zorg1000 said:
im not going to consider that because its not true, SW sales & profit are not proportional to HW sales.
There are many ways Nintendo can be more profitable despite lower hardware sales.
1. Selling hardware at a profit. 3DS was sold at a loss for a full year after the initial big price cut and Wii U was sold at a loss for the majority of its life. This was one of the main reasons they posted losses for a few fiscal years.
2. Streamlined development. They just recently completed the merging of their various software teams and are now working together in a single building. On top of that, developing and creating games/engines for a single platform is more cost/time efficient than developing for two seperate platforms.
3. Reduced hardware R&D costs. Just like with software, Nintendo has merged their hardware teams together and for Switch they abandoned using an exotic chipset and opted for a much more modern and less customized design.
4. Increased 1st party software sales. With a single unified platform all of Nintendo's games will be available to their full audience unlike previous generations. For example, Wii U accounts for less than 20% of their overall hardware sales last generation, that means games exclusive to Wii U were unable to sell to their full potential. Same with 3DS but to a much smaller extent.
5. Increased 3rd party support. Wii U & 3DS did not have support of some of the major 3rd party game engines. Wii U had poor sales resulting in lack of support. 3DS on the other hand had a sizeable install base but did not have support of the major game engines such as Unity or Unreal. Switch having support of the major game engines along with a sizeable install base leads to a higher chance of strong support resulting in higher revenue from 3rd party royalties.
6. Online subscription service. Nintendo is set to release their own paid subscription service for online games. This likely wont make a huge difference right away but in a few years Nintendo could have tens of millions of subscribers. Lets say three years from now Nintendo has 20 million subscribers at $30, thats $600 million in revenue in a single year.
7. Increased digital sales. Nintendo in the last few years has embraced selling games digitally along with DLC. These things have a higher profit margin than physical sales and Nintendo is likely to continue moving in this direction.
8. Increased accessory sales. Unlike 3DS, Switch does not have a clamshell design so things like screen protectors and carrying cases are far more needed. Extra controllers is another big one, Wii U had a low install base meaning a low number of people looking to buy extra controllers, nevermind the fact that Wii controllers were compatible with Wii U so many Wii U owners already had multiple controllers. On top of that Switch has things like additional docks & charging grips/stands.
The combination of all these things will likely see Nintendo post far healthier profit with Switch than they did with 3DS+Wii U.
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