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

kristianity77 on 06 April 2015
Teeqoz said:
Wright said:

Wouldn't the recoup be substancially more damaging to Nintendo than the profit they already make?

You're assuming expensive R&D doesn't pay off when compared to be a merely publisher, but you can't back this claim with nothing substancial. If anything, R&D on handhelds prove to be a very lucrative bussiness for Nintendo.

Then we have the 30% increase ratio in profit-per-sale software, on which you could argue a Mario game definitively would sell 30% more in other platforms. But what about things like Pikmin? Or F-Zero? Things would be too unpredictable to just simply take the risk.

 

Sure, I don't think Nintendo loses anything by becoming a third-party developer, and I'd actually embrace it, but they're in a confortable zone right now and they have no inmediate need to ever think about that.

Expensive R&D (Research & Development) is a neccesity to make a video game platform. I'd wager the Wii U cost maybe 30 million $ to design etc (at the very least!), so that's 30 million they'd save by being a third party publisher. Like I said in the OP, they deffinitely should continue making handhelds, so no issue there.

My logic for software sales is that none of the fans that currently buy Nintendo games would stop buying Nintendo games just because they go third party, so no games would sell less than if they were on a Nintendo home console, but some games have potential to pull huge numbers as multiplats, such as, as you say Mario, Zelda, Metroid (This could turn into a huge franchise if it was multiplat and marketed right), Mario Kart, SSB, heck, Xenoblade Chronicles X would also benefit greatly from releasing on the PS4 imo.

Nintendos problem for me is that they have literally millions and millions of fans who want to play Nintendo games, but don't want to pay the money to buy the console to play literally 2-3 games per year.  Its just not a sound investment (hence why the console sales are horrible.)

So all thats happening is that outside of the die hard Nintendo fans, they are being left by the wayside.  Like you said, Nintendo have franchises which would be up there with the biggest selling games of all time on the Xbox and PS4 respectively if they decided to release games elsewhere, I have no doubt about that.



PREDICTIONS FOR END OF 2015: (Made Jan 1st 2015)

PS4 - 34M - XB1 - 21m - WII U -12M

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zorg1000 on 06 April 2015

Idk u also have to take into account money they make from consoles, controllers, accessories, and they no longer make 100% back on digital sales.

FY 2012-2014 are the only times that Nintendo has posted losses and alot of that comes from them selling their hardware at a loss for pretty much the first time. Basically as long as Nintendo hardware is sold at a profit than Nintendo makes a profit so I see no need for them to go third party in the near future.



When the herd loses its way, the shepard must kill the bull that leads them astray.

Teeqoz on 06 April 2015
Metallox said:
What about the money that Nintendo makes with hardware? I'm aware that they may not be winning with Wii U, but they may be conscious that a profitable hardware can make much more money than just selling games.

I think I'll add a paragraph about that, although it's a bit difficult because it's very hard to predict what type of hardware they'll go for next. But I can assure you Nintendo makes much more money from their software than they do from their hardware.



tak13 on 06 April 2015
rolltide101x said:
kristianity77 said:

I think at some point they will go third party.  Unless they decide to compete hardware wise with Sony and MS (which would make the platform have more 3rd party titles on) they will just fade into obscurity at least where home consoles are concerned.  Handhelds is a different kettle of fish however.  

So for me they either go two ways:

They put all of their efforts into the handheld market and pull out of consoles altogether 

They keep the handheld market as it is and develop console games for other hardware.  

I don't want them to become another Sega, but Nintendo are rapidly becoming archaic in their approach to everything. 

Nintendo would be fine with a Wii U like console without the gamepad. A cheap "no nonsense console" from Nintendo would sell 30 million easily and would make Nintendo profits.

 

Nintendo is not in direct competition with MS and Sony. They are doing their own thing and once they realize they need to be cheap to succeed they will succeed. 300$ for a Wii U when you can get an Xbox One for 350$...... Very few people are going to take the Wii U.... 

Very true!And this is why a price cut can be benignant(Not miraculous) for wii u and some are not expect it to be...Plus to your comment,''that some want it as a secondary console!:P



Metroid33slayer on 06 April 2015
Teeqoz said:

 

 

What does "Returns" mean?



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rolltide101x on 06 April 2015
tak13 said:

Very true!And this is why a price cut can be benignant(Not miraculous) for wii u and some are not expect it to be...Plus to your comment,''that some want it as a secondary console!:P

I just think Nintendo should shoot for 250$ at launch of all of their consoles (Nintendo gamers do not care about power). It also needs to use the x86/64 platform to make it as easy as possible for 3rd party devs. 

If they did both of those things then they would sell atleast 30ish million consoles and would profit

Nintendo games + some 3rd party + cheap system = profit

 

Anybody who thinks Nintendo needs to try and hit a "home run" is wrong, all it will do is cost Nintendo more money. Nintendo can not compete with MS and Sony on an even playing field



Metallox on 06 April 2015
Teeqoz said:

I think I'll add a paragraph about that, although it's a bit difficult because it's very hard to predict what type of hardware they'll go for next. But I can assure you Nintendo makes much more money from their software than they do from their hardware.

Well, right now they shouldn't make much money from their hardware. After all, they had to cut retail price of 3DS and Wii U supposedly has never been profitable. Would be cool to know what happened in the past though, especially with Wii and DS. 



My bet with The_Liquid_Laser: I think the Switch won't surpass the PS2 as the best selling system of all time. If it does, I'll play a game of a list that The_Liquid_Laser will provide, I will have to play it for 50 hours or complete it, whatever comes first. 

Teeqoz on 06 April 2015
Metroid33slayer said:
Teeqoz said:

 

 

What does "Returns" mean?


I forgot to add a source for that pie chart. http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/02/anatomy-of-a-60-dollar-video-game.html

But it's the expenses that come from games that don't sell, when retailers have to return inventory.



AnthonyW86 on 06 April 2015
zorg1000 said:
Idk u also have to take into account money they make from consoles, controllers, accessories, and they no longer make 100% back on digital sales.

FY 2012-2014 are the only times that Nintendo has posted losses and alot of that comes from them selling their hardware at a loss for pretty much the first time. Basically as long as Nintendo hardware is sold at a profit than Nintendo makes a profit so I see no need for them to go third party in the near future.

Because they miss out on huge amounts of software sales by keeping their games exclusive to a console with a very limited install base. Also they could still make controllers and accessories. They could easily sell Amiibo on ps4/xone for example, plus a tablet controller, motion controller you name it.

Also Nintendo could easily strike a deal with either Sony or Microsoft that would lower or even dismiss any royalty's they would have to pay. 



vkaraujo on 06 April 2015

Hard to say. There are 3 questionable points in your OP.

- You are assuming no Nintendo games would sell less. By stating this, you are ignoring loyalty effect toward the big 3, that no Third Party have to this day.
- You are assuming this wouldn't hurt their HH business.
- You are assuming there would be no brand damage.

But it is a good exercise, i will keep an eye.