The rise in 3DS profitability can most likely be attributed to reduced production costs, which decreases over time as components become more affordable. The 3DS was originally sold for a profit, however slow hardware sales, forced Nintendo to invoke a drastic price cut - just months after launch. While sales spiked, this also meant that Nintendo, at that time, was selling the 3DS at a loss.
The price cut was an unprecedented move, especially because Nintendo’s business strategy typically involves selling hardware for a profit. This is in direct contrast to Mircosoft and Sony, who usually take a heavy hit on initial system sales, but make up the difference through software and subscriptions (Xbox Live/PlayStation Plus).
Recently, Nintendo expressed their desire to sell the 3DS for a profit by September 2012 - meaning they’ve hit the mark early.
Nintendo also revealed that the 3DS has sold over 19 million units worldwide, with software sales sitting at a cool 52.81 million units. Between April and June, Nintendo was able to sell 1,860,000 systems alone - quite a feat for a console that struggled during its first few months at retail. Unfortunately, even with the increased profitability, Nintendo still operated in the red this past quarter, earning a loss of 17.2 billion yen ($220.5 million USD). The game maker hopes that the launch of the Wii U will turn things around - suggesting their latest console will remain in line with previous endeavors and be sold for a profit.
Even if this success is somewhat bittersweet, the future is still quite bright for Nintendo’s handheld. The upcoming 3DS XL (which will also be sold for a profit) and the influx of popular games should keep the system selling for quite some time.
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Source: Eurogamer
