Company president and CEO Satoru Iwata confirmed that the console is being priced at “below cost”, which goes some way to explaining why Nintendo reduced their year-end profit estimations yesterday.
In related news, now that production has become more efficient, the 3DS is no longer being sold below cost.
“In addition to the yen’s continuous appreciation, 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. In this first half of the term before the launch of the Wii U, we were not able to make a profit on software for the system while we had to book a loss on the hardware, which is currently in production and will be sold below cost. Our loss has therefore widened during the second quarter in spite of bringing the Nintendo 3DS hardware back to profitability. 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.”
Nintendo released its half-year profits yesterday, showing a loss of $350 million–$100 million more than expected.