Nintendo has traditionally never sold its hardware at a loss. It's what set the company apart from other console manufacturers who sold hardware at a loss, and made up for it with software licensing fees from third parties. The Wii U changed all that by being sold at a loss as well, but Nintendo says it's not as bad as it sounds.
In an interview with Mercury News, Nintendo of America President Reggie Fils-Aime was asked if Nintendo's business model changed with the Wii U being sold at loss. His response speaks of the relationship between software and hardware and how the former helps support the latter.
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.
It's a good sign that Nintendo can become profitable with just one game sale considering that most early adopters of the Wii U will surely buy one game to go with the system. Those who purchased the Deluxe Edition of the Wii U system are less inclined to pick up a game with the system as it comes with a copy of NintendoLand out of the box. The standard white Wii U does not have any such pack in and buyers will be more inclined to pick up new games.
Regardless of whichever console consumers buy, they're going to pick up some new games sooner or later. NintendoLand doesn't exactly have a lot of staying power for those of us in single apartments with no friends so games like new Super Mario Bros. U and ZombiU are key titles that will drive software growth on the platform at launch.
Beyond launch, Nintendo will have to work hard to increase the attach rate of the Wii U. A lot of Wii buyers were content with just Wii Sports and maybe a few other casual friendly mini-game collections. The company needs to push games of all types - casual and core - in the coming years to prove that the Wii U can contend with the other consoles in terms of variety and overall quality.