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pokoko on 06 September 2014
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Vena said:

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. 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. Not just 2x or even 3x. 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

You do realize that they have to pay retailers NOW?

All you're really saying is that you have no faith that Nintendo games would sell.  That's it.  I think they would sell very well.  We can agree to disagree about that.

I struggling to think of a way to put this to you, to explain what people are talking about.  Nintendo lost money last year.  Why?  Because they're selling hardware at a loss.  Yes, they would lose a lot of revenue streams if they went software-only but they would also lose a ton of expenses.  Business isn't about revenue, it's about profit.

Nintendo has some of the best selling franchises in the world.  Even if they didn't sell as many units on other consoles as on their own, they'd still have a fantastic cost/profit ratio.  Nintendo games would still sell very well and their overhead would be well below that of someone like Activision or Rockstar.  

I can't think of any possible way that Nintendo would fail as a software developer.