Nintendo will sell the Wii U at a loss

Nintendo won't make a cent when it starts selling the Wii U next month. In fact, it may lose a few.

Nintendo chief Satoru Iwata said yesterday in an earnings call with investors that the Wii U "will be sold below cost". Iwata didn't say how much of a loss Nintendo is taking on the hardware, though the device's more powerful components and GamePad controller likely drove costs up.

The Wii U will launch on 18 November. A basic set featuring the hardware and GamePad will cost customers AU$349. A deluxe set that adds a charging station, stand and Nintendo Land video game will cost AU$439.

Nintendo has historically sold its new hardware at a slight profit at launch. In general, however, consoles usually sell at a loss, at least initially. Sony and Microsoft, for example, typically sell their new hardware at a loss. The reduced pricing helps attract more customers to the console, which makes it more attractive to developers. Historically, more games translates to more gamers, which translates to a console's ongoing success. Meanwhile, production costs dwindle, leaving hardware makers open to start generating a profit.

That Nintendo is losing money on the Wii U is just the latest bad news that investors have heard from the company. Nintendo yesterday reported a 6.8 per cent decline in revenue to 201 billion yen (AU$2.43 billion) in the six months ended 30 September. It also lost 28 billion yen during the period.

Via CNET.com