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Nintendo makes $6 on each Wii, nobody else makes anything

December 01, 2008 in News comments 39

An analyst from Macquarie Securities revealed Nintendo makes $6 on each Wii they sell -- and that's supposed to be a lot! Microsoft about breaks even, meanwhile, and Sony loses money on each PlayStation 3. Quite an industry we're in.

chautemoc via forbes.com »
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Most recently commented on by on Dec 3, 2008

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  • 1
    Avalith Dec 1, 08
    Wii will rock you indeed, even if it's just by $6.
  • 2
    Goldva_X Dec 1, 08
    Things aren't very good for Sony.
  • 1
    phowell23 Dec 1, 08
    thats it? Its just a gamecube with diffrent controlers and a bigger disk size.
    • 2
      Big A2 Dec 1, 08
      Well, the 360 is a bigger Xbox with nicer graphics, and the PS3 is a bigger PS2 (which in turn was a bigger PS1) with nicer graphics.
      • 0
        Ameer Dec 2, 08
        Yes, but the inference made is that despite the lack of technological advancement in the Wii (unlike the 360 or PS3) the profit margin is not particularly great.
  • 0
    Existence Dec 1, 08
    Well, thats to be expected; The Wii doesn't have too much costly hardware, does it?
  • 0
    DragoniteBallZ Dec 1, 08
    The Wii is basically an upgraded GameCube. IN addition to it not using costly hardware. Much of what the Wii uses is proprietary. They don't license parts from a 3rd party. Even their storage. They don't use a DVD, they use their own iteration similar to a DVD.
  • 2
    Stefan Dec 1, 08
    wait, then how can it only be $6?
    • 0
      Big A2 Dec 2, 08
      Let's say something costs $10 to make, and is sold for $20. They then make a $10 profit. Same case here.
  • 0
    Slumpy monkey Dec 1, 08
    This is old news. Very old news.

    They make their cash on games and other accessories.
  • 0
    Livewire_19 Dec 1, 08
    $6 I think the analyst David Gibson is full of crap, maybe when the Wii first came out it made $6 on each one, but not now.
  • 1
    iLLmatic Dec 1, 08
    Nintendo makes more than $6 for every Wii. This is bullshit.
  • 0
    kspiess Dec 1, 08
    I'd be really surprised if MS wasn't making a profit of the Xbox 360 by now. The hardware isn't all that advanced in relation to where PC's are at, so it can't be all too expensive to make Xboxes in the amounts they do.
    • 0
      RabidChinaGirl Dec 1, 08
      I thought I read a while ago that Microsoft actually does make a small profit on each console, which was unusual because companies typically expect to lose money on the machine and then make it back on games and peripherals.
    • 0
      Slumpy monkey Dec 1, 08
      There making a profit from the 360, Don't know about on each console though.
      • 0
        Red 9 Dec 1, 08
        I don't know why people expect Sony to turn a profit yet; they only just finished their second year, and the 360 is just now breaking even. The PS3's already had a price drop before, it's at $399, and that's where it'll stay until they get profit.
        • 0
          Slumpy monkey Dec 1, 08
          It broke even around January.

          But the 360 released a year ahead of PS3 anyway.
        • 0
          Red 9 Dec 2, 08
          That's my point, though. People forget how young the PS3 is.
  • 0
    Paper Mario Dude Dec 1, 08
    wow, someone is late and..well wrong.

    Nintendo stated that each Wii costs $128(USD) to create and package fully. therefore making a near $125(USD) profit.
    • 2
      fffangold Dec 1, 08
      Did you take into account shipping costs, however much retailers get, and other such expenses? I'm not saying they don't make more than six dollars, I don't know, but there's more to how much profit each console gets than just sale price minus manufacturing price.
  • 0
    Paper Mario Dude Dec 1, 08
    i'm pretty sure that that is included with that. not sure how much the retailers buy it for but i doubt nintendo would pass up an offer (or any company for that matter) to make over 100$ on each product sold.
    • 2
      Koloth Dec 2, 08
      I gareentee you that Nintendo isn't selling the console to retailers for $250. Retailers are probably paying in the range of $200. Then you have to consider other things like shipping distributors and all the middle men taking their peice of the pie.

      In the end Nintendo is probably making about $10 or so before it gets to retail. Which is still pretty good. Retailers aren't making $50 either though because you have to consider payroll and other bills that cut into profit. It is hard to calculate direct profit from thing like this because there are many factors to consider. And making 1% profit on anything after all is said and done is actually very good.
      • 0
        Fatal Error Dec 2, 08
        They're probably selling it closer to $150 than $200 and telling retailers to just mark the price up outrageously. At least, that's the case with other consumer goods I've found (wholesale cost is typically around 40-45% of retail).
        • 0
          Koloth Dec 2, 08
          You're probably right. But you have to remember the distributers mark up, payroll, and so on and so forth. The retailers aren't making $100 a sale either. Unless they can manage a factory direct purchase. Which few companies can, particularly on imports.
  • 3
    Xenctuary Dec 1, 08
    Sell one million and you've got six million dollars profit.
  • 0
    DragoniteBallZ Dec 1, 08
    The building and supplies of the Wii probably would cost around $150. It sells for a hundred dollars more minus manufacturing costs, retail costs and all that other crap. What the analysts is saying is $6 each console is being netted to Nintendo.

    Nintendo has sold over 35 million Wiis. That's about 8-9 billion dollars total. Nintendo actually nets over 200 million dollars of that number($6 per console), the rest of the profit goes to retailers, manufacturers, shipping and to any 3rd party companies that might have contributed to the Wii hardware. That's how that number was calculated. Keep in mind this is variable. Some countries it may be cheaper to sell the Wii while others it isnt. $6 is just the average value that goes back to Nintendo. Nintendo may be loosing as much as $50 a Wii in one country while making $50 in another. But $6 means Nintendo has accurately priced the console enough to make a reasonable profit.
  • 0
    Bale Fire Dec 1, 08
    Only $6? I find that hard to believe.
  • 0
    Atomic Dec 2, 08
    I'm certain the video game companies are making more money then that.
  • 0
    Final Blade Dec 2, 08
    I love how people get things wrong. PS3 is MAKING profit it just doesn't appear to be since they need to get back most of the money they lost when PS3 was released. I'm pretty sure the 17+ million console sales worldwide proves this wrong.

    Sony and PS3 is doing fine people.
    • 1
      Slumpy monkey Dec 2, 08
      Your second statement just disproved your first comment.

      Please can you explain to me on how the PS3 is turning a profit, when sony's predictions are to turn profit sometime in 09.
      • 0
        Final Blade Dec 2, 08
        By that, I assume they mean get back the money they lost. As I said, they are turning profit, but it doesn't appear that to others cause they've been trying to regain their money lost during 06-07.
        • 3
          DragoniteBallZ Dec 2, 08
          It doesn't matter how many consoles they are selling. They could be in first place selling 50 million something consoles, and they'd still be losing money per console. They are losing hundreds each console. The PS3 is an expensive piece of hardware you know. More expensive than the price it's selling for.
        • 1
          Slumpy monkey Dec 2, 08
          How can they be turning a profit if they haven't even broke even?

          Revenue=/=Profit
        • 0
          Final Blade Dec 3, 08
          360 is just as expensive as the PS3, so what's your point DBZ?
        • 2
          DragoniteBallZ Dec 3, 08
          I don't get the point of that reply.

          Ok anyway you obviously don't get it. All the parts used to construct the PS3, licensing for 3rd party parts, plus manufacturing, shipping. in grand total would probably cost around $700. If you were to build a PS3 yourself buying each exact part, that's how much you'd be spending. Yet each console is selling for $400. So you do the math. Is the console making money?
        • 0
          Slumpy monkey Dec 3, 08
          I think FB just got confused with him self again.

          I think he thinks that revenue is profit.

          So he is thinking like this:

          Starting money: 1000
          Costs to make ps3: 700

          So your left with 300, then a few weeks later you sell that ps3 at 400.

          Your left with 800.
          Sales revenue=400
          Loss- 200
          Profit- 0

          I think FB sees that as making profit, which it isn't as your only making profit until you make more than what you started with, anything else is a loss.
  • 0
    Cruxis Mana Dec 2, 08
    Does anyone remember awhile back when Royal Dutch Shell joking said that they gained more profit from their service station sandwich sales than from their oil?
    • 0
      Koloth Dec 2, 08
      Actually I don't think that is much of a joke from a service station stand point. Most service stations don't make very much selling fuel. They really hope that you will fill up then come in and grab something to eat or drink.

      That's why you don't see full service gas pumps anymore. It is also why you never see a gas pump unless it is attached to some sort of food shop. It is also why places like Sam's club, Wal-mart, Racetrack and so on can drive their prices so low. They don't sell the fuel for profit they make far more on food sales and force the distributers prices down.
      • 0
        Cruxis Mana Dec 2, 08
        I wasn't too sure whether it was meant as a joke or not.

        Google failed me.



        The point remains though.

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