Nintendo makes $6 per Wii sold – cheap really is cheerful

The Nintendo Wii may be a joke to some people, but it’s currently the only home console to make any profit for the company that produces it. While the Xbox 360 just about manages to break even for Microsoft, and Sony loses money every time a PS3 is sold, Nintendo makes $6 profit on every Wii sold. This generation shows that cheap really can be cheerful.

It’s been known for some time that Sony loses money on every PS3 it sells, although there aren’t really accurate figures as to the sum of money involved. At the beginning of the console’s life, when development costs were high and production numbers were low, it was likely to be hundreds of dollars, but that is likely to have lessened considerably over the past two years. However, the figure clearly hasn’t lessened enough to enable Sony to cut the price of the Playstation 3, something it’s refusing to do.

Microsoft also likely lost money on each Xbox 360 sold when the console was first released three years ago. But it is now thought to be breaking even, with production costs equaling the average sale cost. However, the $1 billion spent on fixing the dreaded Red Ring of Death problem, a problem that is hopefully a thing of the past now that Jasper has arrived, will have badly affected overall profits of the gaming division.

And so it is left to Nintendo to be the company making all of the money on hardware in this generation. Until now, although it was considered highly likely that Nintendo were making money on the hardware side of things, due to the phenomenal profits results of late, an actual number wasn’t known.

Now, according to David Gibson, an analyst at Macquarie Securities, that figure can be estimated to be about $6 per Wii console sold. The figure is mentioned in a Forbes article discussing the actual profits involved in this generation’s console battle. Which is of the utmost importance because while we talk sales figures, attach rates, and quality of games for each platform, what will ultimately justify a console’s life is how much money it makes for the company producing it.

It seems in this generation at least, cheap and cheerful rings true. The Wii launched at an incredibly low price, being in the range of the consumer sweet spot that ultimately shifts huge amounts of units right from the off. But because Nintendo concentrated on inventing a new control system and bringing fun back to gaming, it was making money right from the start.

Sony and Microsoft, meanwhile, decided to build hugely expensive machines capable of displaying state of the art graphics. Unfortunately the development and production outlay involved meant they had to launch at a high price and still, in the Playstation 3’s case, cannot lower it to the consumer sweet spot without losing money hand over fist.

I’ve said it before, and I’ll say it again – the success of the Wii will mean lower-priced consoles which concentrate on more than just the latest graphics are to become the norm from now on. Casuals will love it, and the hardcore amongst us will have to evolve or die.

• Price cut rumors for Xbox 360 and PS3 – Wii already cheap enough
• PS3 sales up but Sony still makes a loss
• PS3 costs Sony $3 billion – Will Nintendo Wii be only profitable console?
• Why Nintendo is right not to lower price of Wii & DS
• Nintendo Wii Fast Approaching 20 Million Units Sold