This generation Microsoft and Sony sold their consoles at a loss which generated more losses then they could possibly ever recover on the hardware alone.
Nintendo sells their consoles with a small profit, but they also have extremely strong 1st party software. You don't want to include 1st party software in the equation, so I would say Nintendo possibly makes more on hardware and accessories than royalties. This is assuming they make $70-80 per console (with controllers before price cut) sold. That would be 8-10 3rd party games per system sold if we assume they make 8-10 in royalties. Due to the extreme popularity of 1st party software and an attach rate of only 8, you could venture to guess that hardware wins out, but only by a tiny bit. If 1st and 3rd party software were combined, software would easily win for Nintendo.
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