Nintendo will sell Wii U ‘below cost’ at launch

Nintendo president Satoru Iwata has admitted that his company’s upcoming home console refresh, the Wii U, will be sold at a loss when it launches next month. In discussing Nintendo’s financial performance over the last three months, Iwata points out that revenues were constrained by the rising value of the yen and production costs for the Wii U, which has been priced at a level “that consumers would consider to be reasonable.” He then goes on to caution:

“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.”

Making a loss on hardware, at least in the initial stages of distributing a new device, isn’t an entirely unfamiliar practice for Nintendo, which until recently was also selling the 3DS at a price below its manufacturing cost. The good news shared by Iwata is that the 3DS portable is now profitable in its own right, which should combine with growing software sales to bolster the company’s bottom line going forward. There’s no doubt that Nintendo will seek to make that same transition with the Wii U in rapid fashion, but at least for the first few months, you can buy the console smugly knowing that it cost the company more to build it than it did for you to acquire it.