Well, uh, still a dumb move for me, Ninty.

Full story below.

Nintendo Region Locks Consoles To Get More Hardware Sales, Says Mitchell Corp Boss

Posted Tue 23rd Sep 2014 18:00 by Damien McFerran

"They want more people to buy their hardware"

Mitchell Corp founder Roy Ozaki thinks that Nintendo's region locking policy has more to do with shifting additional units than it does with controlling releases in different territories.

While Nintendo has always exercised some kind of regional lock in its home systems, its portable devices have traditionally been region-free — which makes sense when you consider that people can take them all over the world. However, this all changed with the 3DS, which is only capable of playing games from the territory in which is was purchased. Even the New 3DS — which is due out in Japan next month, and in the west next year — will be region-locked.

We've discussed the whys and wherefores of region locking before, and Nintendo has even gone on record to state why it chooses to use this approach when its rivals — Sony and Microsoft — have all but abandoned it.

However, Ozaki — whose company has enjoyed a very close relationship with Nintendo over the years, producing exclusive titles such as Tokyo Crash Mobs, Polarium and Magnetica — feels that the real objective behind locking out games from other countries is to sell more consoles.

Speaking to John Szczepaniak in his excellent book The Untold History of Japanese Games Developers, Ozaki explains his perspective on the matter:

John Szczepaniak: I haven't bought a 3DS, because Nintendo put region locking on it. What do you think?

Roy Ozaki: That's to get more sales. You see, Nintendo is a hardware company. They want more people to buy their hardware.

JS: So you think it's deliberate, to encourage people to buy multiple machines?

RO: Yes. Nintendo has a lot of Kyoto University graduates. So you've got the best brains in there. As a matter of fact, I'm on pretty good terms with the guy that comes out with those kind of ideas for Nintendo.

JS: Really? Who is the guy?

RO: Higashiyama? I don't know, they're like banks. Every three years or so they move. Anyway, Higashiyama really helped us a lot. With a lot of things. Really nice guy.

JS: So Higashiyama came up with the idea to region-lock the 3DS?

RO: Probably, it's all on consensus.

Do you think Ozaki has a point, or is the reasoning behind region locking a bit more complex than that? Do you think the opposite is true, and that Nintendo is likely to sell less systems because of this approach, and not more? As ever, the comments section is your friend.

They should know it also prevents many from buying the system. I dont get the point about Kyoto university graduates. Those graduates don't ensure smart decision will be taken.

Ah they're relying on academics. Newly graduated ones at that. That explains a lot of Nintendo's problems.

I don't think so...

I believe it is the opposite, making more games accessible would give people more reasons to buy the system instead :S

I can't argue against those Kyoto University graduates... Damn it! They always outsmart us common people with those fancy papers.

Yeah. My bet is that these people simply don't understand the market.

I know I'd do the same thing if all I had was an MBA and nothing else.

My bet is that this guy is full of it, and Nintendo's reason for region-locking has nothing to do with hardware sales, since Nintendo makes a lot more off their software than their hardware (especially with the 3DS selling at a loss initially). And before someone points out revenue, I'm going to point out that hardware profit is unit revenue minus unit cost minus development cost, and hardware unit cost is quite high, whereas software profit is unit revenue minus development cost - so selling more units of software boosts profit significantly, whereas boosting hardware sales only slightly boosts profits.

There are a few reasons why Nintendo might be region-locking. It could even be a perceived opportunity to make more money through regional pricing differences. But it's not because they think people will buy more systems, I'm about 99% certain of that.

Ultimately the best option is to remove region locking. However I have seen the impact its had on local game stores due to price differences.

Perhaps a middle ground could be found where games that are released in every region are locked a games that come out in some regions are not locked allowing people to import them.

That doesn't make any sense. If anything region locking leads to fewer systems being bought.

Read the bolded, and you'll get why I put it in!

It's still an anti-consumer decision to give out needlessly high prices in PAL regions (though sales taxes are different), and starve them of some games (localization  perhaps?), though.