Sales, Bottom Dollars, and Nintendo Launch Profits

Forums - Sales Discussion - Sales, Bottom Dollars, and Nintendo Launch Profits

So, in the vain of trying to inspire some intellectual debate i'll try again with something all of us care about, MONEY!

Does the Wii being a profitable system from the get go, as opposed to PS3 or even XBox360, mean that Ninty essentially put themselves behind the eight ball to start with in terms of further developing the console and unlocking it's full potential? Since it is profitable, then the number of consoles they need to move to make an overall profit is less. Thus if the system doesn't perform well then it's not a really big deal. This makes good business sense as it minimises risk financially speaking. However, the manufacturers efforts in terms of developer support, add-ons, etc, now don't have the same driving incentive as does a manufacturer who isn't making a profit on their system and needs to make their dev tools brilliant, their games always good sellers and their add-ons must have items in order to turn good profits. In other words they need to make focused and consistent efforts on squeezing the most out of their systems, which in a general sense makes their console and the games on it alround more appealing to the mass market. I feel this is an area which Ninty has lacked and Sony has excelled in (DVD remote, network adapters, HDD + Linux, Multi-tap, light guns, solid dev tools (compared to launch dev tools, etc) and has in past contributed to some of the gap between Gamecube/PS2 and N64/PS. I know i would have gotten the N64 modem or N64 CD Drive if they had ever have followed through with those projects, and i feel the N64 would have not seen as large a gap between it and the PS.

My main reason for saying this is that the Wii has huge potential in what it can achieve, so long as Ninty maintain a focussed effort on it for 75% of it's life. This effort could be support to devs, firmware upgrades, USB add-ons, new channels, DS interactivity. So far things look promising, but historically speaking i don't think Ninty do as good a job at unlocking their systems potential as do other companies (DS for example could be the ideal system for a MP3 player game card and GBA card with SD card memory for storage, or with an Organiser application, and i don't think the microphone has had it's potential fully unlocked, nor the WiFi functionality) and i feel some of this comes down to the fact that Ninty just don't need to focus their efforts on stuff like this because they have already turned a significant profit from minimal sales. NES was the only system that really explored its potential with things like the powerglove, R.O.B the robot, 3D Fx chips in the carts etc, but it was limited in how far it could go.

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There is a 3rd party SD card thing for the DS if I remember correctly...lets you play music or watch movies...I dunno how well it works though.

Yeah, the fact that Nintendo makes a good profit from its systems means it can focus on new consoles or quick upgrades to current consoles.  Maybe Nintendo will release a Wii with DVD playback...I dunno.  I think right now they're just focusing on getting more Wiis manufactured, but in the future I can see Nintendo, but especially 3rd parties giving the Wii a lot of peripherals love.

Bet with disolitude: Left4Dead will have a higher Metacritic rating than Project Origin, 3 months after the second game's release.  (hasn't been 3 months but it looks like I won :-p )

I never look at profitability as a sign of weakness. Profits allows things to happen.

There are memory card readers for the DS that let you play MP3s and even movies and they are pretty good efforts. But they are not nintenfo supported and are aimed at the Homebrew audience, which essentially means that the average member of the public misses out on these sorts of things.

One example for me on the Wii is the photo channel. This could be expanded into a Music Channel and a Video channel, where you can play your MP3 collection off a USB HDD or video, or even utilise the SD card and the opera browser to be able to download this content for later play/upload to an MP3 player. This is the sort of thing Nintendo should keep rolling out in order to keep the console moving and it's sales momemtum positive. But as i said before where is the incentive if financially they are already raking it in?

Profitability doesn't always mean that a company will have a weakness. Profits allow for greater improvement. However, as i said before, if the 80% or 90% solutions are selling like hotcakes, where is the incentive to achieve the 100% solution, or to maintain the momemtum if a system has already paid itself back to the company 100 fold?

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If a company is profitable, it gives them resources that are unavailalble to a company that is losing money.  Being poor or unsuccessful does not give a company more desire. Failure breeds failure. Success breeds success.

Assume for a moment that Nintendo took a $100 loss per unit; this would mean that roughly $600,000,000 that could be invested into game development is currently sitting as hardware in people's living room. Using an estimate of $10 Million per game this would mean that Nintendo would be paying for your hardware rather than investing in 60 games; if you assume that these games are released pretty evenly over a 2 year time frame, and that the average ROI was 25% this would mean that Nintendo could release 30 games in 2007, 30 games in 2008, 37.5 games in 2009, 37.5 games in 2010, 46.9 games in 2011 and 46.9 games in 2012 for the same initial investment as subsidizing hardware.

In other words, over a 6 year period Nintendo could initially subsidize your console by $100 or they could develop 228.75 games ...

I know as a gamer what I would want

On the scale of Sony, Nintendo, MS, that rule isn't 100% true. They have enough resources to be able to survive failure IMO. And with the success factor, success only breeds further success if greed doesn't get in the way. One of the old axioms that get passed down is "To make money you have to spend money" and "Big gains can only be made on the back of big risks" or at least they are sayings that i have heard in my time. Ninty make the profits, but they don't always put those profits back into their current system IMHO. They minimise their risks but it also means they don't tap into the full potential of their systems. That being said i applaud them for the risk they took on the Wii, it would be nice to see that risk vs reward strategy continue with their support for the Wii.

Let me also add that the investment in R&D and market analysts is not cheap.

And Nintendo does lots of this so that they can always read the market and bring games that the market wants. And by market, I mean the mass market that wants the games, not the niche "hardcore" market that spends time whining about graphics, difficulties, and online multiplayer.

Whilst i also applaud nintendo for the risk they took with the wii, did sony take a bigger risk with blu ray, profit losses and the price tag on the ps3?

I think they did yet NO ONE is applauding them