While it might seem counter-intuitive to sell your product at a loss, that isn't all that uncommon in video gaming. Many a console maker, from Microsoft, to Sony, to Nintendo itself, have all sold consoles at a loss. Indeed the latest generation of systems from all of them were sold at a deficit early on in their live-cycles.
The reason companies do it is to held seed the marketplace with their systems. With enough consoles out there, the manufacturers are able to make their money on content. That's how a lot of platform providers make the most of their money these days, though companies like Apple also make a killing on hardware.
In the case of Nintendo though, it's looking to make money on the NX, its next-gen system, as well. It will not be selling it at a loss.
This was announced by Nintendo president Tatsumi Kimishima during the company's latest financial report:
We are not thinking of launching the hardware at a loss," Kimishima said (via Eurogamer). "When Wii U was launched, the yen was very strong. I am assuming that situation will not repeat itself. Selling at a loss at launch would not support the business, so we are keeping that mind in developing NX."
He went on to say that the NX needed a strong launch line of games and that that was the reason that Nintendo was pushing it back beyond the Christmas period 2016, so as to take advantage of the Zelda Wii U/NX game launch, as well as other titles (presumably).
