The truth about Nintendo

[Zod95]

andrewclear said:

"1 dollar spent on Sony or Microsoft products means 1 dollar to feed hardware and software developers for the production of more and better games. 1 dollar spent on Nintendo products means a very significant part of it out of the videogaming industry. It’s interesting to realize that the only 100% gaming corporation making consoles nowadays is also the only one taking money away from the gaming cycle.

32B$, that is Nintendo’s “debt” towards gamers as of 2011. 1.2B$ is the Sony’s “debt” as of 2010 but now it must be nothing. With Microsoft, it’s the opposite: gamers have a “debt” of 6.8B$ as of 2011."

As the wishfull utopian op pointed out, Sony and Microsoft are losing money (or just breaking even), and Nintendo is making a profit (it seems these are the lifetime profits of the brand, not a yearly).  So, the OP, who doesn't seem to understand business, will be heartbroken when Nintendo is around in 5 years, and either Sony or Microsoft pulls a Sega and exits the console business because they aren't making a profit.

Microsoft will probably be the company that pulls out, unless the Xbox One becomes very profitable.  Also, Sony is one mistake away from a company to losing everything.  Playstation in that case would probably be bought during a liquidation, if the PS4 is actually making a profit.  We honestly don't know if Sony or Microsoft are making money.  Sure, Sony isn't taking a huge loss on the hardware, but investing into its 1st and 2nd party games, as well as lining up exclusive 3rd party content, is risky, and they might not be able to recoup the investment if the games do not sell well.

Nintendo is taking a beating lately, since they have finally entered the HD age, and have seen their game budgets rise.  They just aren't selling enough of their 1st and 2nd party titles in order to gain that money back.

The OP doesn't try to explain business. It only suggests a way on which the market could behave. Using your own logic, I could say that you don't seem to understand the market. But I will not do that, once it would be unfair.

However, one thing that I think it's worth for you to undestand is that big revenues hide big inefficiencies. Companies don't need to suck huge amounts of money from their clients to make a profit. They just need to be efficient both internally (for example, don't having workers earning a lot by producing so little) and externally (for example, add "cost" to their products only on what will be valued by the clients). Sony has learned that and is now making a profit despite having a non-expensive powerful console with everything that gamers want. PS3's Cell was a huge inefficiency, giving millions for temporary exclusives is another one and Kinect on all XOnes is yet another. Nintendo doesn't seem to have significant external inefficiencies but I speculate that they have huge internal ones, once they are not making a profit despite what they deliver to be (technically) poor regarding what they charge.

I will never be heartbroken with the exit of any company that insistently makes stupid moves or that jeopardises the long-term with its greediness. Unlike you, I don't have the power to see the future, so I don't know what companies will come and go. But one thing I know for sure: it is possible to stay on this market clean from stupid moves and greediness and still make a profit. And, quite frankly, those are the companies that deserve to stay.