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jammy2211 on 27 January 2010
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famousringo said:
jammy2211 said:
In my view it's just no third party dares risk big bucks on a Wii project, to try and emulate the Mario Kart come NSMBWii 'bridge' appeal that Nintendo pull off so well. The finances are hard to justify - Wii games generate them ~$10 less then a HD game per sale, which after you count in costs reduces the profit per copy by 33% compared to a HD game. Throw in the Wii markets tendancy to buy games at reduced prices, and it doesn't look so rosy.

Nintendo throw a ****ton of money at the advertising budget, and it results a ton of sales. No third party has really dared try this approach outside of a Wii Fit / Wii Sports rip offs, because the figures don't add up, and they can invest just as much money in a HD project where they know the market will snap up a game with guns, warfare, blood etc.

Third parties have typically always invested the money after they know the potential for success is there. Until then they'll just keep making Wii game after Wii game, hoping one will randomly be a break through success, similiar to Just Dance.

I think you're raising some very good points, I really do, but I always wonder where that extra $10 goes. I doubt it all goes to the publisher. I've always assumed that the retailer gets a cut, since the retailer markup is usually a percentage of the wholesale price. I'm also guessing that the hardware manufacturer gets a slice in higher license fees to pay for those hardware subsidies. Manufacturing and distribution should be pretty even.

I've seen some people on these boards assert that they think Nintendo license fees are higher, but that makes no sense to me when the HD consoles are dependant on third party software licensing to make a profit while Nintendo earns a profit on everything they sell.

Anyway, not disagreeing with the gist of your posts, I just think your details are a little exaggerated.

In reality it'll be $8-$9 less profit per copy, but it's just easier to estimate it as $10 unless you're really wanting to get into the financials. Retail obviously takes a smaller cut out of a cheaper game, and licensing fees are based as a % of the products RRP, so is likely less for the Wii as a number.

 In my opinion if what I've put is exhaggerated, it's that I make the picture better then it is for publishers - on every console.  The reality of a video games financials imo is a much less rosier picture then alot of people want to believe, emphasised that only 20% of released games actually go on to make profit, and 4% of all games that enter production.