Iwata: "Wii business a healthy one from the first year"

Nintendo president predicts that his company will not suffer an "enormous loss" when it launches its forthcoming console.

The old axiom "giving away razors to sell the blades" has long been applied to the launch of game consoles. During the PlayStation 2's first year on the market in 2000, Sony lost over $458 million, according to a recent Merrill Lynch report. Since then, it has made up for the losses via a hardware redesign, streamlined manufacturing processes, and commission on the hundreds of millions of software units sold.

By contrast, Microsoft has never made money on the Xbox. Since the console went on sale in 2001, the company's gaming division has burned through over $7 billion, according to its own financial statements. Some analysts estimate the company loses as much as $125 each time it sells an Xbox 360--although that number will likely shrink as manufacturing costs are perfected.

One company that has always prided itself on profitable gaming hardware is Nintendo. Being a game company first and foremost, it doesn't have other divisions to make up for losses the way Sony and Microsoft do. According to a Reuters report today, Nintendo won't be changing its approach to taking hardware losses with its forthcoming console, the Wii.

"We can't promise we won't have even a one-yen loss, but we are not expecting an enormous loss," Nintendo President Satoru Iwata told a news conference in Japan this morning. "It is a strange notion that a game console always leads to mounting losses in the beginning...We are working to make the Wii business a healthy one from the first year."

Iwata's statements may seem optimistic, given his previous proclamations that the Wii will not exceed $250 in price. However, the console also sports less powerful--and less expensive--hardware, which has roughly twice the graphical power as the GameCube. Also, given Nintendo's penchant for peripherals, there is some speculation that the company might sell many add-ons to the Wii separately.

For its part, Sony is hoping to lessen its losses via the PlayStation 3's steep $499 and $599 price points, which were set in part to cover the console's inclusion of an expensive Blu-ray drive. The aforementioned Merrill Lynch study--which erroneously forecast a single PS3 model priced at $399--forecast the $599 PS3 hardware spec would cost $494 to make before manufacturing. However, many analysts estimate the company has already spent over $1 billion to research and develop the PS3's Cell CPU and RSX GPU--meaning it faces a long road out of next-generation-console debt.

236 Comments

  • Lithavalon

    Posted Sep 17, 2006 9:33 pm PT

    wow didn't know that Microsoft didn't make any profit with the xbox

  • jedimastergerco

    Posted Jun 21, 2006 8:36 am PT

    all i nead is the euopean release date and specs
    and then ill be a happy man

  • psychic

    Posted Jun 21, 2006 12:44 am PT

    Wii price is at an affordable rate, but i'm not getting it because it's cheap but because of its gameplay especialy with the controller (of course Zelda is on my game list), I'll get PS3 when the price drops.

  • evilyoda861

    Posted Jun 20, 2006 9:50 pm PT

    I agree I dont like the name and dont know why they named it Wii, but it is going to be just so joyful playing our old favorites of course I am talking about Super Smash Brothers Brawl, Metroid3 Corruption, and Super Mario Galaxies. Those three I have to get no matter what.

    I agree with the 360 kicking major ass and I love mine but Oblivion dissapointed me. I sold mine a long time ago now. Yes it has great graphics but the characters still look ugly too me, and the way they walk YUCK EW GROSS! I am looking forward to Chrome Hounds. Now that game is gonna sell! Halo3 will be the best 360 of all time and forever will be the best game. Out of everything overall too me.

  • MattyMaggs

    Posted Jun 20, 2006 7:53 pm PT

    I think it is overlooked that pricing the Wii any lower than $200/$250 would potentially push the wrong image about the console. It's not that Nintendo is being fiscally sound, or that they are hell bent on making a profit (which they are), but I would venture to guess it has more to do with product positioning.

    The naming of the Wii has been publicly stated by Reggie (at E3) as not meshing well with existing fans... let's think about this for a moment. If Nintendo understands that the fan's don't really like it, then the only logical reason the name remains Wii is because it appeals to non-gamers. Nintendo is looking to bolster sales by growing the market, and hopes to foster curiosity and purchases by creating a marketing campaign based on the name. I don't like the name, I am a gamer, but am still getting the console because the gameplay should be very engaging and fun. I'm glad that Nintendo is protecting its profitability so it will remain a major player in the gaming industry.

    Also, for those that are saying that the 360 sucks, just play Elder Scrolls - Oblivion (700 hours of potential gameplay). I'm pretty excited about their upcoming lineup from E3.

  • Slime_monkey

    Posted Jun 20, 2006 4:37 pm PT

    If you buy a 360 or PS3 for the sole reason of its graphics instead of the wii, we might as well call you superficial
    Nintendo did get an @$$ kicking this gen, but look at the results.
    RE4
    Metroid
    Smash Brothers
    Eternal Darkness
    Some of the best and highest scoring games of the gen exclusice to nintendo, and you can't deny their incredible visuals... or game play, or atmostphere either. Contrarary to fanboy belief, GC was not a wasted effort. We all enjoyed it didn't we?

  • Ices100

    Posted Jun 19, 2006 6:53 pm PT

    Whoever says a system isn't good if it doiesn't have good graphics or aren't like someother system is stupid, and know nothing about games in the first place when they wern't anywhere near what they are now. Nintendo's new system i s way better in every area than gamecube was, and even though gamecubes visuals were better than anything previously out in fine with that.

  • chimairawolf

    Posted Jun 19, 2006 6:24 pm PT

    I,m going to get the Nintendo Wii no matter what happens.

  • evilyoda861

    Posted Jun 19, 2006 5:57 pm PT

    You must be rich the FullSurface. The PS3 is just rubbish. The 360 and the Wii is where the true gaming consoles are at. They are not trying to be put out as a super computer...Sony...you dumbass.

    I love my 360, they got some epic games coming out and of course everyone knows Halo3 is the real highlight for 2007. Only a fool would say Halo3 sucks and it wont do very well. People will get it just becuase it is Halo3 but a huge majority will get it because the game already promises to be epic in scale and exellence.

    Wii si going to be epic also. With games like Metroid3, Super smash brothers, and super mario cmon the PS3 got nothing! Damn Sony you really scrwed up this time.

  • FullSurface

    Posted Jun 19, 2006 3:56 pm PT

    Only problem with the Wii is no high definition, but Xbox 360 Playstation 3 and Nintendo Wii, ill take them all.

  • lord-azrael

    Posted Jun 19, 2006 10:51 am PT

    the xbox had trouble cause it first console from them trying to break into a already competitive market,now they have a fanbase I believe Microsoft will make money on the 360.

  • skillzombie

    Posted Jun 19, 2006 9:11 am PT

    Nintendo will make it through this no problem. You can't go wrong with a next-gen console under $250.

    "Wii will, Wii wil rock you!!!!!!

  • wii___man

    Posted Jun 19, 2006 6:15 am PT

    Nintendo has made a great move think about it.all the games on current gen consoles that have great graphics like God of War (PS2),Resident Evil4(PS2,Gamecube),BLACK (PS2,XBOX), Final fantasy series. there are tons of games that also have great graphics and double or even triple the polycounts, shaders, pixels,etc i may be the only one but those graphics are good with me plus the 250$ is no biggie compared to 600$(you know who you are).......sony.

  • gamecubedave000

    Posted Jun 18, 2006 3:10 pm PT

    wow i really am suprised that microsoft didnt make any money off the xbox i jsut hope nintendo will do well next generation.

  • roll450

    Posted Jun 18, 2006 2:27 pm PT

    That is one of the best ideas for gaming...Go Nintendo

  • marco888

    Posted Jun 18, 2006 11:28 am PT

    Man losing that money is very painful for he conpany..

  • Fullmetal1andy

    Posted Jun 18, 2006 11:14 am PT

    Hey The Game cube is not so Bad I have one it is cool and it is makeing mony because it is affordable and that why nintendo is makeing money.

  • Fullmetal1andy

    Posted Jun 18, 2006 11:05 am PT

    Wii Looks cool. The Ps3 is not on my list.and the xbox 360 is not as good as they say!I think it is Nintendo turn to be the best !!! Xbox was last year! nintendo could be the Best i'm geting a Wii.

  • Wiifanboy_4life

    Posted Jun 17, 2006 7:16 pm PT


    rastamandaz
    nintendo know what they are doing..................ripping the fans off.

    they are selling you a rubbish console with barely any power to run anything superior to what games are now on the xbox (not 360).

    they are blinding the fans with this super duper utter B\x controler which is basically a light gun with a tilt sensor and a seprate analogue, they also feed the fans rubbish regarding the ps3.

    Sorry nintendo but your time was with the n64 and you failed to grab people with the GC and the Wii again will go Wii Wii Wiiiiii all the way home.
    -------------------------------------------------------------------------------------------------------
    o cmon man. like one of the other ppl said, graphics dont mean anything if the game isnt fun. and its not like wii graphics are bad, they just arent as good, and frankly who cares. most games nintendo makes are cartoony anyways so its not even supposed to look real. and the demos at e3, those wii graphics were awsum, and thats only half of wat the wii has to offer. and as for xbox superior, you need to realize that ms LOST money on the xbox, so it cant be all that superior. and wat about the n64 and gc. i own both and they are both good consoles its just ps ps2 and xbox were main stream and you looked kiddy if you had a gc, when gc has sum of the most fun games ever made. in essence non of the consoles are better than the other, but ps2 and xbox are mainstream and thats why they sold more. and you have to remember, hen xbox gc and ps2 first launched for christmas season 2001 ps2 was in first gc was in second, and xbox was in third.so no the only thing better then gc about xbox is graphics. as for what consoles im gunna buy, i am gettin a Wii, then a 360, and when kh3 comes out ill get a ps3.
    GO WIIIIIIII!!!!!!!!!!!!

  • tsunamiwave

    Posted Jun 17, 2006 6:57 am PT

    though people look at nintendo as the underdog of the 3 companies,they're the most profitable!

  • Fluroworm

    Posted Jun 17, 2006 3:20 am PT

    "Des_Eagle
    And people say the Wii is so innovative and risky, when Nintendo is the one that's taking the least risks with their system."

    lol are you serious? just because theyre smart enough to keep their production costs down you say theyre not innovative and risky? what could be more innovative than to invent an entirely new way to play videogames and make it affordable to all parts of society. Nintendo are taking well calculated risks in this respect while the risk sony is taking is that they're fans will buy the PS3 despite the fact that its nothing more than a more powerfull PS2, they havnt innovated in the slightest and its not that im some sort of fanboy for nintendo, i dont even own a cube, but its things like the Wii that have gotten me interested in gaming because its something new, not an overpriced clone of the last generation. Gaming in the home console market is becoming stagnent and we can only hope that a cheap and innovative console will breathe some new life into the market.

  • FortuneC00kie

    Posted Jun 16, 2006 3:29 pm PT

    which X-Box games are superior buddy? Why don't you name a few? Infact, why don't you name a few that are so much better on the 360 as well.

    Ps. You won't be able to.

  • rafaelszpo

    Posted Jun 16, 2006 6:56 am PT

    oh, c'mon, get over it about the name already. If you don't like to call it wii as in"we", call it (as I and my friends do) the w2. It's not that difficult, see? And it starts to seem more cool ^^

  • rastamandaz

    Posted Jun 16, 2006 6:18 am PT

    nintendo know what they are doing..................ripping the fans off.

    they are selling you a rubbish console with barely any power to run anything superior to what games are now on the xbox (not 360).

    they are blinding the fans with this super duper utter B\x controler which is basically a light gun with a tilt sensor and a seprate analogue, they also feed the fans rubbish regarding the ps3.

    Sorry nintendo but your time was with the n64 and you failed to grab people with the GC and the Wii again will go Wii Wii Wiiiiii all the way home.

  • werid

    Posted Jun 16, 2006 1:55 am PT

    i dont care ill buy one just because i loved loads of games from the gamecube.
    Metroid Prime w00t!

  • FortuneC00kie

    Posted Jun 15, 2006 10:19 pm PT

    What's all this about Rev and 360 being big players? Rev for sure, but I thought we already established that 360 sucks? It hasn't offered much anything to the industry. It's just an X-Box with a new shell.

    Sorry, not to get off topic.

    The game I'm looking forward to on the Rev (which I happened to just make up) is Nintendogs. When they do a high res version of that game on the next gen hardware....just wow. And think of all the features the controller would tie into. You'de be petting the dog with your hand....it's something incredible to think about.
    Nintendogs: Taking Digital Frisbee to a New Level.

  • Paper_Baggins

    Posted Jun 15, 2006 12:58 am PT

    Yes lilkikerman4450, What you have said at the end of your post is what all of us on here must realize. JUST BE A GAMER. I do agree with him also about getting a Wii and an Xbox 360...but yes, it is YOUR choice. I just got a job so I should be able to buy all 3 systems which is nice. However, I want a DS too. I just want it all. Haha. So yeah looks like I'll be saving up about.... $2000 + Money for a car + Money for marching band... yikes. Pray for me people.

  • lilkikerman4450

    Posted Jun 14, 2006 11:23 pm PT

    I dont know about everyone else but im so gettin a wii (i agree the name is really stupid) but who cares!!! Anyway, the wii sold me the first day i watched the trailer and saw its games and unique gameplay (that is wat really got me)!!! but i still want a 360 just cause i played it and the grphics r awesome and the price aint too bad considering its "next-gen" and has online play!!!
    Too bad im only thirteen and only could possibly get a wii for christmas or if i was old enough for a job i'd get all three
    But like many r sayin i think all hard core gamers will definitly get a wii and a ps3/360

    I think gamers should get the wii and 360 but its your choice im just statin my opinion
    (and no im not a ms, nintendo, or sony fanboy) Im just a gamer!!!

  • evilyoda861

    Posted Jun 14, 2006 7:36 pm PT

    I'll agree that the name for this sucks. Why Wii? Atleast it is easy to say...

    This is gonna be so awesome though. The sales for this is going to be epic...

    Also will they be able to send one for everyone on launch?

  • A7Xfan

    Posted Jun 14, 2006 5:03 pm PT

    You can't argue with Nintendo on this. I mean they put more thought into their system and the others put more money. Both sides are right as there's no correct way to do things but Nintendo played it smartly.

  • yuginodo

    Posted Jun 14, 2006 1:22 pm PT

    Tres epres sa Numa Numaiyay! The-Wii-name's-so-gay ! But-I'll-buy-it-anyway!

  • hib2405

    Posted Jun 14, 2006 12:26 pm PT

    i gonna buy Wii, Nintendo is the best

    NINTENDO 4 EVER

  • davenweb

    Posted Jun 14, 2006 11:58 am PT

    Nintendo make more business sense, microsoft and sony could make more in the long run if they had sense to stick to a reasonable price and asjust development accordinly. Are we really ready for the next generation if we cannot manufacture it cost effectively ?

    who here has a HD tv in their home / room (if thats where your ps3 is)

  • rafaelszpo

    Posted Jun 14, 2006 10:27 am PT

    I don´t know why someone would buy a PS3. I've seen no game worth it´s name up to this date. FF13 is not really worth anything. It is a mere cg show, not any different from any of the other 12 before it... I bet my coins on Wii before any other console. And yes, I see no reason for owning a 360 too. What for? To be bugged when it crashes and dies for good, having to go all the trouble to get a new one? i've seen no exclusives for that console that would make me go for it, and it is probably I'll never see. If it ever mirrors it's XBOX predecessor, then we'll be seeing one awesome title (that Ninja-whatever since I can't recall the name of the game even, and maybe Halo for the FPS fans - not me, mind you...) and then we'll speak no more of it.

    So yes, there WILL be someone who will buy only the Wii. And it´s not only myself. =)

  • GCN49

    Posted Jun 14, 2006 9:45 am PT

    I believe that there will not be a "core" game player who will only be buying a Wii... There are three camps: those who have a 360 and are eagerly awaiting the Wii, those who are eagerly awaiting the PS3 and the Wii, and those who have a 360, are eagerly awaiting the Wii, and will throw down the big ones for a PS3...

    I think Nintendo knows this, and this makes them happy...

  • brimasra

    Posted Jun 14, 2006 7:13 am PT

    Nintendo is brilliant! Wii wins my vote!

  • brimasra

    Posted Jun 14, 2006 7:11 am PT

    Nintendo is brilliant!!! Of cousre they make great grames, make good profit, they come up with te best ideas too! Wii wins my vote!

  • roll450

    Posted Jun 14, 2006 6:32 am PT

    IID SAY GO NINTENDO...because of the very low price and for free online

  • RatingPending

    Posted Jun 14, 2006 2:53 am PT

    I know i'm not gonna change anyones opinion with this, never the less, i can't resist stating MY opinion. So i'll just say good job Nintendo, you've made a smart move that i think will really pay off and you've captured my attention again for the first time in a while. To Sony, i say ignore the critics. $600 is quite a bit of money, but you've made an incredible system that i think is worth it, i mean a Blu-ray player that's cheaper than a thousand dollars AND it plays some of the greatest games out there that i badly wanna play AND i can use it as a DVR? I can save $600 for that. Anyone who spends so much time complaining about that price must not have a job, or must not appreciate or understand the other abilities of the PS3.
    I'll buy a PS3 right away, and i may get a Wii down the line as well. As for the 360? They may have next gen graphics, but i haven't seen much in the way of next gen gameplay. It had better get some exclusive games that i really really want to play if they expect me to buy one. And no, i don't feel like Halo 3 is a reason to buy a 360. That game would have to impress me like i've never been impressed before for me to buy a 360 to play, and based on Halo and Halo 2, i don't think that's gonna happen. I'm not impressed easily, that being said, i was however impressed with the Wii. I'm quite eager to get my hands on those controls. I think Nintendo is gonna do quite well this time around, i also think the PS3 will do farely well. From the looks of it, i think the 360 might come out third. I'm thinking nintendo will come in first, Sony 2nd. The 360 hasn't sold alot, so i think people are waiting for a Wii or PS3. That's my prediction, and my opinion. If you read this, you just wasted like 5 minutes, that kinda sucks, huh... oh well, thanks anyways.

  • coaten

    Posted Jun 13, 2006 9:29 pm PT

    I am going for the Wii. Don't like X-Box's games (most of them are to highly ratted), and the PS3 is to expensive. Nintendo is ingenious!!! A motion sensitive controller, why didn't i think of that? As long as you won't need to move the controller side to side to move left and right, i am happy.

  • BeefBoy25

    Posted Jun 13, 2006 7:24 pm PT

    I love nintendo, and i think the Wii may be nintendos best console yet, but if nintendo produces the B rate games as most of the GCN games have been, then that with the low price for the console may bu nintendo in debt. I still love nintendo !

  • BeefBoy25

    Posted Jun 13, 2006 7:19 pm PT

    [This message was deleted at the request of the original poster]

  • O-ZoneX

    Posted Jun 13, 2006 6:56 pm PT

    Sorry. Typo found. I meant the PS3 will most definetly NOT sell as well as the PS2 did.

  • O-ZoneX

    Posted Jun 13, 2006 6:54 pm PT

    Tons more people will beable to afford the wii. Unlike the 360 and that cash eating monster the PS3. I'm buying the wii and I'm 100% sure about. I also want to buy the 360. And like mattmaul5488 said, I'm not even touching the PS3. The PS3 will most definetly sell as well as the PS2 did. Only because of that f****** price! $400-$500 is WWWWWWAAAAYYYYYYY TOO MUCH!!!

  • Tremblay343

    Posted Jun 13, 2006 6:20 pm PT

    Nintendo won tihs race. Every gamer has at least two consoles, and because intendo is so cheap, they'll almost always be one of the two. Myself, i getting a PS3, cause i hate MS, and the playstation was my first console. Its helped me waste many hours of my life with Spyro and crash, so why not continue the trend

  • natebayne

    Posted Jun 13, 2006 6:19 pm PT

    To the guy who said the PS3 is way more powerful than that 360...... thats not so true; the blue ray technology is ultimatly unecessary... the cell processor is fast ill admit that... probably faster than the 3 3.2 ghz cpu's in the 360 ... but the 360 has more than just the processor, im not too sure ps3 can say that, last thing i read it has a lackluster amount of memory... i wait to see how that pans out. In any case i will never waste my money on a sony product... ever... well ok I will be playing vanguard in the winter FOR PC. I love my 360 and i will love my new nintendo, but sony is not getting my money.

  • evilyoda861

    Posted Jun 13, 2006 2:29 pm PT

    Basicaly the 360 and the Wii are the real next gen systems. Both got games that will bring a tear in your eye. 360 has Halo3 to look forward to, just one extremely huge example, and lets say Super Smash Brothers Brawl. God I hope when I get the Wii I can also play SMBB right away. How awesome though it would be to play ssbb online...

  • thepeter

    Posted Jun 12, 2006 9:29 pm PT

    Peter Moore is buying one ASAP!!!

    (true story)

  • evilyoda861

    Posted Jun 12, 2006 9:06 pm PT

    600 dollars I can come up with in time, but not for one thing. I have a 360 and it is great, I have great games for it and more coming, Wii is going to be a lot of fun for me also with SMBB and Metroid, and Mario Galaxies, and Twilight Princess. I find it strange no one on here said anything good for the 360 since their price tag wasn't that bad and since it has almost the exact specs of the PS3. Not joking look for yourself you will find the the games will look exactly the same in graphics. Wii will have the lowest but games like SMBB will just sell like hotcakes! I am tired of people talking about the graphics with the PS3 is going to be awesome when the 360 has the same graphics at a much cheaper price with Xbox live included. Screw Sony.

  • totalgamemaster

    Posted Jun 12, 2006 8:29 pm PT

    Incredible. I'm getting a Wii and blowing off Sony because I don't have the money. Who does?

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