevolution
Did I say anything about not buying it? I just don't think this is a smart move to be bragging about how profitable the Wii hardware is, it could have some terrible ramifications, that is reality not whining. I want Nintendo to suceed and I hate to see them do something that could potentially damage that.

No not really but its been all over these forums today and I felt like venting my opinion.  As far as I am concerned, YEA I would brag about its profitablity, we are only dissapointed because we have hyped ourselves as Nintendo fanboys and girls to think the Wii would launch at a 200 pricepoint.  But think about it, to me why not capitalize on the moment anyways.  

Reason 1.  The ps3 and wii

The wii compared to the lowest model of ps3 is still HALF the price

Reason 2.  Launch

We all know that launches sell out so why not make money off of it.  Price cuts can come in the future if the console has a harder time selling at its current pricing.

Reason 3.  Ds

The Ds is at 130 right now and it can make more money by staying at its current price.  The Wii being at 200 and having a 70 dollar difference is insane.  Now with the Wii being 250  they can keep up both the Wii and Ds's price.  This way when the Xbox 360 does a price cut Nintendo can easily slash their console to 200 and keep in the game and STILL make a profit.  Likewise with the Ds if the PsP does a cut Nintendo can lower it to 100.  

[iMoron]

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Originally posted by: VGrevolution


True but I have a feeling they are making the most profits out of any other console before, I just don't see that package costing anywhere close to the 250$ they are asking.

... So you think that making the CPU more eficient and yet more powerfull than the Cube's CPU is cheap...

Or the graphic card... Or the remote and its sensor... or the self loading drive bay... What about the plastic? I read they are using a cuality plastic...

And the game... thrue, it could go for $40 by itself...

... Besides, they are not making a huge profit... most likely $10 per console... or even less... but a profit none the less...

So... they make profit... maybe this should have been directed to share holders and investors alone, to avoid people from complaining about them making a profit...

Lame... weak...

... And... I remember that the N64 costed $250 when it realesed! It was that price for a short time since, short time... Then it was $200. They made a profit...

The GameCube was lossing like $7 for a few months... then it made a profit shortly after...

[31 Flavas]

I don't have direct articles or such, but geez, they've got 7 Billion US dollars "in the bank", so to say. They didn't make that by selling their stuff at loss or break even price.

If you don't like now Nintendo is making it's money, you've always got Microsoft's "consumable" microtransactions and Sony's propritary Memory Sticks and RootKit loaded DRM music.

[GoldenPhoenix]

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Originally posted by: iMoron

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Originally posted by: VGrevolution


True but I have a feeling they are making the most profits out of any other console before, I just don't see that package costing anywhere close to the 250$ they are asking.

... So you think that making the CPU more eficient and yet more powerfull than the Cube's CPU is cheap...

Or the graphic card... Or the remote and its sensor... or the self loading drive bay... What about the plastic? I read they are using a cuality plastic...

And the game... thrue, it could go for $40 by itself...

... Besides, they are not making a huge profit... most likely $10 per console... or even less... but a profit none the less...

So... they make profit... maybe this should have been directed to share holders and investors alone, to avoid people from complaining about them making a profit...

Lame... weak...

... And... I remember that the N64 costed $250 when it realesed! It was that price for a short time since, short time... Then it was $200. They made a profit...

The GameCube was lossing like $7 for a few months... then it made a profit shortly after...

Well if some of the rumblings are to be believed the Wii hardware costs less than 99$, even with the nunchuck/remote, component, and Wii sports I don't see them coming close to the 250$ price point when you go production/material cost of each system package. Then again this all relies on the Less than 99$ manufacturing/materials cost for the Wii hardware, which could definately be wrong. I still would love to see the final specs, since some of the games are looking pretty stunning, and do look next generation (look no further than Mario Galaxy and Metroid Prime 3).
 

[zakkiel]

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Well if some of the rumblings are to be believed the Wii hardware costs less than 99$

And why, exactly, would we believe these rumblings?

[IceCold]

zakkiel is right - I remember those "under $100 to develop" rumours - they were bullshit; unnamed sources, unprofessional article, and I remember many other articles that basically debunked that one.

[wandering]

*runs off to buy Nintendo stock*

[GoldenPhoenix]

Wandering that is an awesome picture to choose out of the Mario Galaxy ones!

[KnowsNothing]

Only Reggie would come out and say that.  Reggie doens't like sass, don't talk back to him.  Nintendo is making a profit on Wii and you're not going to do anything about it.  You're going to help.  Now shut up and take your lumps.

[Arbok]

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Originally posted by: VGrevolution
Well if some of the rumblings are to be believed the Wii hardware costs less than 99$, even with the nunchuck/remote, component, and Wii sports I don't see them coming close to the 250$ price point...

Not saying that's the actual price to produce the unit, but if it does cost $99 to manufacture I can actually see that coming much closer than you assume.

For one thing, you have to factor in the heavy R&D that went into something like the Wii, that remote I'm sure took a lot of time to perfect, while products don't advertise themselves also so you also have to factor in marketing costs. Retail chains will also take a cut of that $250 pie for doing the actual selling, so squeeze out some more money there, and you get closer and closer to the $99 point. Not enough so Nintendo probably wouldn't make a profit, but enough so that it doesn't have the huge disparity one would simply assume looking at the $99 cost (again, just assuming that might be true).

[wandering]

I am a bit surprised, honestly. Didn't they say Cube was initially sold at a slight loss? But really, there's nothing to complain about here. A company selling a product for profit? Oh noes! And there's nothing wrong with Reggie 'bragging' about it, either. Anyone with an interest in the console will want assurances that Nintendo won't go the way of Sega.

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Wandering that is an awesome picture to choose out of the Mario Galaxy ones!

Thanks, I like it too!  

[Kairon]

The more money Nintendo makes, the more likely they can hire me when I get out of college! YAY!

~Carmine M. Red
Kairon@aol.com

[NinGurl69 *huggles]

I plan on getting the console plus 6 games at launch, for less than the price of the "proper" ps3, Wii product tax considered.  Do either "HD" console provide reliable backwards compatibility (to my 30+ GCN library) or a comparable virtual console experience or the ABILITY TO LET THE MOVEMENTS OF MY HANDS INFLUENCE THE GAMEPLAY?

That's plenty of bang for my masculine deer.

[jasonditz]

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Originally posted by: wandering
I am a bit surprised, honestly. Didn't they say Cube was initially sold at a slight loss? But really, there's nothing to complain about here. A company selling a product for profit? Oh noes! And there's nothing wrong with Reggie 'bragging' about it, either. Anyone with an interest in the console will want assurances that Nintendo won't go the way of Sega.

You're right, the Cube was sold at a slight loss and later break even for a long time.

On the other hand, there's a valid complaint. Sony's willing to subsidize my hardware purchase, so is Microsoft... why should I pay cost + margin for a Nintendo console when I can get a different one for cost - subsidy? Sure, it's a higher overall cost console, but it's a compelling argument from a value perspective, and it's a question that's going to get asked now. Nintendo can clearly justify it, but if Reggie wasn't going around bragging about it in the first place, we would've never known.

[Kairon]

How much something is subsidized or isn't subsidized should have no or little impact on consumer behavior. End price to the consumer is what is most important to consumers, and for businesses, profit is king.

This means that the Wii is the best of both worlds: it needs to compromise neither desirable aspect, it can be BOTH cheaper to consumers AND profitable to the manufacturer, a win-win for all!

~Carmine M. Red
Kairon@aol.com  

[Mario]

Nobody cares that Sony are taking a loss with PS3, or that Nintendo will make money from Wii. Nintendo makes money from hardware, period. Sony doesn't care so much. Whatever the prices would be, this would ALWAYS be the case.

The only relevant facts are

$600 = Bad
$250 = Good

It doesn't matter how much it costs the companies, that doesn't make it good value for US. We don't buy the chips and wires inside (they are of NO value to us), we buy the experiences, and some would argue (obviously everyone here) that Wii offers better experiences, so it would be the best value even if they were all the same price.