You seem to be making up numbers off the top of your head for some reason and I'm not sure why.  80-100% down to 20-40%?  That doesn't even make sense.  The only significant increase would be that they now have to pay royalties.  Buying development kits from Sony and Microsoft is pocket change and a one-time fee.

Nintendo as a third-party developer would make a ton of money.  Period.  I have no idea why no one has faith in Nintendo games.  Pokemon, by itself, would rake in more money than most multi-team studios see with multiple releases.

The real question is, would they make MORE as a third-party developer than as a hardware manufacturer.

That can be broken down very easily:  IF their future consoles are like the Wii, they would make less money as a software-only company, but if their future consoles are like the Wii U, they would be much better off as a software-only company.  Of course, there is an absolute ton of gray area in the middle.

Basically, the hardware business, in today's environment, is a massive gamble.  It has a huge upside but it's no sure thing.

Now, all that being said, I don't think we can judge Nintendo's hardware business on one less than stellar product, not when the previous product was a smash hit.  They definitely deserve the chance to prove that the Wii U is an anomaly.  They also have a mountain of work to do, as well, or the loss in confindence will be justified.

I never said they wouldn't have higher profits. It's just that the internet keeps saying that Nintendo would have a higher revenue if they went third party. I'm very open to then going third party.

I think their per sale software profits if they were third-party would be around 50% vs maybe 60-70% currently. That would most deffinetly be made back and more by the additional software sales.

The thing that looks bad for Nintendo is that every console except the original Wii had less sales than their predecessor. I'm not saying that the next Nintendo homeconsole will sell worse than the Wii U (That would be devastating), but  that the Wii was the exception, not the rule. Nintendo hardware isn't that succesful (for homeconsoles). Now, I don't se Nintendo doing this for now, but when the next handheld gen arrives and the sales of that is substantially lower than 3DS (because of mobile) then they can no longer rely on their handheld divison to off-set the losses from the home-console division. At that point I see Nintendo becoming desperate and might even resort to becoming third party.

Side note: Not only could Nintendo make money from extra software sales, but imagine how much Sony or MS would pay for exclusive marketing and/or content of their franchises, or even all out exclusivity for certain titles.

The bold, first of all, is downright foolish to declare. Period. 

I'm not making up numbers at all. Let's look at what Nintendo currently earns vs. what they would earn:

Now:

1.  
   1. Game sales 80-100% of profitability. Period.
   2. Royalties (Third parties, indies.)
   3. Hardware (Slight down due to R&D, but their usual foray is to sell at a profit. They screwed up wit the WiiU and the 3DS.)
   4. Peripherals and other accessories for their hardware.

I may have been zealous with my software sales increase numbers but they have to rise, a lot. A lot, a lot. We're talking millions in lost profits on things that for Nintendo are dirt cheap to produce like their peripherals.

You can sit down and read through: http://www.neogaf.com/forum/showthread.php?t=740455

I have no idea what happened with the formating of this post, I apologize.

You do realize that they have to pay retailers NOW?

All you're really saying is that you have no faith that Nintendo games would sell.  That's it.  I think they would sell very well.  We can agree to disagree about that.

I struggling to think of a way to put this to you, to explain what people are talking about.  Nintendo lost money last year.  Why?  Because they're selling hardware at a loss.  Yes, they would lose a lot of revenue streams if they went software-only but they would also lose a ton of expenses.  Business isn't about revenue, it's about profit.

Nintendo has some of the best selling franchises in the world.  Even if they didn't sell as many units on other consoles as on their own, they'd still have a fantastic cost/profit ratio.  Nintendo games would still sell very well and their overhead would be well below that of someone like Activision or Rockstar.  

I can't think of any possible way that Nintendo would fail as a software developer.

Yes, hence why I said 48$ to start? And why I said, originally, 80-100%? That 80% was if they sold at retail.

I have no faith that they would sell *enough*, not that they wouldn't sell. They will sell, will they sell enough to offset billions of Yen in profits that are lost elsewhere? I don't know, and I really don't think they will because we have other examples of what happens when a hardware manufacturer and publisher goes 3rd party: SEGA (alive... sort of), Atari (ya...).

Their hardware is no longer sold at a loss (somewhat fittingly timed with the recent uptick in their hardware sales which, even if bad, is good for them from their previous two financial quarters where they were not only selling at a loss but selling badly), and they also spent a cool 200+ billion on restructuring which is now also over. With the consoles no longer at a loss, software still selling well when released, and their usually baffling low development costs, should see them starting to return to profitability. It will take time to walk off the WiiU/3DS combinatorial disaster but I also think they will not make the same mistake twice. They had 30+ years of selling everything at a profit and pushing it, and maintaining a controlled overall income. This time they cocked up at the start and had to jump through hoops to get back to normal. Nintendo has been looking at long term and spending short term to fix their cock-up. Will it work? It will be years before we find out.

Will they survive as software only? Probably, SEGA Is still somehow alive but the quality of what they produce is... questionable. Will they be the Nintendo of today? No. You'd likely need to see more annualized releases to start regaining sales, and not everyone of their franchises is actually all that big of a deal outside of its own console. Smash, Mario, and that's just about it. The rest of what they provide is niche and I don't see the sales going flipping over mountains. (Heck, I swear the only reason this conversation has even started is because of recent moves by Nintendo to revive franchises and control quality products that cannot be found elsewhere. It's got nothing to do with Nintendo as the company we know of today, it has to do with what people want from Nintendo with no regard to what Nintendo may or may not actually become if they turn into a software-only studio.)

In a software only future of Nintendo, we're probably not going to see things like Bayonetta 2 or Sin and Punishment 2, or any of their other "for the fans" moves that they can afford. They will have a handful of IPs that will maintain sales or exceed them well enough, and everthing esle will fall of the wayside.

You don't think Nintendo games would sell better if they were multiplat? okay.

Just because SEGA didn't handle the first to third party conversion well doesn't mean that the same would happen with Nintendo. They should get dev-kits for the other consoles a long time before hand, just to get to know the different consoles. Pokemon would still sell boatloads, Mario would still do great, Metroid Prime would sell super great, because the FPS genre has much more fans on PS and XBOX consoles, and their smaller franchises would get a good boost from having the much larger installbase. And then there is the extra $ they would get from exclusive advertising deals and similar stuff. Imagine how much Sony or MS would pay to get exclusive advertising rights to Mario.

They could still sell Nintendo accesories like Pro-controllers and NFC readers for both XBO and PS4.

Who says they can't make money on hardware if they stop producing consoles? Wii motion controller plus Wii sports on ps2/ps3 and xbox 360 would have been a huge success.

They would sell millions more of each game if they went multi platform. And if they wanted a system of their own it should be a really cheap one, giving consumers an affordable way to play their games.

Bolded: Try reading again. They will sell better, will they sell enough. That is the most important question and one that none of us have any real answer to, and as history shows no matter how much you may like to downplay it, first-to-third has never ended well.

SEGA back in the day had incredibly strong franchises, franchises that were competing with Nintendo. Then the Dreamcast happened, then going software only happened. When was the last time you played a good Sonic game? Or any SEGA mainline IP? Was it years ago? I bet you it was years ago. They are a struggling company and their IP worth tanked. Tanked to the point that Nintendo actually does their franchise better than they have in near a decade.

You really overvalue Metroid Prime just because its an FPS, the game is hardly even a shooter and what made it so good had little to do with "Shoot X SpaceRussians". And the "good boost" is likely no where near actually enough of a boost of any kind. If Metroid Prime was that big of a draw, people would have spent the little bit extra on the 99$ NGC to play it. Or the other small franchises or even Mario. They really didn't.

Exactly how many third parties do you know of that sell accessories that aren't just glorified reskins of the "only controller allowed". You do know Sony does not even allow non-dual shock controllers right? You say these things "oh they can sell X, they can sell Y" as if there is any sort of precedent for it. There isn't. The only precedent we have is that console producers get to sell their own specific hardware and peripherals, and some bootlegged third-party knock offs. You'll on occasion get some sort of headset partnership or deal, or reskinned main line controller, and thats about it.

If we use your numbers, where nintendo makes 80-100% profit on their games now, whilw when third party they would only make ~60% the they would have to sell 1,6 times better to make profit there. which means they'll have to sell 60% more software to make up the lost profit. I'm confident that they could do that.

Then there is the fact that they wouldn't have any of the losses from their hardware segment, so that none of their software profit would be used to offset hardware losses.

Metroid Prime would do waaaay better on PS3/4 and Xbox 360/One. FPS wasn't as big during the 6th gen as it is now, so during the NGC era it didn't matter as much as it would now. And you just proved our point in your post, despite many being interested in Nintendo games, they're not interested enough to buy Nintendo hardware, but if it was third party then a lot more people would buy their games.

Does it matter if the Pro-controller has the same innards as the DS4? I mean, it still feels exactly the same right? And for the NFC thing, there is precedent, it's called Skylanders and Disney infinity, which both are accecories that come from third parties.

SEGAs downfall wasn't purely because of them going third party, but also because of their horrible financial situation. The Saturn wasn't as succesful as a lot of people seem to think, and besides the Saturn all their other systems were basically failures that cost them quite a bit of money. If Nintendo goes third-party BEFORE their broke, then they can still fund the development of great titles.

FYI SEGA had higher profits than Nintendo last year