Nintendo is usually laser-focused on profitability, but we recently learned that the company will take the unusual step of step of selling the Wii U at a loss. That sort of thing tends to make investors uneasy, and Nintendo president Satoru Iwata reassured them during a results call that this will serve as a foundational year, making system profitability as a whole (including software sales) possible next year.
"I do not yet have all the necessary information to be able to say exactly when Wii U hardware will start to be sold at a profit," Iwata told an investor call. He also noted that Wii U won't make a big dent in profits on the whole, since software sales will be limited by the install base and the initial investment in advertising the company must make.
"However, in the next fiscal year, we will have a larger installed base," he continued. "We will have a richer array of software and manufacturing costs will also decrease. Therefore I believe that, as opposed to simply asking when we will be able to sell Wii U at a profit, the focus should be on constructing a healthy profit structure for the business as a whole... I believe this is a goal we can achieve in the next fiscal year. While I cannot say exactly when the Wii U hardware will become profitable, I am confident that in the next fiscal year we can improve our Wii U business to a level where the platform business as a whole (when we include both the hardware and the software) makes solid contributions to our profits."