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Reggie on why how they're making up Wii U loss, why Wii U didn't come sooner
A portion of a Mercury News interview with Reggie Fils-Aime...
Q: This will be the first Nintendo game machine that the company's going to be selling at a loss at launch. How does that change the business model for Nintendo?
A: The business model doesn't change dramatically, in that as soon as we get the consumer to buy one piece of software, then that entire transaction becomes profit positive.
In the end, the business model is still to drive the install base of hardware, and then to drive a strong tie ratio with all of the other software and experiences for the consumer. And if we're able to do that, then we will create significant profit for the company.
Q: After selling like gangbusters in its first several years, the Wii has really faded in the marketplace. Given that the shortcomings of the Wii were apparent at launch -- it wasn't an HD console, it was underpowered compared with its rivals and, unlike them, it didn't offer a full suite of entertainment options -- why didn't Nintendo release the Wii U much sooner, and was it a mistake not to?
A: As we sit here today, whether you look at this from a U.S. perspective or you look at it from a global perspective, the sell-through rate of Wii was faster than our competition, and the total install base for Wii is much more than our two competitors.
We began working on Wii U a number of years ago, and certainly the innovation that we're bringing is significant. And it's a complex endeavor to bring this type of innovation into the marketplace. We needed to do it the right way. We needed to make sure that it would be a strong consumer experience.
Full interview here
Q: This will be the first Nintendo game machine that the company's going to be selling at a loss at launch. How does that change the business model for Nintendo?
A: The business model doesn't change dramatically, in that as soon as we get the consumer to buy one piece of software, then that entire transaction becomes profit positive.
In the end, the business model is still to drive the install base of hardware, and then to drive a strong tie ratio with all of the other software and experiences for the consumer. And if we're able to do that, then we will create significant profit for the company.
Q: After selling like gangbusters in its first several years, the Wii has really faded in the marketplace. Given that the shortcomings of the Wii were apparent at launch -- it wasn't an HD console, it was underpowered compared with its rivals and, unlike them, it didn't offer a full suite of entertainment options -- why didn't Nintendo release the Wii U much sooner, and was it a mistake not to?
A: As we sit here today, whether you look at this from a U.S. perspective or you look at it from a global perspective, the sell-through rate of Wii was faster than our competition, and the total install base for Wii is much more than our two competitors.
We began working on Wii U a number of years ago, and certainly the innovation that we're bringing is significant. And it's a complex endeavor to bring this type of innovation into the marketplace. We needed to do it the right way. We needed to make sure that it would be a strong consumer experience.