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Soundwave on 08 July 2014
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RolStoppable said:
Soundwave said:

SNES and N64 were sold at a moderate/thin profit margin (hence the razor blade analogy that's been used for decades). Both had large price cuts within the first 6-8 months on market too. The SNES price cut coming so quick actually caught Sega really off guard. 

I remember that pretty well because my dad was really pissed off that the Super NES had come out and we were bugging him about getting one when we had just gotten the NES a few years prior. He said he'd buy one when they cut the price and they cut it like 2 months later, lol, so it was like my gaming prayers had been answered. That's how I got my SNES, just in time for Street Fighter II. 

The N64 chip was actually fairly cutting edge too (the SNES was a good deal better than the Genny/TG16 too). When Tom Kalinske at Sega was demoed it (SGI went to Sega before Nintendo), he flipped out over it but Sega of Japan was too stubborn/stupid to adopt it, it just happened to be fairly cheap too. Yamauchi then I believe personally inked the deal with SGI himself a few months later. I remember that too (the Project: Reality press release in EGM). 

The common understanding and use of the razor and blades business model when it comes to video games is hardware sold at a loss, mainly because that is what the razor and blades business model has evolved into over time with companies getting more and more aggressive (across all industries). Newly launched video game hardware that is sold at a profit (however small) will not be called razor and blades by any analyst.

I highly doubt that the SNES and N64 had large price cuts in the USA, but rather $50 ones. Plus the SNES launched about a year later than in Japan to begin with, so the time for the SNES chipset to drop in price was far longer than you make it look like. The N64 didn't have more than a CPU, GPU and RAM; it didn't even have a sound chip.


Razor blades are sold at a profit too ... just not a big one, you know that right? The replacement cartridges are where they make the real money. 

No one is advocating selling a system at a loss, so I'm not sure why you're getting upset over nothing. 

The N64 was supposed to launch at $249.99 as well, they cut the price once before launch ($199.99) and again about seven months after the launch so that it was $149.99 very quickly.