One game sale enough to make Wii U profitable

By: Jason McCarthy

  |   November 26th, 2012   |  

Uncategorized

Over the last few months, the critics have been taking some solid hits at Nintendo’s next-generation console and its chances of doing well in the market due to a stiff competition from the likes of PlayStation 3 and Xbox 360.

Undaunted by the alarming predictions and negative reviews, the Japan-based company is determined to make sure that Wii U attracts the same amount of success, if not more, that was seen at the launch of its successor Wii.

In order to accomplish this, the company has devised and implanted what many would consider a very bold strategy, which involves selling the new system at a loss.

In a recent interview to Mercury News, Nintendo of America President Reggie Fils-Aime conceded that it takes a sale of merely one game to make Wii U profitable.

The reason for this rather unconventional business model, he explained, is to create an install-base of the system.

“As soon as we get the consumer to buy one piece of software, then that entire transaction becomes profit positive,” Fils-Aime said. “In the end, the business model is still to drive the install base of hardware, and then to drive a strong tie ration with all of the other software and experiences for the consumer. And if we’re able to do that, then we will create significant profit for the company.”

The strategy indeed makes a lot of sense as selling the console at a loss will contribute to raising its sales.

Publishers who are yet not too sure of investing in a game for Nintendo’s new system will be given a reason to add it to their preference, which will consequently lead to an increase in the number of games available for the console in the market.

With more games in the market, the appeal of Wii U will become even more, which will consequently lead to greater sales.

One thing that Nintendo must prepare itself for is the counter-strategy by its competitors, namely Sony and Microsoft.

Both the companies are dropping the price of their current-generation consoles to $200 for Black Friday, which is sure to curb the demand for Wii U in the market for at least one day if not more.

Putting a price tag of $350 on the 32GB deluxe version of Wii U and $300 on the 8GB basic version, Nintendo is undertaken a huge challenge.

However, the company believes that the experience and various online features being offered by their latest offering is more than enough to justify its price and will continue to attract consumers irrespective of the price at which other consoles are being sold.

After successfully launching in North America on November 18, Wii U will hit Europe and Australia on November 30, before eventually becoming available in Japan on December 8.