Forbes: Nintendo making $6 profit on every Wii sold [Joystiq]

[DP ServBot]

Filed under: Nintendo Wii (http://www.joystiq.com/category/wii/), Business (http://www.joystiq.com/category/business/)


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While Sony and Microsoft dream of turning a profit on their consoles, Nintendo is doing just that. According to a new article from Forbes (http://www.forbes.com/technology/2008/11/28/nintendo-wii-wii2-tech-personal-cz-cs-1201wii.html), the Big N makes $6 in operating profit from every Wii unit sold. Nearly 19 million units have been sold worldwide so far during 2008, earning Nintendo a tidy $114M in profit, taking that $6-per-system figure into account. That's not the extent of the interesting numbers in the article, though.

Forbes points out that, while Nintendo is turning a profit on hardware, the fact that its top-selling software is all first party means it is losing out on serious revenue normally brought in via licensing fees. Still, according to its figures, the magazine claims that there will be in the neighborhood of 100 million more pieces of Wii software sold in 2008 (220M) than the nearest competitor, Xbox 360, at 125M (PS3 is on track for 120M). One has to wonder, though, how many of those Wii games will be snagged from a bargain bin, given recent analyst data (http://www.joystiq.com/2008/11/25/data-shows-wii-games-discounted-fastest/).


Forbes: Nintendo making $6 profit on every Wii sold (http://www.joystiq.com/2008/12/01/forbes-nintendo-making-6-profit-on-every-wii-sold/) originally appeared on Joystiq (http://www.joystiq.com) on Mon, 01 Dec 2008 22:00:00 EST. Please see our terms for use of feeds (http://www.weblogsinc.com/feed-terms/).

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[Berserker]

Is it just me or does that Wii and wiimote look like they were soaked and stained in some kind of urine.

[Frankie_Says_Relax]

Is it just me or does that Wii and wiimote look like they were soaked and stained in some kind of urine.

Historically speaking, that's probably the color the plastic that Nintendo used will turn in about 10 years.

[Captain Wrong]

^ It's so true. LOL

[mailman187666]

that wii was from a home which has several 2 pack-a-day smokers living in it.

$6 per system huh? I guess that adds up when you consider the millions of units being sold. I wonder how much older systems have made profit per system in the past, especially PS2.

[skaar]

I thought Microsoft was actually making money off the 360 consoles, just losing out on warranty claims.

Also, I'd heard the Wii has one of the lowest number of titles sold per console - something like an average of 2 games sold per unit versus 10 for 360 and who knows for the PS3.

[TheDomesticInstitution]

Only $6? Sounds like no price drop in the near future. Not that it matters to me.

[refan]

You would think that nintendo would be making more money off each system by now

[MrSparkle]

$6 per console really isn't bad considering both other competitors have to sell the hardware at a loss. That and nintendo also has the largest sales volumes of its hardware between the big three. The fact that first party games vastly outsell third party games isn't really a surprise to me either nintendo has always had a great in house game development effort. What they lose in licensing fees to third parties they make up in direct sales profit of their own software.

Also i smoke and my consoles have never turned yellow infact my snes is one of the whitest in town probably due to me smoking near it!

[eskobar]

while Nintendo is turning a profit on hardware, the fact that its top-selling software is all first party means it is losing out on serious revenue normally brought in via licensing fees.

I disagree with this comment, even if you have any company developing and selling big on Wii, Nintendo games always would be on top. The quality of its games is undeniable, even if they are recycling all of its franchises.


Very interesting data :D

[Trebuken]

Doesn't jive with what I have been reading here over the last several months. I too thought the 360 was said to be making a profit on hardware, though maybe that is before RROD is figured in.

They say the 360 is on pace to sell 125Million and the PS3 is going to do 120Million...I can't believe the PS3 is selling anywhere near as many games as the 360. I would hazard to guess that the 360 numbers (as far as software) are closer to the Wii's than this article suggests. Yet I'm just guessing...

[Bojay1997]

I disagree with this comment, even if you have any company developing and selling big on Wii, Nintendo games always would be on top. The quality of its games is undeniable, even if they are recycling all of its franchises.


Very interesting data :D

I don't know, in the NES and SNES days, there were certainly third party games that sold as many or more copies than the first party titles. Admittedly, that has fallen off sharply in the N64-Wii generations. It could happen again, but I doubt many third parties would pour in the development resources to bring out games similar in quality to what Nintendo has been releasing.

I also am a little skeptical of the $6 per unit profit. Last I heard, Sony and Microsoft were making about that much on each PS3 and 360 sold, so I suspect that the Wii number is substantially higher. The manufacturing cost on the Wii can't be much more than $100 each and I can't believe that marketing, shipping, packaging, warranty issues, etc... would suck up $70 on each unit assuming a normal retail margin of 30% per unit.

[The 1 2 P]

Is it just me or does that Wii and wiimote look like they were soaked and stained in some kind of urine.

It's just you.

[roushimsx]

It's a shame they were more concerned with that $6/console than they were with implementing Wii Motion Plus from the get go, as they already had the technology but it would have been "too expensive to include". Now everyone suffers. Players have to buy a new add on and developers have to decide if they're going to support it (support it and only cater to the people that bought it or not support it and have a larger market base).

Bravo, Nintendo. Thanks for screwing it up again and forcing people to use second rate waggle instead of actual, high quality motion controls. Imagine of how innovative Twilight Princess could have been if it hadn't been some crummy hack of a Gamecube game (and I loved it so much on the Gamecube). Hell, think of a Wii game with imprecise and wonky motion controls (it's not hard, pretty much all of them have issues) and think of how much better it could have been.

Not saying the 360 or PS3 are flawless (though I would say it's a far more major exclusion than that of a hard drive in the base 360 SKU), just saying that the Wii could have been so much better.

Oh well, maybe next generation. Can't wait to see what Nintendo has up their sleeves for that.

[jajaja]

I think Nintendo makes more than 6 US dollars on each sold Wii. Here are some operating income numbers from Nintendo:

http://www.nintendo.co.jp/ir/pdf/2008/081030e.pdf

The way i understand this chart is that Nintendo made 144,828 million Yen in profit (after all expences and taxes has been payed) in a 6 month period (from March or April to September in 2008). If i calculated right from japanese Yen to US dolalrs (please correct me if i am wrong), then that is about 1.55 billion US dollars in profit.

I think these numbers are from the worldwide sales though, and i think they include both the Wii and the DS, and i think it include software sales as well, but still, i would assume that Nintendo make more money on the Wii hardware sales, but i dont know :) Nintendo makes alot of money atleast, that is for sure :)

[j_factor]

Yeah, it must be more than that. I mean, it was reported that Nintendo was making a profit on every system at launch. Two years later it's the same bundle at the same price -- their costs haven't gone down at all?

[Rob2600]

Yeah, it must be more than that. I mean, it was reported that Nintendo was making a profit on every system at launch. Two years later it's the same bundle at the same price -- their costs haven't gone down at all?

I agree. This is what I wrote in this (http://www.digitpress.com/forum/showthread.php?t=116832) thread from May 2008:


It's been reported that Nintendo earns $13 to $79 profit on each Wii sold.

http://en.wikipedia.org/wiki/Wii#System_sales


Now all of a sudden, it's $6? That doesn't make sense.

[jajaja]

Yeah, it must be more than that. I mean, it was reported that Nintendo was making a profit on every system at launch. Two years later it's the same bundle at the same price -- their costs haven't gone down at all?

I agree. This is what I wrote in this (http://www.digitpress.com/forum/showthread.php?t=116832) thread from May 2008:

Now all of a sudden, it's $6? That doesn't make sense.
Ye, and doesnt the production costs un general go down if you produce a bigger quantity? I mean i've heard about that atleast (i.e it is cheaper to produce i.e 1.000.000 copies of one thing than producing i.e 10.000 copies of the same thing. With cheaper i mean the price pr. copy). I think Nintendo has increased their Wii production within the last 2 years atleast :)

[Trebuken]

I believe some of these fluctuations have to do with the value of the US dollar which is why it is awkward...