Whatever helps you sleep at night.

There are different ways this could work, depending on distributer practice and retailer options.  For example, returned stock is sometimes not returned at all, as the cost of actually physically returning something only to be shipped out again would be horribly inefficient.  Instead, a retailer might be credited per copy; kind of like they sent the product back then re-bought it at a lower price, only the product never actually moved from the retailer's storeroom.  Usually when this happens, both the retailer and the distributer eat some of the loss in value.  I imagine a game would have to be a flop to bear the cost of actually sending physical copies back, as that produces a lot of extra overhead on both ends.

That being said, I've never actually dealt with game returns, only DVD returns, which had tons of incentives and promotions, such as tiered buy-in deals, so what I said above is just speculation.

The big thing with software sales, though, is that, while a retailer doesn't want to run out, they also don't want to overstock.  First shipment sales for the retailer are important to the publisher because that means the retailer is going to order more units in the next shipment and so on.  Sales that first week are key for everyone.

The 1.2 number is from a report that is now weeks old.  It's outdated and irrelevant.  The current math can be done right here on VGchartz as of 12/29: 5 million games / 2.45 million Wii U's = an attach rate of basically 2 games per console.

But the reason I'm chiming in - is to remind everyone that this does not include the digital-download games via their E-Shop.  So, the attach rate is actually higher than 2.  How much higher? I have no idea.

Nintendo projected an Attach Rate of 4.36 for the Wii U in October!  So please god let that number include all of the cheaper Indie games like "Chasing Aurora" in the figure, and not just the premium titles.  Otherwise it will be yet again, another drastically wrong projection out of Nintendo...a theme for them these days.

I'm wondering how big the digital numbers are. Animal Crossing sold 500k units digitally in Japan but that's a different beast entirely. As for the Wii U games I can see the big games like NSMBU selling maybe a max of 50k digitally and the rest are probably way lower than that.

The 1.2 attach ratio was for the US launch and for the Japanese launch.

Bundled games did not count, so most of NintendoLand's sales weren't included (which was not bundled in Japan anyway).

reggie must be cranking up the online services,he wants some of that download cash

Nintendo taking the money loss strategy?

Inconceivable!!

OT: They need to figure out budgeting for the Wii U. Now. (Like getting rid of the Basic Unit.)

The odds of Nintendo making profits has just shrunk dramatically unless 3DS can make up for it.

Nintendo is fucking up everything they did right with the Wii. Sound familiar? Why anyone would want to emulate what Sony has done with the PS3, which was probably the worst business plan for a console ever, is beyond me, but Nintendo seem to have completely lost their minds.

The WiiU is terrible, and Nintendo will suffer for it.

On topic: Was Reggie lying or not? You have to take into account if the numbers stated by Reggie were just calculated figures based on estimations, or real world figures. Was Reggie talking about regional numbers, or global numbers. Was Reggie's statement made as a COO of NOA, when the numbers included only the cost of what NOA pays for games/consoles and doesn't take into account what NCL pays for the manufacturing, whereas Iwata as a CEO have to take into account the costs and revenue as a whole.

It's normal that a BAU or BU makes a shitload of profit, but the company as a whole posts losses (or the other way around). And typical for a "sales" division doing better than ever, at the same time the "manufacture" division spills red ink.

Off topic: I'd expect Nintendo's tactics being that they are able to cut down costs before the competition arrives with their new consoles, so they'd be ready to go into a pricewar and make profit, where the competitors couldn't do the same.

If the competition copycats Nintendo, competitors are going to lose money with an expensive controller/console, and if not, Nintendo is going to have the "edge" due to the controller.

So, what makes Wii U so expensive? The gamepad should be rather expensive; even if it's "specs" would seem like nothing, there is quite a lot of tech inside, with the touchscreen, NFC, Wi-Fi, camera, mic, accelerometers, and of course it needs a processor of it's own.

The CPU should contain "a lot" of cache, which is expensive. Internal memory is flash memory, and even if it's 8GB for Basic and 32GB for Premium, the cost per GB shoots sky-high, when you compare it to the cost per gigabyte on HDD's.

And lastly; retail margins. As Wii sales dropped down due to lack of games, Nintendo isn't in the best position when negotiating the retail cut, so it should be expected that Nintendo had to cut it's own share in favour of retailers share for them to take the device on theis shelves.