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Activision

Nintendo makes $6 from every Wii sold

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Nintendo makes $6 from every Wii sold

Analyst also predicts that Wii software will outpace rivals in 2008

It’s common knowledge that Nintendo is the only current platform holder to have made a profit from its hardware from the off, and now a number has been put on that - $6.

A report on Forbes reveals each Wii unit brings in an operating profit of $6 for Nintendo, according to David Gibson, an analyst at Macquarie Securities. By comparison, Sony loses money on each PlayStation sold, while Microsoft is currently able to break even.

Nintendo’s profits are also aided by the success of the company’s first-party titles, with the platform holder’s releases accounting for 60 per cent of Wii games sold, significantly higher than Microsoft and Sony’s share of 30 per cent and 15 per cent respectively.

The Wii’s userbase is also expected to purchase the most games this year, with a projected 220 million units outperforming targets of 120 million PS3 games and 125 million Xbox 360 titles.

Despite selling games at a lower price point and earning less in licensing fees than Microsoft and Sony, Nintendo boasts a higher gross margin on game software than its rivals, with 65 per cent compared against between 50 per cent and 60 per cent.

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SW

posted by Lee Dec 01, 2008 at 5:45 pm
1
Lee

"120 million PS3 games and 125 million Xbox 360 titles."

Sounds a little bogus to say the least. A 6 million WW lead would certainly have a bit of an impact on that estimate.

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Re: SW

posted by Fred Flinstone Dec 01, 2008 at 6:00 pm
2
Fred Flinstone

Like Yebba-debba-doo, the Wii is for you! Little Pebbles just loves taking on Bam bam. The two of them just play for hours and hours on end! It drives poor Dino up a wall when they play because they take his rock for sleeping on! It's okay though, because Pebbles always gets her homework done, and me and Wilma always check her tablet to make sure she's done it. Afterwards, the Wii just takes up hours and hours of her time!

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Re: SW

posted by Stinky Thumbs McGee Dec 01, 2008 at 9:22 pm
3
Stinky Thumbs McGee

"The Wii’s userbase is also expected to purchase the most games this year, with a projected 220 million units outperforming targets of 120 million PS3 games and 125 million Xbox 360 titles"

Not too sure about those numbers. If anything the Wii has the worse attach rate for games.

I'd like to know where you got those numbers...

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Re: Re: SW

posted by Mr Mathematics Dec 02, 2008 at 11:14 am
4
Mr Mathematics

@3 - Attach Rates are calculated on a "per console" basis. Nintendo has sold many more consoles than the other two, so it can reach higher software sales figures with a lower attach rate.

Personally, I suspect that the "Wii owners don't buy new games" theory is an urban myth anyway.

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$6 not really believable

posted by Jules Dec 02, 2008 at 10:00 pm
5
Jules

I seriously doubt the accuracy of the $6 figure - the source is attributed to a "Dave Gibson, an analyst at Macquarie Securities". He does not work at Nintendo and nor is he an engineer qualified to asses the cost of the wii's components. How did he reach that figure?
The wii is mainly based on obsolete technology that was developed for the gamecube (it has essentially the same processor and graphics chip, just running a at a higher clock speed). From a technical standpoint the only novel bit is the controller, yet they sell the wii for over $100 more than they sold the gamecube, a console on which they also made a profit for each unit sold.
I believe their profit margin is likely to be at least 25 to 30%, if not higher.

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Re: $6 not really believable

posted by Dan Dec 30, 2008 at 3:14 pm
6
Dan

Thanks for not being a sheep, Jules. I'm glad not everybody is as credulous as they think we are.

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Re: Re: $6 not really believable

posted by Farnsworth Jan 08, 2009 at 3:39 am
7
Farnsworth

Like the last two posters, I find the $6 unbelieveably low. I think it may be missing a zero.
The Wii is using very cheap, past gen technology, and I recall the statement that Nintendo was making money from the console to be a very old one from well over a year ago. The Wii is more expensive than a similarly equipped current-gen, high def 360 Arcade.. and that machine is reportedly sold at a break-even point? .... so that means a Wii is more expensive to make than a 360? I highly doubt that.
I think the $6 is missing a 0 after it. ..and even that is conservative.

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