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Smashchu2 on 30 January 2011
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Squilliam said:
Smashchu2 said:

Which would only be more reason to drop the line all together. It's not making the company money. All it is doing is taking the profits of the other departments and eating it all away, lowing their net income.

Nintendo, with less assets compaired to Sony, would be better off trying to increase sales of the Wii and release bigger software rather than spend much more resources to make a new system and hope it has the same success as the Wii. With a company who only makes games, launching a console is risky. Again, the reason they would rather try to increase Wii sales rather than to bet the farm on a new system, especially when 2009 has shown potential for the Wii and the software does amazingly well.



Increasing the sales of a console after it closes in on 100M sales is easier said than done. Theres a reason why new consoles are released because saturation is one of the hardest things to fight in any industry. At this point it is the only realistic way they'll increase their console revenue to 2008 levels.

Nintendo's mission, as they have set forth for the Wii and DS, is to grow gaming. In this sense, Nintendo would see no limit or saturation. If you watch the Investor Breifing, you would see that the reason for low sales, from Nintendo's mouth, is a lack of software. The Wii sold 4 million in a month in Dec 09. Nintendo knows that they will increase Wii sales if they have the software to support it. This is why, in their data analysis, it was all about software.

As for Sony, well, they probably will make more money going forward if they continue the PS3 line than if they released a new console or exited the console market. All things relative Sony will be better off keeping the PS3 going whilst Nintendo will probably only improve their fortunes with a new console.

Typically, in a decision making scenario, the decision is based on two alternative. In this case, it is not "Make a new system or keep the old one," but "Keep the brand or discontinue it." The Playstation brand has lost almost as much as it has made, and shows no signs of stopping. Of course, Sony keeps going (I expect the reason is because they expect to make money on it soon).

I see bad analysis thrown here too much. People think that if revenue is down "Well, then they should just make a new system." No actual thought goes into these thinkings as that would require a lot of time and money to invest, and it could also bust (like the GC before and the PS3 and 360 now). Making a new system when sales is down is bad business. This is why Nintendo's answer to slumping sales is, as they have said themselves, to make software (ask your self, outside of Donkey Kong Country Returns, what game was going to push software?). Anyone who has seen this business long enough knows people buy systems for games, so the answer to cure slumping sales would be obvious.