Every Wii sold makes Nintendo USD $6

Wii News | Microsoft breaks even, Sony loses money.

It's common knowledge that unlike the other console manufacturers, Nintendo actually makes money on each Wii sale. However, it has been revealed that this figure is USD $6.

The news comes from a Forbes report where Macquarie Securities analyst David Gibson highlighted Nintendo's successful strategy of opting for older, cheaper technology as opposed to their rivals. By contrast, Microsoft are only breaking even on every Xbox 360 they sell, while Sony are losing money with each PlayStation 3 sold.

Helping pad Nintendo's pockets are their share in software sales. They move 60% of the Wii's software, while Microsoft and Sony only publish 30% and 15% respectively. Gibson also predicted that the Wii would sell 220 million pieces of software this year, compared to Microsoft selling 125 million and Sony 120 million.

Good news for Nintendo shareholders, then.

To date, the Wii has sold 35 million units worldwide. Microsoft have managed to shift 23 million 360s, while Sony has flogged 13 million PS3s.

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26 Comments

Marka

1 year ago

Considering the Wii's hardware I find this higly unlikely. What else? Oil companies only making $0.06 P/L at the bowser.

Eyce

1 year ago

Can people please for the love of god, put the whole "But it's just a Gamecube 1.5" to rest.

If the Wii is approximately as powerful as an Xbox, I'm pretty sure it would have been pretty damn expensive at the time to put an entire Xbox inside a unit about the size of 3 DVD cases.

David No.1

1 year ago

$6 per console is it? If that's true, then Nintendo really are laughing their way to the bank. 35million x 6 = Heaps of money. $210,000,000 to be specific. Good for Nintendo. Now release a HDD for the Wii damn it!

Qbert

1 year ago

As the article says, that's $6 US, where the Wii sells for much less than Europe/Australia, where you can bet that they are making at least double that. Also I won't believe this untill it comes from Nintendo itself, and I still wouldn't believe $6 US, it seems way to low.

And Eyce, the gamecube was way, way smaller than the Xbox and they were pretty much the same in terms of power. You have to remember that the Xbox had a big ugly hard drive in it along with a crap load of left over computer parts, which added to its size. Along with that they basically put a PS2 inside the PSP.

I'm not trying to rip on Nintendo/Wii here, I just think that they would be making more than $6 a unit. Just my theory though

But then as David said, even $6 per unit is a lot of money!

Sin Ogaris

1 year ago

Personally I'm surprised it's so low.

ANd so it is that QBert beats me to the punch, apparently I fail to type one sentence in ample enough time. I fail at the Internet.

IISpacebreakII

1 year ago

Qbert wrote

I'm not trying to rip on Nintendo/Wii here, I just think that they would be making more than $6 a unit. Just my theory though

I agree too, $6 seems way too low. I also would like to know how much they make from the controllers, there is definitely not $80 worth of parts in there >>

WilliamsF1

1 year ago

Rough maths, that's just 2.75% return on every dollar they spend (English, each $1 they spend, makes $0.0275 back).

I actually recall reading somewhere over 1 year ago now, that the cost price for a Nintendo Wii, for Nintendo to make, was $310 Australian....

lordofthesheep

1 year ago

They may be talking about some kind of net profit, deducting marketing and support or something. Or not. I really wouldn't know.

Eyce

1 year ago

Qbert wrote

They've still got to pay for those factories they had to build to just produce the actual consoles to keep with the demand (Re: America), come to think of it.

Mojo

1 year ago

I'm sorry, but I find it a bit hard to believe this Forbes article. Some of their console sales numbers are old. Their Top 3 selling PS3 games are incorrect. And there's this:

"Nintendo's strategy is to buy inexpensive components instead of making them in-house, allowing the Wii to sell for $260 while the PS3 costs $300."

Wii sells for $250 in America, PS3 is $400. Not sure what the author has been smoking.

And lastly, only $6 profit on a Wii? There's no way. Nintendo said at launch that they were at least breaking even, and probably making some money from each console. So they're saying that over 2 years later the price to manufacture a Wii costs the same as it does at launch? After 35+ million Wii's shipped? Really?

Luckily though, the article just mentions that this is only some analyst's view, so we can easily take it with a grain of salt. But let's just bring him up on that Microsoft breaking even remark, which may or may not be true. But regardless, if the 360 Arcade breaks even at US$200, and yet the Wii only makes $6 at $250, something is wrong. So he's telling me that a high-tech Xbox 360 costs less to make than a Wii, which is mainly last-gen technology. Alright..

This is a more realistic pull-down of the Wii's costs. I have to hand it to him though, Sony seem to still be losing money, so at least he got that one right, ey.

DancesInUnderwear

1 year ago

Spacebreak wrote

I also would like to know how much they make from the controllers, there is definitely not $80 worth of parts in there >>[/color]

Now see I'd be much more inclined to believe there was $80 worth of tech in a Wiimote, or, at the very least, Nintendo gets less profits from them than they do from the console itself - because if Nintendo are making good profits on their controllers Microsoft would have to be making a killing on theirs.

Passa

1 year ago

I do find $6 hard to believe. But hardware shouldn't at any stage come into this discussion at all. If we got a figure only factoring hardware costs, Nintendo would be appearing to make an absolute mint. The argument of "oh it's small but powerful for its size

" is complete and utter garbage. The hardware is dirt cheap, let's leave it at that.

If this $6 figure was true, then it'd be taking into account all the other costs associated with getting it onto a store shelf - packaging, shipping etc, all this would incur a greater number of expenditures.

lordofthesheep

1 year ago

DancesInUnderwear wrote

If Nintendo are making good profits on their controllers Microsoft would have to be making a killing on theirs.

And the reason that can't be the case is? Microsoft controllers, from where I'm standing, would cost basically nothing to produce. The battery is probably the most expensive part.

Buttmouth

1 year ago

Quote

Every Wii sold makes Nintendo USD $6 ... Microsoft breaks even, Sony loses money.

So if you hate Sony, you should definitely buy a PS3.

The longer you put it off, the more money they have. It's simple maths.

*nods*

Nephilim

1 year ago

BoomBoom wrote

Quote

Every Wii sold makes Nintendo USD $6 ... Microsoft breaks even, Sony loses money.

So if you hate Sony, you should definitely buy a PS3.

The longer you put it off, the more money they have. It's simple maths.

*nods*

Post of the month for me!

stick_theory

1 year ago

NO! Dont listen to BoomBoom, he is a clandestine sony fanboy. Yes, they lose money on the CONSOLE, but you still have to buy their SOFTWARE which i assume makes a profit of about 90%-95% of the rrp. Thats how they get ya money

Buttmouth

1 year ago

Did you just call me a fanboy?

Argh!?

I can't tell if you're being serious or not. Damn interwebnets!

It's true they make all their money from software, but I never said "if you hate Sony you should buy a PS3, oh and don't forget to buy the entire library of PS3 software and peripherals while you're at it so they can break even, because this is a secret plot to help Sony out because I'm a rat bag, scum of the earth fanboy"

In fact I didn't even think of that until you posted. Because I was clearly joking.

Bad vibes in this thread... bad.. bad vibes...

3mt

1 year ago

Mojo wrote

This is a more realistic pull-down of the Wii's costs. I have to hand it to him though, Sony seem to still be losing money, so at least he got that one right, ey.

But they didnt factor in the wiimote cost in the article. That'll probably bring the profit down to about $6.

Eyce

1 year ago

stick_theory wrote

but you still have to buy their SOFTWARE

No you don't.

Just use it as a cheap Blu-Ray player.

That way, you know that you've removed a portion of Sony's wallet from them, and you can see all the news reports of Sony's demise in HD.

Jellyfish

1 year ago

Eyce wrote

stick_theory wrote

but you still have to buy their SOFTWARE

No you don't.

Just use it as a cheap Blu-Ray player.

That way, you know that you've removed a portion of Sony's wallet from them, and you can see all the news reports of Sony's demise in HD.

Except Sony get a % from every Blu-Ray disc/player sold. It's better to not buy anything at all because they will still make PS3s and then they will rot in warehouses and be a true waste of their money.

tkilik11

1 year ago

damn i feel sorry for the ps3 and for wii owners getting jibbed and not getting decent specs and things like media player and harddrive!

stick_theory

1 year ago

[quote="BoomBoom"]Did you just call me a fanboy?

Argh!?

I can't tell if you're being serious or not. Damn interwebnets!
[quote]
Nah man! Just jokes, its all good

(people seem to never be able to tell whether im serious or not across the web. i think its time video forum posts were mandatory where you have to actually record yourself saying the post then post the video)

...sorry to all for going off topic like that.

and yeah, sony also has a production studio (well, a few) that release bluray movies, so even there its kinda hard to avoid giving sony ANY money.

Mojo

1 year ago

3mt wrote

Mojo wrote

This is a more realistic pull-down of the Wii's costs. I have to hand it to him though, Sony seem to still be losing money, so at least he got that one right, ey.

But they didnt factor in the wiimote cost in the article. That'll probably bring the profit down to about $6.

Except those prices were from over 2 years ago, they're bound to be a fair bit cheaper now.