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Einsam_Delphin said: Aha, so you see, it's all about them long-term software sales, as why else would they ever sell their systems at a loss if even for a short period of time. I don't see the risk in a $100 drop coinciding with key releases, as the same tactic worked out for the 3DS. Besides, they're gonna drop the price to that point and beyond sooner or later anyhow. I forgot why we're debating over which console Nintendo is focusing on, but ahwells lol. All these games we're seeing now weren't made this year, but have been in development for years. They likely decided to shift game development in the 3DS's favor after it's slow start, but that's just speculation on my part. I do expect the Wii U to be getting development focus right now though, and so we could expect a 3DS-like game rush in 2015. |
Long-Term thinking is fine and all but not if that means taking a big loss on systems. As for the bolded: Yes, but once they can actually break even with it or take a slight loss. You can't take a big loss from a business perspective.
I'd expect a big Wii U game-push in 2014. It normally happens during the 2nd full year for every system. 2013 was 3DS's 2nd full year and Wii's was in 2008.
The following post was spot on so read it again!
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I am grasping what you’re getting at; your points are crystal clear. It just doesn’t make sense and I’ve tried to convey that to you, but I’ll try once more and then I must move on. Let’s focus on what is probably the biggest flaw in your reasoning: Past Nintendo consoles selling at a loss and the 3DS. You really need to stop using the 3DS and its price drop as a metric for WiiU. They really are apples to oranges comparisons. To put things into perspective, the only Nintendo home console that I remember hearing sold for a loss at launch was the Gamecube. More on that in a moment, but every other one of their consoles (or handhelds for that matter) either sold for a profit or broke even at launch. If I’m wrong on that I’m sure someone can correct me but I know I read that somewhere. The N64 is the only other one I question because I remember that it was supposed to launch at $249 and was then cut to $199 right before launch. But back to the Gamecube. I read that it was selling at a rumored $7 to $10 loss per unit. It became profitable very quickly. By comparison, the PS2 lost over $100 per unit IIRC at launch at $299. It was, after all, a DVD player in the year 2000 but unlike the PS3 the BOM came down pretty quickly. The PS2 sold far, far more than the Gamecube during that gen from 2000 to 2006. Despite the difference in install base, Nintendo made more profit in that time than Sony. Now, much of that had to do with the booming GBA but despite that, the GC was a very profitable endeavor for Nintendo. This is the reason why Nintendo had never, ever posted a yearly loss as a company since they’ve been in the games industry until recently. They value profit more than they do bragging rights of console numbers. This is why Nintendo never cut the Gamecube’s price similarly to what you are suggesting just to boost sales numbers. As I said before, install base is important, but it’s a balancing act, and Nintendo is not Sony. So keep this example in mind because it is important to my point; Nintendo will profit more as a company by smaller drops over time as production becomes cheaper than a huge drop just for the sake of install base and hope that third party support will come. Why your 3DS comparison fails horribly is because it was selling at a nice profit at $250. When they dropped the price by $80, it was then selling at a loss and it was about a year later before the hardware was profitable again: http://www.destructoid.com/nintendo-no-longer-selling-3ds-at-a-loss-231943.phtml Keep in mind that after 3DS became a loss-leading system (combined with less coming in at that point from the Wii and the expense of readying the WiiU) Nintendo posted their first ever loss at the end of fiscal year 2011 (end of March of 2012) of around $530 million. While that’s definitely covered by the billions they made from the Wii/DS printing money, it’s still a historic first and a big black-eye for the company and Iwata. Now, let’s consider the WiiU which Nintendo launched at the biggest hardware loss they’ve ever had before. I know there was a rumor that it was between $40 to $46 per unit, and considering that Ninty themselves stated that after a game purchase it became profitable ($60 minus retailer, etc), that sounds plausible. At the end of Nintendo’s next fiscal year (end of March 2013) Nintendo still posted a loss, albeit a smaller one. This means that despite the 3DS being profitable since July 2012 and great game sales, Nintendo was still in the red. Remember, Nintendo no likey the lossez… So if the 3DS, which even after the price drop wasn’t losing them $40 to $46 per unit, took about a year to become profitable again, the WiiU hardware, which likely has a higher BOM cost, will - best case scenario - be breaking even by the end of the year. Now apply your full $100 drop scenario. Yeah… Despite the fact that install base is important for profit, $100 is just too much and the Gamecube scenario above will still garner them more. This is why Iwata has been reiterating that WiiU will not have a price drop this year, because they absolutely positively do not want to post another loss come March 2014. We’ll be lucky if they even drop $50 this year. They have a strong lineup of games coming this year but if they do manage a $50 drop, the deluxe at $300 is only about $50 more than the seven year old PS3. And being a full $100 less than the PS4 is huge. They don’t have to worry about being further away than that until next year when the PS4 is back in stock, has more games, and Nintendo can afford to drop more without jeopardizing their profit margins. While the 3DS is doing very well for them, $100 drop for WiiU this year simply ain’t in the cards, man.
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