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Teeqoz on 30 December 2015
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Miyamotoo said:
Teeqoz said:
Nintendo's main profit driver is software sales. Their 3rd party royalties are basically nonexistant at this point, and while Nintendo normally does make a profit on hardware sales, it's hardly as much as they make from software.

If the money they'd get from increased software sales from launching on a tremendously bigger userbase outweighs what they lose from 3rd party royalties and hardware profit, then they should go third party. Neither us nor Nintendo knows if it will though.

Nintemdo are in a peculiar position among the three platform makers because of exactly this. MS and Sony's primary profit drivers are 3rd party royalties and subscription fees, both of which are things that they need to maintain their own platform to keep. Nintendo's main profit driver is in no way tied to their hardware, and could potentially benefit a lot from a higher userbase. This is why Nintendo going third party is in no way as silly as someone make it out to be.

To end it, I'll say this: It's not about wether or not they make money at all as a platform maker, but if they can make more as a 3rd party.


*raises flame shield*

You probably dont know, but half of profit Nintendo is making from hardware and addons for that hardware. Do you know how money Nintendo made just from selling Wii Remotes, Motion Plus, Nunchuck, Wheels...whitout profit from hardware!? For instance build price for Wii Remote was around $10-15 and Nintendo were selling then at $60, and they sold tens of milions (probably more than 100m) of Wii Remotes.

Second is when you have your own platform you don't pay royalties to anyone, you have whole profit just for itself.

Not to mention that when you have your own platform and software you have completely freedom and control of your whole business.

 

http://kotaku.com/5672972/its-official-nintendo-has-sold-a-ridiculous-amount-of-wii-remotes

20 million Wii remotes were sold standalone in the US. While that is just US, and as of 2010(30th september to be precise.), it proves that in all likelihood, the number is no where near the over 100 million you're claiming. If, for simplicity's sake, we assume that on average, the amoun of standalone controllers = 70% of how many consoles are sold, then yes, with a platform like the Wii, that would be a lot. However with numbers like the Wii U is pulling now, that would equal a bit more than 7 million controllers. It's a question of wether extra sales cover what they lose by not having their own hardware like I said. There are of course more factors than just what I said, I only mentioned a few. However can you provide a source that hardware and accessories make up 50% of their profit? Cause profit margins are much higher for software than hardware normally.

I am aware of what you are saying here, but my post was a simplification. I didn't attemp to go too indepth, because the post would be ridiculously long.

You have complete control of your own business as a publisher as well. Their business would be making and publishing games, and they would have full control of that.

 

If Nintendo's home consoles keep on selling Wii U like numbers, then I honestly think they'd be better off going 3rd party whwn it comes to home consoles (Not handhelds). If they can manage to get a userbase of 30-40 million, then that's probably sufficient for it to be better for them to keep on making hardware.