The “Break it Down” Blog

I’ll be the first to admit my Wii takes a back seat to my other gaming consoles.  I do play it occasionally and my wife is a Wii Fit fanatic, but compared to the 15 games I own for my Xbox 360 the 3 I have for my Wii is a pretty small collection.

However, according to Forbes Nintendo may not mind that I only have 3 games since they are making a profit on every Wii sold.  Neither Microsoft or Sony can make that claim yet with the Xbox 360 or the Playstation 3.   Plus, since Nintenod’s top selling games are first party titles they are not making money of the licensing fees for those titles.  Meaning that they’re probably more happy I purchased a Wii than that I picked up a couple of games for it.

Unlike its competitors, Nintendo has figured out how to make money from its console sales. Sony loses money on each Playstation sold. Microsoft might just break even. But every Wii brings in $6 of operating profit for Nintendo, says David Gibson, an analyst at Macquarie Securities.

Nintendo also sells 60% of Wii games itself, compared with 30% for Microsoft and 15% for Sony. Wii users are expected to buy the most games this year, 220 million, compared with 120 million PS3 games and 125 million for the Xbox 360.

The top three Wii games–”Wii Play,” “Super Smash Brothers Brawl” and “Super Mario Galaxy”–are all Nintendo’s own titles, but the top three for PS3–”Grand Theft Auto IV,” “Call of Duty 4: Modern Warfare” and “Assassin’s Creed”–are all from outside developers, not from Sony.

By making most of its games itself, Nintendo risks sacrificing the chance to earn licensing fees from as many third-party developers as its competitors. It also prices games cheaper–at $50 versus $60 for the other two consoles. But so far the gambit has paid off: Wii locks in fans because many of its most popular games appear exclusively on the Wii. And Nintendo has a higher gross margin on game software than the others at 65%, compared with between 50% and 60%.

Those only-available-here games sell better than games that have been ported to other consoles because the Wii’s unique features–the motion-sensor remote, for instance–make it hard to translate into other systems. PS3 and Xbox 360 games can be ported between those two systems fairly easily, but developers that want to make a game for all three consoles need a dedicated Wii team to write the Nintendo version.

Ubisoft’s new “Shaun White Snowboarding” game, which shipped in late November, uses the Wii Fit motion board to simulate full-motion snowboarding; its Xbox and PS versions push online virtual snowboarding with friends.