Erik designs the Wii 2

[Erik Aston]

RolStoppable said:

The profit margins on peripherals are generally really high, so it shouldn't be too much of a problem to offer more in next gen controllers for a lower price. However, it's a matter of Nintendo understanding what people want out of their game consoles. They probably think they would be giving money away by selling controllers with only a small profit margin and don't consider the positive effect that higher controller penetration could have on software sales. You know how it is: Once you've got a lot of controllers you are more inclined to buy multiplayer games.

I believe that the profit margins on peripherals are high somewhat as a concession to retaillers. When Sony and MS take big losses on hardware over the first half of the hardware cycle, that means tiny margins on hardware for retaillers. And they don't make it up on software; they get maybe $10 on a $50 game, and they very frequently have to discount games. That's why so many retaillers are selling used games now, because the margin is much higher.

So I think that's why controllers have ballooned in price. And I don't think Nintendo should try to undo that by giving retaillers a higher margin on the hardware or games. But Wii Play was an awesome idea, so I think Nintendo should emulate that with the next system, but be even more aggressive in getting 4 (or 6) controller penetration instead of just 2.