Forums - Nintendo Discussion - How is Nintendo making more revenue with one console?

I want to educate myself and find out the reason Nintendo is making more revenue & profit with one console instead of two with a console and a handheld. While the Switch has been successful, in the past fiscal year it sold only 21.3M units when multiple times in Nintendo's history Nintendo sold around or over 21.3M total console units with the GC and GBA or the SNES and GB but had far less revenue. I want to know what's giving Nintendo more revenue & profit with no major increase in total console sales.



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I dont think they make more now than during the DS and Wii era.



There are many possible reasons.

Revenue: Consoles sold at a higher price. More accesories sold. More games sold. More digital games sold (thus giving Nintendo a bigger share of the revenue and less going to retailers). More DLC. More merchandise. And so on.

Profit: Should be obvious, but 1 console is likely to have less expenses than 2.

Your post kind of suggests you think that's a very hard thing to do, but it's really not.



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javi741 said:

I want to educate myself and find out the reason Nintendo is making more revenue & profit with one console instead of two with a console and a handheld. While the Switch has been successful, in the past fiscal year it sold only 21.3M units when multiple times in Nintendo's history Nintendo sold around or over 21.3M total console units with the GC and GBA or the SNES and GB but had far less revenue. I want to know what's giving Nintendo more revenue & profit with no major increase in total console sales.

Two platforms means more resources required to support them especially in today's era for example you'd need to develop two installments of a franchise instead of the one so development costs increase and better hardware as time goes on means more effort and costs come into play, you'd need double the marketing efforts and R&D etc... For reference Sony who are good at supporting their platforms were unable to give both the PSP and Vita much support at all as it's like double the effort in one gen.

A single platform means all efforts are in one ecosystem reducing operating costs significantly so while having two platforms may mean more hardware is sold in total the costs and efforts of supporting two platform eat into what you make back.



Less expenses plays a part in it I think. The Switch isn't exactly a powerhouse nor Nintendo's best built console.



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There dip in the mobile market would have helped



Nintendo's peak era for both profits and revenue were the Wii/DS years.  Switch is not quite to this level but it's getting close.  But when you think about it in Wii/DS terms, then I think it's easy to understand.

Hardware: Wii launched at $250, while Switch launched at $300.  DS launched at only $150.  In terms of hardware revenue, Switch is fairly comparable to the Wii.  Wii is ahead in # of units, but Switch base model launched at a higher price.  Wii also got a price cut and Switch got the Lite model, but overall revenue should be close if you compare them for a similar amount of time.  Adding in the DS is what would put hardware revenue ahead for generation 7, but DS units cost a lot less than either Wii or Switch.

Software: This is where the Switch really shines.  Typically games cost $60 each.  On the Wii it was $50 and on the DS it was $30.  Switch also has a higher tie ratio than either the Wii or DS alone.  Software is also where the big profits are made.  So for software both revenue and profits for the Switch would be higher than if you compared it to either Wii or DS alone.  But it's not as high as both systems put together.

Subscriptions: Switch gets more revenue simply by selling subscriptions.  Wii and DS didn't have anything like this.

One last thing to factor in is that the Wii hardware sales peaked during it's third fiscal year.  Switch is currently in it's fifth fiscal year which is when it will likely peak.  That means that the most profitable years for the Switch are yet to be reported.  Switch is currently selling at an incredible rate and third party support keeps growing as well.  It may end up being about as profitable as the generation 7 years or even more profitable.  



1. It's obviously cheaper to make one system than two. Also Nintendo only has to do R&D for one future system which brings down operating costs a bit.
2. Other than the failed Wii U, the Switch is Nintendo's most expensive system ever. And the original Switch still hasn't had a price cut over 3 years in which means they are likely making a ton on every Switch sold.
3. Switch full price games cost $60, whereas games during the GC/Wii gens were $50, and games on handheld systems were usually what like $30 or $40?
4. Digital games are sold these days, which means zero production and shipping costs on those, therefore higher profit.
5. Software sales on first party Nintendo titles are nothing like the company has ever seen before, when combined with the previous two points this means more revenue and more profit.
6. New income streams: Nintendo charges for its Online subscription and they sell DLC. Back in GBA/GC games nothing like these existed.

All these things lead to higher revenue and higher profit margins.



More games at higher price points. Consoles at higher price points. New subscription service. More non-gaming merchandise. There are probably some other things that I'm not thinking about as well.



Most of money comes from software sales, not hardware

Switch's game sales so far are awesome. Almost surpassed 3DS and I'm guessing in one more year it will have Wii U and 3DS software sales combined, and then some more months to outsell Game Cube + Game Boy Advance sales combined

I'm sure it will be the first Nintendo console to surpass 1 billion software sales