Well that's obvious. The real question is how profits will be affected and I think those will increase.

60% of their business is selling consoles.

They'd likely need to see a several hundreds of percents increase in software sales over their Wii software sales to see profit. At all.

Sometimes Nintendo seems to be a small cosy family-business, but it is really big in the world!

Good info! I should have looked at video game companies/publishers, too so thanks for looking that up.

So according to my findings and this, video game publishers companies make up a majority are the most popular companies that earn 5$ billion in revenue with less than 10,000 employees. Good to know!

Its crazy how big Facebook got in such a short amount of time though.

Not necessarily. Personally, I think Nintendo will eventually go third party considering how big Microsoft/Sony/Apple etc. are. Whatever the case, I don't really care. I just want them to make good games whether on WiiU, PS4, X1, PC, 3DS, or Vita.

"NOBODY" understands where Facebooks money comes from!

With the rise of digital download game sales, it would be absolutely foolish for them to ditch the hardware business.

They have many options for the next gen of hardware. In the handhed space they could be making a variant of the handheld with smartphone functionality (like their own distribution of android). In the console space, there is a potential foray into VR, and since WiiU will have a shorter lifespan of current gen consoles, they could bring it first to the market.

One weaker selling console doesn't automatically spell doom for Nintendo. They have the resources to ride out at least two or even three weak generations. The stance against going third party only shows that the company management cares about companies employees and long term future. All the b***hing from investors and PS/Xbox gamers is getting tiresome. Times and times again Nintendo has shown that they can sell hardware almost solely relying on first party software.

Let's compare that to XBox Studios and Sony Computer Entertaiment.

Revenue isn't the primary number in this discussion. It doesn't really matter how much money you're bringing in if it's exceeded by your expenses.

What we should be talking about with regards to Nintendo is A) does hardware turn a significant profit, and B) would software sales drop dramatically if not supported by an owned platform. Hardware is expensive, so obviously revenue would go down without hardware sales, but again, the bottom line is more important.

The first question is kind of hard to answer. Nintendo has a long history of profitable hardware--until the 3DS and the Wii U. The 3DS was a strange situation which didn't last long so we'll toss that aside as an aberration. The Wii U is the real problem. As far as I know, it's still not profitable, which means it might never actually sell enough units to be profitable over the full run of its life-cycle. That would be fine if the console is being projected to sell like hotcakes after it turns profitable but that doesn't really look to be the case.

Therefore, if the Wii U is the base-model of Nintendo's console business going forward then it doesn't look like a profitable aspect of their business when considered in a vacuum.

However, it is entirely possible that Nintendo has learned some things from the Wii U--like the fact that expensive gimmicks are a bad idea--and they will go back to building consoles that are profitable from Day One or close to it. If they did that, then less revenue would not matter, as they could still turn a profit with a lower amount of consoles sold.

That leaves us with a discussion about games sales if Nintendo went third-party. IF Nintendo sold the same amount of copies on Xbox, Playstation, PC, and mobile devices as they do on their own systems then I think there is no question at all that their profit per employee would be insane. The overhead for game development and publishing would go up somewhat, yes, but it would be a drop in the bucket.

But would that really be the case? I honestly don't think so.

In my opinion, without an owned platform, sales of most titles would begin to sink. That captive audience would be released out into the wild with more choices than Nintendo consoles have seen in a long, long time. Dedicated, Nintendo-only fans would become a dying breed. Ten years down the line, I simply do not see Mario titles pulling down the same numbers. Pokemon might be an exception, though, if it ended up on mobile.

Still, I think being software-only would be less of a gamble. I think they could easily turn a profit every year, though they'd likely shed a lot of employees. Hardware can be a massive boost if done well or a massive drain if you screw up. The Wii U following the Wii is a prime example of that.

My opinion on Nintendo's best possible path is to continue making hardware, but ONLY if it's cheap and profitable at launch. They don't need to "win" a generation as long as they're turning a slight profit on hardware and selling a ton of their own software. Second or even third place is fine. They just have to convince their fans of that.

Yes but that doesn't matter.  Hardware is high revenue, low margin or even sold at a loss when they are trying to boost their market.

Software is high margin.  If they went 3rd partiy their games would sell a lot more.