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10-25-12, 06:40 PM
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Nintendo is counting on a strong launch for the Wii U next month to help return the company to profitability (http://arstechnica.com/gaming/2012/04/nintendo-pinning-hopes-on-3ds-sales-to-turn-around-historic-annual-loss/) this fiscal year, but the hardware itself isn't going to contribute anything to that bottom line. Nintendo has revealed that the Wii U will be sold below cost in order to attract more potential customers for what it hopes will be stronger-than-normal┬*software┬*launch sales.

"Rather than determining a price based on [the Wii U's] manufacturing cost, we selected one that consumers would consider to be reasonable," Nintendo President Satoru Iwata said in an investor conference call yesterday (http://www.nintendo.co.jp/ir/en/library/events/121025/index.html). Iwata didn't say how much of a loss the company would take on each system it sells, but he did indicate that the projected write-off from Wii U hardware is a big part of why "we cannot say that we will achieve 'Nintendo-like' profits within this fiscal year." Just yesterday, Nintendo slashed its profit forecast for the year by 70 percent (http://arstechnica.com/gaming/2012/10/nintendo-slashes-profit-forecast-70-on-weak-3ds-wii-demand/), thanks in part to weaker than expected 3DS and Wii sales in the first half of the year.

Selling hardware at a loss is relatively common in the game industry: both the Xbox 360 and PlayStation 3 lost money when they were first put on the market, despite starting prices of $400 and $500, respectively. But Nintendo systems have recently been the exception to this rule: the low-powered Wii made a profit (http://arstechnica.com/gaming/2006/09/7752/) at its launch price of $250, and the 3DS was also profitable when it launched last year.

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