Forbes: Nintendo making $6 profit on every Wii sold

the wii = $6 foot long

I haven't been excited about anything for the Wii since Brawl and I own about fours games for it in total, so its non-stop success in the market comes as a mild surprise to me.

Part of me wants to be cynical and attribute the sales to a low price tag and the rise of casual gamers, but I suppose the people like what the people like.

Just to make sure, am I missing out on any awesome Wii games? Right now it's just collecting dust, and I want to get some usage out of it before it sleeps the cold, lonely sleep of the dead in my cabinet of discarded electronics.

I think they are really low-balling it with the $6 profit estimate:

http://www.joystiq.com/2006/11/17/miyamoto-wanted-a-100-wii/

We know that the Wii technologically is approximately in the same league as the original gamecube. (I actually read one article that suggested that once the extra throughput for progressive scan support is taken into account, graphically the thing is basically identical to a gamecube.)

I'm guessing that most of the price premium over the gamecube is due to those crazy motion-sensing devices in the controller and inclusion of half a gig of flash memory. Oh, and don't forget the blue tooth controller along with blue tooth licensing fees. We know that they didn't bother paying licensing fees in order to enable DVD playback, so that cut costs slightly.

Still though - Microsoft manufactures a 360 controller for 12 bucks, I can't see Nintendo spending more than 25 to build a wiimote. It needs accelerometers and some other special crap, oh and a processor to do the number crunching on your wacky arm movements (Apparently they do that in the controller as opposed to on the console), something to throw the bluetooth signal to the console, a low grade camera to interpret the infrared light from the sensor bar (that's for the pointer feature). It's a nice piece of kit. Still though, I can't subjectively see it costing more than 25 bucks to build. Throw in a nun chuck, add another 15 bucks or so.

Rolled in with the price of the console, we know that wii sports is now basically a free pack in. They payed for dev costs quiet handily when they sold the game in Japan separate from the Wii, and they don't pay licensing fees on their own game, so it's just the cost of the disk.

The last thing I can think of that would significantly add price is the Wi-Fi support. You have to license that technology, and you have to put some controller in there. Probably a few bucks for that. They retail cards for PCs around 50 bucks, so a good guesstimate for manufacturing costs would be like 15 bucks for that.

I don't think I'm missing too many major things. You have packaging and shipping on top of that -- in the end I can't see it being much more than 200 bucks.

Last thing - I don't have a source for this, but I'm pretty sure that Microsoft is making money on the 360 now - if Nintendo is only making 6 bucks on each Wii sold, MS could initiate some sort of price war and actually have the ability to fight in it. That said, they have to get the cost of the pro model down before I could ever see that happening. Anyway, enough gabbing...I think my post is too long as it is.

I find it hard to believe that Nintendo is making that little on Wii hardware unless the small amounts of RAM / older components require MORE money to make because they're older (which happens in manufacturing), but still I doubt that very much. Maybe this also accounts for advertising, I don't know how Forbes is evaluating this.

I really doubt those software sales are accurate as well, even looking at 1st party Nintendo sales. Look at how many 360's have been sold with a >8:1 tie ratio and then look at how many Wiis have been sold with a lower tie ratio (5:1? 6:1?) The numbers don't add up.

Definitely some weird data in this article.

"...its chief competitors, Sony's PlayStation 3, with 13 million units in users' living rooms, and Microsoft's Xbox 360, with 23 million units."

I'm pretty sure the PS3 is at 17 million.

"...allowing the Wii to sell for $260 while the PS3 costs $300."

I'm pretty sure the Wii sells for $250. And are they telling us that the PS3 costs only $300 to make now or are they selling its being sold for $300?

I made $20 profit by selling mine on Ebay.

That article read like somebody went to the Wikipedia page for each console and then put together an article explaining why the Wii is financially more successful.

But, I also don't trust Forbes as a news source anymore. There are too many times when the have un-cited facts (particularly statistics) in a story that make me scratch my head in disbelief.

Forbes, don't quit your day job. I can't imagine how N is making that little on such a low-tech device sold at that price.

From the article:

"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."

I'm not a rocket scientist, but I don't recall the PS3 costing either $300, either to make, or at retail.

Bad numbers.

Also, Forbes did not say $6... they just got that info from one analyst at another company. We all know how good analysts are at guessing.

the best part is knowing that the ebay scalpers are making a shit-ton more profit than 6 dollars a unit. See nintendo- that profit could be yours if you actually made enough systems to sell people!

$6? I'm surprised it's not $60 considering the fucking ridiculous price they're selling it at... Are you sure it wasn't 60? I bet it was 60...

when will they come in different colors? i want one in black. also they need to include some type of charger that takes into account the covers for the wiimotes, ours ripped from constantly remove the to charge

Then they'd had about $24 profit from me alone. Bought one for my place in Europe and the States, one for my fiance's parents and one for my bro. All get played a lot too.
GG.

"Knicks suck, Yankees suck, Mets suck, Wii sucks......Krypton sucks”.

I don't think Nintendo is really hurting on licensing. I'm sure they make more money when their software is purchased vs. a 3rd party.

I think I can see what they mean about licensing, it is similar to that of the Gamecube. Yes, Nintendo makes big money from its games, but 360 rakes in money through its strong third party support and licensing. Basically, the Wii is still going through a 3rd party drought over all.

It's so funny to me how many people don't actually read the entirety of an article before they make a comment. Perfect example on page one comment number three Jimmy said...

"What makes Joystiq so sure Microsoft isn't turning a profit on the xbox 360? Considering the 360 is more than 3 years old now, and using the new, cheaper jasper chips, I wouldn't doubt it for one second that it costs Microsoft less than $200 to make a 360."

Jimmy, L2READ JOYSTIQ DIDN'T SAY IT, FORBES DID!!!

"According to a new article from Forbes, the Big N makes $6 in operating profit from every Wii unit sold."

Also, they started using Jasper when? Last week? If microsoft made 360's for under $200 bucks that would mean they were getting 100% profit on the elite... very unlikely.

People, start using a little common sense and the reading/writing skills you learned in elementary school before posting comments...

Wtf why does this article use US sales for ps2 alongside worldwide sales for every other console? Also, the PS3 number is off by 5 million.
And since when has the Wii cost $260, or the PS3 $300?

This article is bullshit. Why are you reporting on it?

And, of course, those numbers are inflated with Wii Sports and Wii Play, as always. Also, I call complete bullshit on the $6 profit margin. There is NO way that POS costs even $100 to make, and they only make $6 a unit? Un Uh.

Nintendo always makes a profit on their consoles, why I was happy to invest in them.
They would probably be making even more if they weren't needlessly advertising. I understand needing to keep Nintendo in the public eye but they can do that virally now. I just don't understand the point of advertising things like the Wii & the Fit when both regularly sell out.

I could have sworn the math was done at the release of the console and Nintendo made $21 dollars for each sale. Now it is 6!!!! Some one should get fired.

You know it's a thread about the wii when 50% of the posts are so grayed out you have to highlight the txt to begin to discern why they were downvoted in the first place. I'm neutral on the matter, I just enjoy watching people squabble. It's not a bad console, calm down.