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Teeqoz on 06 September 2014
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pokoko said:
Vena said:


I am talking about profits, so don't make baseless assumptions. You should go look at their last 20-30 years of financials if you don't think that their hardware is a massive part of their profit margins as well as a synergistic machine for their software profits on which they earn 80% of the proceeds or, if digital, 100%. If they go third party all of that literally goes out the window.

Money lost on R&D is next to negligible over all. The rest of the money spent still has to be spent whether they are first or third party, and now they have even more expenses including having to pay licensing fees and tool kit fees which will eat up another 5-7$ a pop on each sale. Suddenly their profits per sale on software goes from 80-100% to 20-40%, if that.

You seem to be making up numbers off the top of your head for some reason and I'm not sure why.  80-100% down to 20-40%?  That doesn't even make sense.  The only significant increase would be that they now have to pay royalties.  Buying development kits from Sony and Microsoft is pocket change and a one-time fee.

Nintendo as a third-party developer would make a ton of money.  Period.  I have no idea why no one has faith in Nintendo games.  Pokemon, by itself, would rake in more money than most multi-team studios see with multiple releases.

The real question is, would they make MORE as a third-party developer than as a hardware manufacturer.

That can be broken down very easily:  IF their future consoles are like the Wii, they would make less money as a software-only company, but if their future consoles are like the Wii U, they would be much better off as a software-only company.  Of course, there is an absolute ton of gray area in the middle.

Basically, the hardware business, in today's environment, is a massive gamble.  It has a huge upside but it's no sure thing.

Now, all that being said, I don't think we can judge Nintendo's hardware business on one less than stellar product, not when the previous product was a smash hit.  They definitely deserve the chance to prove that the Wii U is an anomaly.  They also have a mountain of work to do, as well, or the loss in confindence will be justified.


I think their per sale software profits if they were third-party would be around 50% vs maybe 60-70% currently. That would most deffinetly be made back and more by the additional software sales.

The thing that looks bad for Nintendo is that every console except the original Wii had less sales than their predecessor. I'm not saying that the next Nintendo homeconsole will sell worse than the Wii U (That would be devastating), but  that the Wii was the exception, not the rule. Nintendo hardware isn't that succesful (for homeconsoles). Now, I don't se Nintendo doing this for now, but when the next handheld gen arrives and the sales of that is substantially lower than 3DS (because of mobile) then they can no longer rely on their handheld divison to off-set the losses from the home-console division. At that point I see Nintendo becoming desperate and might even resort to becoming third party.

Side note: Not only could Nintendo make money from extra software sales, but imagine how much Sony or MS would pay for exclusive marketing and/or content of their franchises, or even all out exclusivity for certain titles.