Following the price cut on its 3DS console, reports claim Nintendo is now incurring a loss for every system sold, noting that this is a necessary move.
Nintendo typically avoids selling its hardware at a loss, while console gaming competitors Sony and Microsoft initially sell their consoles at a loss and offset those losses through software royalties.
The company announced yesterday
that it will cut the price of its 3DS console in all regions on August 12, down from the current suggested retail price of $249.99 to $169.99 in the US.
At a press conference in Osaka, and as translated by
Andriasang, Nintendo CEO Satoru Iwata reportedly said that the price cut was justified.
He noted that, although the company is now reportedly making a loss on each 3DS handheld sold, Nintendo believes this will help to improve its financial performance. Gamasutra expects further information on the alleged loss-per-console from Nintendo's earnings conference this week.
While the report claims that Nintendo is taking a loss on each 3DS sold, a hardware teardown of the device earlier this year estimated the handheld's bill of materials to be just over $100.
Following on from the 3DS price cut, Nintendo modified its financial forecast
for the current fiscal year ending March 31, 2012, reducing its expected profits for the fiscal year by a hefty 81.8 percent.
The company also revealed today that its share price has fallen
to its lowest in nearly six years following the announcement that its 3DS console will receive a price slash next month.