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Forums - Nintendo Discussion - Reggie was misquoted when he said Wii U profitable after one game

Barozi on 07 January 2013
bananaking21 said:
ok i know this is off topic but could someone explain to me how software makes money for nintendo? i know how first party software makes money, but how do 3rd party games money for nintendo (or any console manufacturer) do they like take a percentage of every piece of software sold?




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osed125 on 07 January 2013
bananaking21 said:
osed125 said:
bananaking21 said:
osed125 said:
bananaking21 said:
Kresnik said:
Well, that's not good news for the price of PS4 and Nextbox :(


from the price of the WiiU controller in japan im pretty sure thats adding alot of cost to producing the console, also add that the WiiU is using a custom made property format to read disc and im betting that will cost them more. blueray for sony would cost less now since its been on the market for a while and they managed to bring production of the thing down with the ps3

The GamePad apparently cost aprox. $100 in the U.S.

http://gamrconnect.vgchartz.com/thread.php?id=151013&page=1

yeah its pretty expensive, if the WiiU came without it then it would have cost about 200/250 bucks. which is pretty cheap

Two things are possible: 

1) Controllers are usually sold at high profits. IIRC the 360 cost like $20-$30 to make, but it's sold at $60. So there's a possibility the Wii U is using a similar strategy.

2) The GamePad does cost aprox. $100 to manufacture and Nintendo is selling it at the same price (or losing money on it).

As a side note, the console would have cost more than $250/$200, since in the final price of the console it always includes packing, shipment and those stuff. 

well if point 2 is the case which i believe is, that means that sony/ms can release a console that provides a significant leap in terms of power at a 400$ price point

If neither of both companies includes a high price peripheral like the Kinect or Move, there is a high chance of a "big" leap in power. But we need to keep in mind on how much money Nintendo is losing on the Wii U and if all that money is from the GampePad or the console itself. Too many variables at the moment.  



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Arcturus on 07 January 2013
bananaking21 said:
ok i know this is off topic but could someone explain to me how software makes money for nintendo? i know how first party software makes money, but how do 3rd party games money for nintendo (or any console manufacturer) do they like take a percentage of every piece of software sold?

Yes. I think it's somewhere in the ballpark of a few dollars per $60 game.



hivycox on 07 January 2013
Euphoria14 said:
Somini said:
I knew it!!

This is bad news though, for us non Nintendo gamers i mean, as this shrinks the chanses of a 400 euro/ dollar PS4 or nextbox :(

Not really. Nintendo probably just has high costs because of the Tabtroller.

That type of controller is not required what so ever for the other consoles.  Plus, Sony and MS can probably afford a lower price due to having subscription style services on their consoles.

 

I am still optimistic about pricing.


I don't agree, It is obvious that Microsoft and Sony can't sell their nex gen consoles without some sort of innovative controller, too... Nintendo sells the wiiu with the tablet-controller and without a classic controller like the wiiu pro controller...

I think the same will happen to the next xbox and playstation as their rumours tell lots of new stuff.. for example microsoft will probably release their new xbox with kinect 2.0 which will cost a lot more than a standart controller...

IMO 400$ price tags are the minimum...probably somewhere like 450$



bananaking21 on 07 January 2013
osed125 said:
bananaking21 said:
osed125 said:
bananaking21 said:
osed125 said:
bananaking21 said:
Kresnik said:
Well, that's not good news for the price of PS4 and Nextbox :(


from the price of the WiiU controller in japan im pretty sure thats adding alot of cost to producing the console, also add that the WiiU is using a custom made property format to read disc and im betting that will cost them more. blueray for sony would cost less now since its been on the market for a while and they managed to bring production of the thing down with the ps3

The GamePad apparently cost aprox. $100 in the U.S.

http://gamrconnect.vgchartz.com/thread.php?id=151013&page=1

yeah its pretty expensive, if the WiiU came without it then it would have cost about 200/250 bucks. which is pretty cheap

Two things are possible: 

1) Controllers are usually sold at high profits. IIRC the 360 cost like $20-$30 to make, but it's sold at $60. So there's a possibility the Wii U is using a similar strategy.

2) The GamePad does cost aprox. $100 to manufacture and Nintendo is selling it at the same price (or losing money on it).

As a side note, the console would have cost more than $250/$200, since in the final price of the console it always includes packing, shipment and those stuff. 

well if point 2 is the case which i believe is, that means that sony/ms can release a console that provides a significant leap in terms of power at a 400$ price point

If neither of both companies includes a high price peripheral like the Kinect or Move, there is a high chance of a "big" leap in power. But we need to keep in mind on how much money Nintendo is losing on the Wii U and if all that money is from the GampePad or the console itself. Too many variables at the moment.  

i agree, to many variables



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Kasz216 on 07 January 2013
Mr Khan said:
My understanding was that the retailers paid for the games first anyway, which is why i never quite understood why publishers cared about sold vs shipped from a short-term financial standpoint. Longterm, i know it's important, as more sold means the retailers will buy more present and future games for their stock, but short-term per-unit Wii U profitability should depend on what retailers have bought, no?

My thoughts are that they're probably making a tiny per-unit profit if we factor software sales in.

Might depend honestly... at least some of their product likely has returnability.

I've yet to run a stock room for a electronics store... but for example in a convience store, beer, chips and hostess products... anything you don't sell you get credit for towards your next order.

In college books it's the same way.  You have 6 months to return the books for a full refund in terms of credit.

For example in this article guessing the price of a videogame they specficially mention the returning of games.

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/02/

Finally, not all games sell, so the expense of returning unsold inventory eats up another $7.anatomy-of-a-60-dollar-video-game.html

 

So my guess would be you can return at least some of your ordered stock.



bananaking21 on 07 January 2013
Barozi said:
bananaking21 said:
ok i know this is off topic but could someone explain to me how software makes money for nintendo? i know how first party software makes money, but how do 3rd party games money for nintendo (or any console manufacturer) do they like take a percentage of every piece of software sold?



thanks! can i ask what does the 7$ "returns" stand for?



Kresnik on 07 January 2013
Barozi said:
bananaking21 said:
ok i know this is off topic but could someone explain to me how software makes money for nintendo? i know how first party software makes money, but how do 3rd party games money for nintendo (or any console manufacturer) do they like take a percentage of every piece of software sold?



That's awesome, I've never seen that before.  Thanks for linking.



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Euphoria14 on 07 January 2013
hivycox said:
Euphoria14 said:
Somini said:
I knew it!!

This is bad news though, for us non Nintendo gamers i mean, as this shrinks the chanses of a 400 euro/ dollar PS4 or nextbox :(

Not really. Nintendo probably just has high costs because of the Tabtroller.

That type of controller is not required what so ever for the other consoles.  Plus, Sony and MS can probably afford a lower price due to having subscription style services on their consoles.

 

I am still optimistic about pricing.


I don't agree, It is obvious that Microsoft and Sony can't sell their nex gen consoles without some sort of innovative controller, too... Nintendo sells the wiiu with the tablet-controller and without a classic controller like the wiiu pro controller...

I think the same will happen to the next xbox and playstation as their rumours tell lots of new stuff.. for example microsoft will probably release their new xbox with kinect 2.0 which will cost a lot more than a standart controller...

IMO 400$ price tags are the minimum...probably somewhere like 450$

If it is so obvious than please show me why. I just don't see how Nintendo doing something means others need to as well.



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Mr Khan on 07 January 2013
Kasz216 said:
Mr Khan said:
My understanding was that the retailers paid for the games first anyway, which is why i never quite understood why publishers cared about sold vs shipped from a short-term financial standpoint. Longterm, i know it's important, as more sold means the retailers will buy more present and future games for their stock, but short-term per-unit Wii U profitability should depend on what retailers have bought, no?

My thoughts are that they're probably making a tiny per-unit profit if we factor software sales in.

Might depend honestly... at least some of their product likely has returnability.

I've yet to run a stock room for a electronics store... but for example in a convience store, beer, chips and hostess products... anything you don't sell you get credit for towards your next order.

In college books it's the same way.  You have 6 months to return the books for a full refund in terms of credit.

For example in this article guessing the price of a videogame they specficially mention the returning of games.

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/02/

Finally, not all games sell, so the expense of returning unsold inventory eats up another $7.anatomy-of-a-60-dollar-video-game.html

 

So my guess would be you can return at least some of your ordered stock.

I considered that possibility (knowing that that is how it worked with Comic Books before the late 1980s, where newsstands could just sell unsold copies back to the publishers), but then that would dis-incentivize stores from bargain-binning anything, if they could just dump it back on the publisher.



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