Nintendo’s financial reports have been trending downwards for the first time in history ever since the 3DS launched — the company just cut their sales forecasts in half for this year — and Nintendo head-honcho Satoru Iwata told investors that the upcoming costs of launching the new Wii U console will once again keep the company from being as profitable as they had predicted.
Speaking to investors, Iwata explained why Nintendo will once again be in the red this fiscal quarter:
“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.”
Iwata did say that he fully expects Nintendo to be printing money again by next year, using record pre-order sales as an example of the strong sales the Wii U will generate. The Wii U is Nintendo’s first home console that’s being sold at a loss — while Sony and Microsoft have always sold their hardware at a loss, this is new ground for Nintendo, whose previous systems have all been sold at a price that was higher than the cost of manufacturing them. That’s apparently not true of the Wii U, as apparently those fancy tablet controllers are very expensive to produce.
