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Is it possible to be profitable nowadays if you sell only 29 millions like the Genesis/Megadrive or 32 millions like the N64? Or creating games in this HD age has become so expensive that consoles need to be a huge success?

I don't think Nintendo doing everything right can sell more than 40 million units because of the force of their classis IPS.

There are 100 million Wiis and 20 million Gamecubes. But Brawl didn't sell 5 times what Melee sold, Galaxy didn't sell 5 times what Sunshine sold, and Twilight Princess didn't sell 5 times what Wind Waker sold.
Well over half of the people who bought the wii bought it for the motion controls and Wii Sports. Nintendo abandoned those people.
It would have been wiser to call the Wii U, Wii 2, launch it with Wii Sports 2, make it as powerful as they could for 250 dollars without losing money, and perhaps even offer a cheaper version with no controllers because you can use the wii controlls on it.

They should think about cheap, sell a nintendo machine for nintendo games as cheap as possible, and not about specs, because they can't compete with Sony and Microsoft.