Nintendo undersupplied the original Wii because they lost money on each unit

Nintendo Wii U gamesRemember back in the day, when the Wii was released and was harder to get than water in a desert? The console was sold out for over a year after its release, that’s how popular it was. Actually, popularity might not have been the only reason the original Wii console was sold out.

According to an article by GamesIndustry’s Rob Fahey, Nintendo was actually losing money on each Wii console sold when it launched in 2006. Which left Nintendo in an odd position: everyone wanted the Wii badly, yet the console was losing money. Nintendo would have taken a huge operating loss had it fulfilled the Wii demand, but Nintendo wasn’t going to take a loss, no matter what.

So they udersupplied the Wii and waited until manufacturing costs went down enough for them to at least break even on each console sold. It took Nintendo more than a year to have adequate supply of the Wii — in some territories, it took even longer than that.

Eventually, Nintendo’s bet paid off big time: the Wii went on to sell over 100 million units and made billions of dollars for the company.

Of course, Nintendo’s quest for operating profits would be challenged later with the Wii U, which would result in two straight years of losses for the company.