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Vena on 06 September 2014
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pokoko said:

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.

The bold, first of all, is downright foolish to declare. Period. 

I'm not making up numbers at all. Let's look at what Nintendo currently earns vs. what they would earn:

Now:

  1.  
    1. Game sales 80-100% of profitability. Period.
    2. Royalties (Third parties, indies.)
    3. Hardware (Slight down due to R&D, but their usual foray is to sell at a profit. They screwed up wit the WiiU and the 3DS.)
    4. Peripherals and other accessories for their hardware.
Then:
  1. Game sales would lose: 10-15$ to retail shares, 7-10$ for royalties, and their ability to "hold" prices would disappear. Initial sales will see a drop from 48$ at the minimum (also taking note that they lose their 100% profitability to online as well) in the original sequence to 38$. That's ~60% now. The inability to hold price also leads to other drops in the long term for games with especially strong legs. More and more things start to come into question. (Here's a fun article to read on distribution of capital: http://www.eurogamer.net/articles/2011-01-10-where-does-my-money-go-article)
  2. No royalties anymore.
  3. No hardware nor hardware synergy.
  4. No peripherals.
They lose a LOT of profit, more than people ever bother to think about. So will they make more as a third-party? I sure as hell don't think so when you start gutting royalties, peripherals, and start factoring in royalties that they now have to pay for (double dip in losses) and other ways they start to lose profitability and control over their products. No to mention that we have utterly no idea what will happen to development cycles if they are taken from their closed, controlled developer environments where they know the inner workings in and out, to hardware with its own ever changing dev kits and hardware.

I may have been zealous with my software sales increase numbers but they have to rise, a lot. A lot, a lot. We're talking millions in lost profits on things that for Nintendo are dirt cheap to produce like their peripherals.

You can sit down and read through: http://www.neogaf.com/forum/showthread.php?t=740455

 

I have no idea what happened with the formating of this post, I apologize.