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Forums - Gaming Discussion - The financials behind Nintendo going 3rd party

vivster said:
sc94597 said:

They only make/publish niche games to sell hardware, was what I was saying. Why would Nintendo invest in Fatal Frame, Bayonetta etc  - when they can invest in vastly more profitable games? The answer is: to diversify their library, and sell hardware so that their big series can sell to more people as well. Games like Fatal Frame and Bayonetta will lose them money unless they have another purpose besides the revenue they make exceeding the costs to make them. They invest in these games because they know that there might be future benefits for doing so. This isn't excessively cynical at all. It's the reality of the matter. 

So what? These are Non-Nintendo IPs. If they don't pick them up somebody else will. I mean there are still 2 other platform holders desperate to sell their hardware. And if no one picks them up they're obviously not worth it. The absence of these niche IPs will not be noticeable. Or do you miss the thousands of other dormant niche IPs that Nintendo hasn't been picked up yet?

Yeah just like they did before with Bayonetta 2 and Devil's Third. Oh, wait...

And yes I miss them. I'm yearning for a new F-Zero, any Mario Sports title (Mario Smash Football/Mario Strikers in particular), I loved Chibi Robo and I really hope a new Paper Mario and Metroid will be revealed at E3, just to name a few.



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Ka-pi96 said:
Miyamotoo said:

From business perspective,
they have full control of their entire gaming business with their own hardware and software, they always have profit on each sold console (reason why they still don't have Wii U price cut), and they have very large profit on console controllers/accessories (Wii U Pro/Wii Remote are $60 and they cost them around $20), and almost every Wii U owner have some extra controller (for my Wii U I have 1x Wii U Pro, 3x Wii Remote and 1x Nunchuk).

Definitely made a loss on Wii Us sold for awhile, I think they still do even. I believe they also made a loss selling 3DSs as well for awhile. So no, not always.

They have loss on Wii U first year, they have profit in 2014, 3DS maybe was selling at loss right after price cut for a while, but that nothing if compare that with Xbox (especially Xbox) and PS consoles which sales years at loss.



Nem said:
Ka-pi96 said:
Nem said:
I dont know how anyone can even sugest this after we see the case study that is SEGA. It was the worst decision ever.

Was it? They were nearing bankruptcy when they were still making consoles. They went third party in 2001 and now they are still around 14 years later. Considering if they had kept making consoles they likely would have went bankrupt and wouldn't exist anymore I'd say that was a good decision.

Besides that, on the game quality front I'd say they are now better than ever!


You consider this staying around? They retreated to mobiles because they are so incompetent at everything they do. They lost all their talent. It would have been best to just bankrupt. They just went for the slow death instead of the quick one. Now instead of looking at them with nostalgia, we look at the with contempt.

Also, Nintendo is nowhere near banktupting atm. Completely different situation.

Errr... i couldnt disagree more with the last statement. I would like to know which game they make you think is particularly good.

The fact that Sega was almost financially insolvent meant going 3rd party was a matter of survival, not a choice. The time to go 3rd party is when the choice is made freely and on the basis of a company that is financially sound, can continue to employ its most creative and talented people and can afford to invest in top quality games. And even with all the negatives with Sega's financial situation they have made some top quality games since going 3rd party. Valkyria Chronicles and Yakuza immediately spring to mind. They've also made some idiotic decisions, like VC2 and 3 going to PSP. They've also collaborated with Nitnendo on some successful projects like the Mario and Sonic series of games.

Nintendo would keep its best hardware people too by staying in handheld hardware, where all of their hardware sucess has been over the last almost 20 years apart from the fleeting Wii years.

I think Nintendo will have one more throw of the home console dice, and if they can make something next  gen that does even half as well as Wii they'll stick with it. But if they have another GC/Wii U I think they'll walk away from home console hardware.



“The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.” - Bertrand Russell

"When the power of love overcomes the love of power, the world will know peace."

Jimi Hendrix

 

Even if Mario Kart sells 10 million multiplat, it won't make as much money as if they released on their on system and it sells 4 million.



Ka-pi96 said:
XanderXT said:
Even if Mario Kart sells 10 million multiplat, it won't make as much money as if they released on their on system and it sells 4 million.

No, it would make much more...



Like how much? It has to be at least x5 for Nintendo to even consider making it multiplat.

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Teeqoz said:

I'm basing it off this. As you can see, the publisher gets most of the revenue, while the platform owner gets a little bit in royalty. Currently, both of these are Nintendo, so Nintendo currently get 27+7 aka 34 dollars per 1st party 60 dollar video game sold.

 

You should look at the data source and think of what they were trying to suggest with the breakdown they presented, Onlive were trying to give them impression that retailers took a far greater slice of the cake for one thing so they could slip in the option of providing another means of getting the game from Publisher to the consumer, based on the fact that the onlive service failed, financially and from a market share point of view I think you should consider their breakdown of how the market works to have been flawed from the get go, as it has been said, no retailer makes $15 dollars from a new game.

The only way at a stretch could you say that a retailer could make $15 dollars from a game sale would be if the game sold for $60 dollars with a $5 cut then since it is a physical game which can be resold they would assume the retailer buys it back at a point later down the line for $10 and resells it again for $20 making it up to $15 if you take out the overhead envolved in doing that move, again tho, main point is the Data came from a group who burned money like it was going out of fashion, shouldn't be quoted in a suggestion of good business ideas.



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ganoncrotch said:
Teeqoz said:

I'm basing it off this. As you can see, the publisher gets most of the revenue, while the platform owner gets a little bit in royalty. Currently, both of these are Nintendo, so Nintendo currently get 27+7 aka 34 dollars per 1st party 60 dollar video game sold.

 

You should look at the data source and think of what they were trying to suggest with the breakdown they presented, Onlive were trying to give them impression that retailers took a far greater slice of the cake for one thing so they could slip in the option of providing another means of getting the game from Publisher to the consumer, based on the fact that the onlive service failed, financially and from a market share point of view I think you should consider their breakdown of how the market works to have been flawed from the get go, as it has been said, no retailer makes $15 dollars from a new game.

The only way at a stretch could you say that a retailer could make $15 dollars from a game sale would be if the game sold for $60 dollars with a $5 cut then since it is a physical game which can be resold they would assume the retailer buys it back at a point later down the line for $10 and resells it again for $20 making it up to $15 if you take out the overhead envolved in doing that move, again tho, main point is the Data came from a group who burned money like it was going out of fashion, shouldn't be quoted in a suggestion of good business ideas.


A guy who worked at some retailer actually confirmed  the 15 dollar thing himself in this very thread. (or he said it was pretty darn close anyway) But actually, the smaller the retailer cut is, the more financially beneficial it is to go 3rd party anyway

 

Imagine if the retailer cut was 35 (which it of course isn't). That would mean that there would be 7 dollars for each game sold as a third party, while they would get 14 dollars per game sold as a first party. So there you would need to sell twice as many copies as a third party vs first party. Now, if the retailers got nothing from each game sold (which also is an extreme, but I'm doing this to make the concept simpler), then that would mean Nintendo got 49 dollars per game sold (at 60 dollars) vs 42 dollars per game sold as a third party. In that case, they'd only need to sell 17 % more copies as a third part to make the same profit. So basically, the smaller the retailer cut the better.