Have you ever wondered why Nintendo launched a deluxe version of the Wii U in the first place? After all, in comparison to the other consoles, $300 was already pretty expensive. So why did Nintendo create a higher priced deluxe model?
The answer is simple. The deluxe model easily generates much higher income for Nintendo than the basic model does.
At first glance it may seem like the consumer is the benefactor when a deluxe console is sold. For only $50 more than the basic version, a customer can receive 32gb of storage, a game, a digital promotion card, and several accessories. Unfortunately, what seems like an awesome deal, really isn’t all that awesome when broken down.
First off is the memory. Although the deluxe version of the Wii U comes with 24gb more memory than the basic version of the console, that difference really isn’t all that large. Due to the fact that most retail games take up 7gb-10gb, most people downloading multiple games will be buying an external hard drive in addition to the console anyway, so the extra in-console flash memory really isn’t all that big of a deal. Couple this with the fact that memory is constantly getting cheaper, and we come to realize that fitting 32gb of memory into a Wii U costs Nintendo practically nothing when someone can pick up a 500gb hard drive for as little as $40.
The next goodie is the included game. Originally packaged with Nintendo Land, the deluxe bundle offered players a showpiece software for the Wii U; perfect for parties, gatherings, and solo play. This is where Nintendo really reached profitability with the Wii U Deluxe Console. Reggie did say at one point that the Wii U becomes profitable after one game is sold for it. For that extra $50, you have purchased a game, thus making the Wii U profitable. And since Nintendo Land really isn’t the ideal launch title that everyone buys up, this extra sale counts as sort of a bonus, since most buyers of the Deluxe Console would not have purchased Nintendo Land as a full $60 retail game anyway.
Thrown into the package are a few accessories, which literally cost Nintendo literally pennies to produce. This bonus is packaged into the bundle in order to create a bulkier package. Fortunately for Nintendo, since mass producing cheap plastic isn’t very expensive, the accessories don’t really effect Nintendo’s margins in the slightest.
The final item included within the deluxe version of the Wii U is the digital promotion. All purchases made on the eShop will return 10% back to the customer thanks to this addition. Thanks to this trojan-horse-like approach, the digital promotion is where Nintendo benefits the most from the sale of a deluxe console. In fact, if you purchase a game off of the eShop, even if Nintendo returns 10% back to the customer, the company still makes more money off of the game than if it had been sold at retail. Thanks to the fact that the company can skip all the retail, packaging, and shipping fees, and since the threat of used games is nonexistent, Nintendo benefits much more than the consumer in this so called “promotion”.
When all parts of the Wii U Deluxe are taken into account, it is quite easy to understand that Nintendo is benefiting much more than the consumer during the exchange. There is not $50 worth of material within the deluxe Wii U, unless Nintendo Land is valued at $50, and therefore that means that most consumers are falling prey to Nintendo’s attempts to make a bit more money off of the Wii U. At this point, of course, Nintendo needs to be making all the money it can off of the Wii U, so the deluxe bundle can be seen as a mutual favor. Unfortunately for consumers though, they are not getting the better deal of this bargain.