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Soundwave on 16 July 2016
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Jumpin said:
Soundwave said:

People need to stop confusing revenue with profit. 

Nintendo makes $20-$30 profit for one $50-$60 game, that's probably more than a $300 console, the hardware will inflate the revenue numbers because it's so much more expensive (one system can be the cost of 3-4 games), but games make the majority of the profit. 

You're not correct.

Nintendo's hardware component earns them much more profit. Even if software costs were 60$USD on Wii, that still means Nintendo would have 8.8 billion dollars profit from software sales, but they would have still made 15 billion dollars gross profit (before taxes and such) from hardware sales including the amount of extra money they save from not having to pay Sony or Microsoft a cut of the revenue.

 


Plug those numbers in for a 50$USD game, and it would actually be between 15 to 22.50.

Let's assume 60 dollars for the purpose of the argument
So subtracting Wii Sports 82 million, Nintendo sold 326 million units of software on the Wii, that's a large chunk of change 27 dollars per game since Nintendo gets all publishing and - 8.8 billion. How much more would Nintendo have made if the Wii didn't come out and instead they released their games on Xbox 360 and PS3? Probably less money.

BUT, since Nintendo doesn't have to pay manufacturer fees on their own console, they get an extra $12 per game, or 3.9 billion more dollars, pure profit.
Now add in the 515 million third party games that sold on the Wii, and the cut Nintendo got, that's another 6.2 billion, or 10.1 billion dollars extra because Nintendo had their own hardware, which is considerably higher than the 8.8 billion cut that Nintendo made if your don't factor in the console maker cut.

In 2007 it was reported by Financial Time that Nintendo made 74$USD profit on each Wii sold in Europe, 13 in Japan, and 49 in the US.http://web.archive.org/web/20100815075610/http://www.gamedaily.com/articles/features/report-nintendo-makes-about-49-per-wii-sold-in-us/70921/?biz=1

Those profits would have risen each year until the Wii price cuts in late 2009. So lets assume that the numbers average out to about that for the entirety of the generation. That's 2.2 billion more profit in the US, 169 million in Japan, and 2.5 billion in Europe, or approximately 4.85 billion more.

That's how we come to the 15 billion figure when it's all added up. The 4.85 billion direct profit, and the 10.1 billion from their cut on all software released on their hardware.

There is no way Nintendo is ever going to make the $24 billion in gross profit they made with the Wii by selling on Xbox and Playstation instead of their own console. They probably wouldn't make a quarter that amount.

Well when Nintendo has another console sell 100 million units, sure that's a different story. 

If Nintendo were to put games on PS or XBox IMO they would negotiate a deal where they don't pay licensing fees or as low as possible, hell I think Nintendo would have leverage to get Sony or MS to give *them* a cut of their licensing fees. This is the set up the Blu-Ray constorium uses where Sony shares fees with other companies that are on the Blu-Ray board, Nintendo could insist on such a partnership. 

Given that Pokemon GO is proving how valuable Nintendo IP can be, they have a very strong bargaining position, at this point I think MS would basically allow them to run the Scorpio project if Nintendo really wanted such a deal.