outlawauron said:
Slimebeast said:
Panama said:
Now factor in production, marketing and R&D costs among other costs.
The 3DS was found back at launch to cost less than $100 in terms of materials, yet at $170 it's selling at a loss and will continue to do so supposedly until August. That in itself should be a strong indicator that the cost of the materials of a platform isn't an adequate measure in discerning as to whether it is profitable.
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Yeah exactly, such as retailer margins, distribution costs, packaging, cost from returns of faulty devices, and more.
It's always the same thing. These lists of raw bill of materials appear and the fans immediately draw the conclusion that there's huge potential for profit per hardware unit sold.
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Retailers make next to nothing on gaming hardware. Working in retail, the very large retailer I worked for made less than $3 on every PS3 sold.
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It's generally acknowledged that retailers make the majority of their profits on peripherals and controllers that have much higher margins than the consoles themselves.
I can only assume that the benefit of selling volumes of higher priced items like game consoles is that it inflates the outlet's revenue stream even if it contributes little to nothing to their profit margins.
I was actually somewhat surprised to see how low their profits were on new games as well. There's a reason why they all want in on the used game business.
