Squilliam said:
Smashchu2 said:
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.
1. 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.
2. 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.
|
1. Theoretically Microsoft could sell one copy of Windows to every man, woman and child on the planet too.
2. How much the brand is worth is not the same as how much money they have made with products attached to the brand. The brand is worth billions, the losses are as inconsequential to Sony when deciding on what to do with their console business moving forward.
|
I think your missing the point here.
1)This is irrelevant as we are talking about Nintendo and their business goals. Not Microsoft. Microsoft makes their money by selling to computer manufactures. Nintendo's goal is to expand gaming. Even so, you forget the truth that it's risky to release a new system and with the 3DS, they are already putting a lot on the table. There is no gaurentee that old users will take up the new system as the PS3 is evidence of that.
2)Brands are a lable of the product; it's the product that makes the money. The Gameboy was a strong brand, but was discontinued for the sake of the DS. The worth of the brand is the worth of the product. You could tell Sony investors "It's OK that the PS3 is losing the company money because the brand is worth so much." They care that their investment is growing. They don't give two licks about how good that brand is if the product is a money hole and throwing away the investment they made. They would be more inclined to kill it as all it's doing is eating away the money they made.
The problem here is that your responses have little to do with cash flows and earnings. Brands are nice and all, but how good is that if the finacials don't show a gain and their is no growth from that brand. Sure, a new console would increase revenue (as releasing a new product does), but it doesn't take in the risk factors of doing such a thing.
