Topic: Nintendo expects little profit from Wii in first year, to be sold at or near loss?

[Kairon]

Gamasutra reported on Nintendo's recent Japan marketting even, the same one that unveiled Pokemon Battle Revolution for the Wii, and here's the relevant text:

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Speaking at a marketing event in Japan, as reported by Reuters and Famitsu.com, Nintendo president Satoru Iwata has said that the Wii console is initially expected to make little contribution to the company’s next full year profits.

Iwata confirmed that Nintendo expects to sell six million Wii consoles worldwide in the period ending March 31st, 2007 (4 million before the end of the calendar year) and 17 million units of Wii software. If the company does not expect these targets to produce any significant profit for the company it suggests, contrary to Nintendo’s usual practices, that the hardware will be sold at or near a loss.

Full link here: Gamasutra

~Carmine M. Red
Kairon@aol.com

[ShyGuy]

So this system is either going to be really cheap, or more powerful/feature rich than revealed?

[Requiem]

Basically...


That can only mean good things for us since we know the price won't exceed $250. I'm guessing Nintendo has decided to throw in all the needed attachments and maybe another controller as well as WiiSports and some VC game, thus making it a wonderful package that really doesn't make much profit. However, the benefits far outweigh the bads since people will then realize how wonderful the system is from Wii to VC.

[couchmonkey]

You know, so far Nintendo has proven to be really dedicated to the non-gamer strategy, and I can't think of anything that would be better for that strategy than releasing the system at $150 or less.  So my guess is this means a lower price, although a moderate price with lots of bundled equipment is still possible, I guess.

[Requiem]

I don't think a low price would be that effective. They don't want to effect their DS sales. And since 150 is damn near 120, it'll do just that. Plus, you never want to start off with a low price because it throws out the possibility of dropping the price after one year.

Also, if it launches at 250-200 and comes with a bunch of pack-ins, it'll make it seem like a steal and not like a underpowered "toy".

[Ceric]

I agree with Requiem.  Which should be obviouse because everyone should know my stance by now.

[Kairon]

Yeah, the price won't go too low because then you can just raise the price and pack-in more. Let's not forget that Nintendo keeps reminding everyone to look back to the past. The NES released with Mario/Duch-Hunt packed-in, a zapper accessory, a R.O.B. accessory, AND a controller. It was also technically under-powered if you looked at the specs.

~Carmine M. Red
Kairon@aol.com

[Smash_Brother]

No concern about profit loss? That might be because they have the DS and, as you know...

[nemo_83]

it comes with a brick of gold

[Strell]

They can afford a small loss.

Why?

BECAUSE THERE'S ABOUT 10 GAMES I MUST HAVE AT LAUNCH.

****.

That's not even including VC games.

[Frozen Atlantic]

That image wins.

Pair this with the news that Nintendo is waiting until August to announce the console price. Nintendo plans on creating a storm of OMGWTFLOL must buy from impulse purchasers. I think you'll see this system debut with the works. 2 Wii controllers. 2 VC Controllers. A pack in game (Wii Sports). And some free downloads off the virtual console. And it'll cost $200.  

[getter77]

This news intrigues me.  If Nintendo can keep momentum then ratchet it up like mad at the appropriate moments....this is gonna be killer in the industry.

[Smash_Brother]

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Originally posted by: Frozen Atlantic That image wins.

I can't claim credit for it, but it has been appropriate in a surprising number of situations.

[TrueNerd]

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Originally posted by: Strell
They can afford a small loss.

Why?

BECAUSE THERE'S ABOUT 10 GAMES I MUST HAVE AT LAUNCH.

****.

That's not even including VC games.

Yeah, the typical Nintendo fan who's buying the Wii at launch will probably want, at the bare minimum, two games (Metroid and Zelda) and at most like EIGHT games. (Red Steel, Madden, Rayman, Wario Ware, Wii Sports, Trauma Center, etc) Nintendo can certainly afford a marginal loss at the beginning.

[Ceric]

You guys are thinking to small.  Nintendo said that the company would have a slight lost.  So I'm going to take that as meaning that the games will also initailly be a little cheaper then they should and that there is going to be some sort of marketing blitz of Coca Cola porportions(sp?)

[Jensen]

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Originally posted by: Requiem
I don't think a low price would be that effective. They don't want to effect their DS sales. And since 150 is damn near 120, it'll do just that.

I don't see how having an inexpensive console will make a portable sell less.
The DS will connect with the Wii more easily than the GBA did with the Cube.

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Plus, you never want to start off with a low price because it throws out the possibility of dropping the price after one year.

You also don't wan't to call a console "Wii".  You don't want to put less buttons on the new controller than the old one.  You don't want to release a console that isn't all that much more powerful than the previous one.  Nintendo is doing things differently with this console.

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Also, if it launches at 250-200 and comes with a bunch of pack-ins, it'll make it seem like a steal and not like a underpowered "toy".

It already comes with the pack-ins that differentiate Microsoft's core and premium systems.  It has built in storage space, wireless controllers and wireless network abilities.

[Original_Hamster]

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Satoru Iwata has said that the Wii console is initially expected to make little contribution to the company’s next full year profits.

Well it is not new, Gamecube was sold at $4 profit margin, low but profit anyway, the same way that probably they gonig to sell Wii, less profit doesn't mean losses, just less profit.
   

[Smash_Brother]

I should have pointed this out:

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Satoru Iwata has said that the Wii console is initially expected to make little contribution to the company’s next full year profits.

The console shouldn't be their moneymaker anyway: it's the software, and I've no doubt that the software will do JUST fine.

[Requiem]

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Originally posted by: Jensen

I don't see how having an inexpensive console will make a portable sell less.
The DS will connect with the Wii more easily than the GBA did with the Cube.

While I see your point, people are going to buy either the Wii or the DS as a gift this holiday season. If the prices are too close, many of those DS sales could potentially become Wii sales. It's still good for Nintendo, but putting your hardware in direct competition has always been stupid.

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You also don't wan't to call a console "Wii".  You don't want to put less buttons on the new controller than the old one.  You don't want to release a console that isn't all that much more powerful than the previous one.  Nintendo is doing things differently with this console.

No, seriously. You don't want to start off the system with such a low price.

First off: It's going to sell out anyway. Nintendo has the largest fanbase of the three, so they can count on that.

Secondly: People like seeing "New low price" next to something they might of had a peripheral view on. It simply catches peoples attention, period.

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It already comes with the pack-ins that differentiate Microsoft's core and premium systems.  It has built in storage space, wireless controllers and wireless network abilities.

That's exactly what I'm talking about. If it had even more stuff within the system, it will make it seem like a steal when compared to the 360 and especially the PS3. So what if it already comes with whatever you said....people like to read a long list of items pre-packaged within the system -- especially if that system is a hell of alot cheaper than the competition.

[BigJim]

"Iwata has said that the Wii console is initially expected to make little contribution to the company’s next full year profits."

I interpreted the text to simply mean they're planning to be close to break-even on the hardware. I think we were all expecting that.  

[Smash_Brother]

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Originally posted by: BigJim I interpreted the text to simply mean they're planning to be close to break-even on the hardware. I think we were all expecting that.

That might mean that the Wii will sell for a possible $250 and that such a price will be close to breaking even.

Didn't think of it that way. I guess we're all hoping for the other way around.

[SixthAngel]

I think packing in items is an awful idea (besides maybe a second remote).  The nunchuk and remote is the standard controller and that is what you should get.  Adding in a vc controller will just confuse consumers (especially non-gamers) and developers who see two controllers.  It is also selling me something I don't want.  Nearly all vc games will work with the regular remote so don't make me buy this.

[Requiem]

Well, what if they have all these pack-in (VC controller, WiiSports, free VC games, another controller), would you still be reluctant to buy it, even if it were $200?

What about $250?

[Arbok]

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Originally posted by: SixthAngel
Nearly all vc games will work with the regular remote so don't make me buy this.

Have fun playing N64 games on that, or any fighting game SNK might produce for the system...

[stevey]

This is bad, I hope their not selling it at a lose since that sony thing, although sell it at near lose is better since nintendo like marking up cheap stuff, the GBM which cost nintendo ~$55 to make they but sold it at $99. But low profit can hurt nintendo when even though their kick sony butt in sale the dont have high profit and lable as the loser.