| RolStoppable said: Actually, the Wii U was sold at a loss in the beginning and for a long time. You don't need a 300% margin to sell hardware at a profit. At least try to be somewhat reasonable. If Nintendo made an average of only $10 per hardware sale, then that's still a gain compared to not making their own hardware and putting their games on someone else's machine (let's say they sell 50m units, that's $500m profit). Then they'll get $10 more per game because they don't have to pay Sony or Microsoft a royalty fee (let's say they sell 200m of their own software, that's $2 billion of additional profit compared to being a third party). They'll also get $10 for every third party game that is sold on their system (at 100m units, that's another $1 billion). Lastly, let's say that every owner of the 50m systems buys on average one additional controller which has a profit margin of $10; another $500m of profit. So Nintendo as a modestly successful console manufacturer can bring in $4 billion more in profit than a third party Nintendo that sells 200m copies of their games. This example uses rough numbers for a timespan of five years to show why there is merit to being a console manufacturer. Of course, if Nintendo does stupid things like with the 3DS and Wii U where both systems were sold at a loss for a good portion of their lifetime, then profits take a massive hit. If you make billions of losses on hardware sales instead of a profit, then you won't have much to show in the end. That's why most video game publishers choose to be third parties. Being a console manufacturer has the potential of more profits, but there is also a high risk involved that you fail. |
10$ is nothing.
If they go multiplats they would easily double their sales on their biggest franchises Mario kart, Smash, 3D mario and co. That would be like a 30-40$ increase for each of those games.
