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With the Wii Mini, Nintendo Pays for the Future with the Past

Yesterday Nintendo announced a new game console.

I yawned. You yawned. The entire Internet yawned.

The Wii Mini is a small, $99 console only available, for now at least, in Canada. It’s black and red, small, and works with “most” Wii accessories.

It doesn’t have a fancy gimmick.

It doesn’t come bundled with a free game, not even Wii Sports.

It doesn’t even have, as Andrew Webster at The Verge highlighted, access to the Internet.

It doesn’t make sense.

Why launch a new version of the Wii with the Wii U for sale? Why take the chance that someone will buy this instead of Nintendo’s more expensive hardware? Why is Nintendo doing this?

The answer comes from another doesn’t, one that’s been brushed aside in the flurry of coverage that’s built itself up around the Wii Mini’s launch.

It doesn’t cost much.

It doesn’t cost much because Nintendo doesn’t have to pay much.

The Wii is an old console built on old technology. Old technology is inferior to new technology, but it’s also cheaper. The Wii Mini takes the Wii’s sparse, old hardware and trims it down every more. It’s a value proposition, not just for the customers who never had the money to buy a console, but for Nintendo itself.

Stripping out anything a bargain hunter might not care about pushes down Nintendo’s costs, and pushes up their margins. Nintendo gets a chance to clear out its inventory of old Wii parts without sacrificing profits, all while capturing a few customers they may not have been able to pocket this holiday season.

Launching a brand new hardware platform is an expensive proposition. The Wii U might be profitable after Nintendo sells just one game, but it’s still not the money machine its predecessor was. Nintendo understands that, so they’re pulling a classic consumer electronics play—juicing revenue and keeping profits high with older hardware while selling a new console that will, hopefully, create new revenue streams over time.  It’s a strategy as old as home computers themselves. Apple used profits from its aging line of Apple II computers to subsidize its Macintosh division. Sony kept the Playstation 2 on the market long after the Playstation 3’s launch, and it continued to outsell its Blu-Ray progeny well into the last generation of home consoles.

The Wii U is an audacious console, and it may fail miserably, bringing mighty Nintendo down with it. 400,000 consoles is a good start, but Nintendo needs to build on that foundation if it wants to stay relevant and profitable. Building isn’t cheap. It requires investment in new games, advertising, and supply chains.  The Wii Mini is not a product I’m going to buy. The Wii Mini isn’t audacious, sexy, or even that fun, but it, and products like it, look to the past to ensure Nintendo will have the money it needs to build a future.