Nintendo Gains $6 in Operating Profit from Every Wii Sold, says Analyst

Unlike Sony's PS3 or Microsoft's Xbox 360, Nintendo's Wii console has been profitable from the very beginning. Whereas Sony and Microsoft are largely relying on software sales (and in Microsoft's case Xbox Live sales as well) to recoup hardware losses, Nintendo has the advantage of profiting on both hardware and software, and the company's been doing a fine job of it.

According to Macquarie Securities analyst David Gibson, who recently spoke to Forbes, each Wii sold brings in $6 of operating profit (not to be confused with gross profit) for Nintendo. That would mean that just in the month of October for the United States alone, Wii sales generated roughly $4.8 million in operating profit for Nintendo.

Beyond that, Forbes points out that Nintendo sells roughly 60 percent of all Wii games (no doubt to the chagrin of third parties), compared to 30 percent for Microsoft and 15 percent for Sony. Wii users are also expected to buy the most games this year, 220 million, compared with 120 million PS3 games and 125 million for the Xbox 360. And importantly for Nintendo, although those games are sold for $50 instead of $60, they generally have a higher gross margin than competitors' software – 65 percent compared to 50 – 60 percent. Put it all together (not to mention Nintendo's wildly successful DS handheld business), and the bottom line is Nintendo is doing very, very well financially.