If Reggie Fils-Aime, President of Nintendo of America, is a poker player, he evidently has the best poker face in the business.
Fils-Aime continued to toe the company line in releasing as little information about the Wii,s price point and launch date. The big buzz at E3 centered all around the Wii. But many were also expecting an announcement regarding the launch date and price for the Wii, only to be disappointed with the words from Fils-Aime, “As for date and price, we think it,s best to keep those details quiet a little longer.”
Satoru Iwata, CEO of Nintendo, threw another little bone at the press by saying to AP that the information will be released “by September.” Thanks, Satoru, that helps us a lot. But in all seriousness, this little bit of information does answer part of the mystery equation for the Wii. While Iwata didn,t confirm any price point, his statement that the console,s price would be announced in September means that we won,t be seeing an early release of the Wii before then. So a little deductive reasoning means the Wii could be released anytime in September thru November. November is the cutoff date for release, due to Nintendo,s previous announcements that the Wii would launch sometime around the Thanksgiving holidays.
Newly released game consoles have always traditionally accrued first year losses due to heavy development costs and the need to release the hardware for less than it costs to manufacture. This practice is to make the price point attractive to the consumer while getting as many of the units into the hands of the public as fast as possible. Profits are recouped by software sales and the reduction in manufacturing costs of the game consoles as parts for making the machines drop with time.
In a press conference regarding Nintendo,s upcoming Wii release, company president Satoru Iwata said, “It is a strange notion that a game console always leads to mounting losses in the beginning. We can,t promise we won,t even have a one yen loss, but we are not expecting an enormous loss.” Iwata,s words prophesize at least a small loss for the console, as development, marketing, and distribution costs take time to recover.
Nintendo stands a good chance of meeting Iwata,s predictions as the Wii stands apart from the other next-gen machines by already being relatively inexpensive to make. The Wii architecture is derived from technology that is not truly “next-gen,” so the parts and development costs are considerably lower then their competition.
On the other side of the fence, Sony expects an $880 million operating loss in the current fiscal year because of the PlayStation 3 release. It,s no secret that the console is going to cost an arm and a leg for Sony to produce and maybe just an arm for the consumer to purchase. What really matters is: how long will it take to make that back? Since the Wii will hit the streets first, Sony is going to have to play catch-up and then some with their enormous starting loss.
