Teeqoz said:
First of all, this is not a thread saying Nintendo will or should go third party. This is a thread to shed some light on what would change, and the goods and the bads of Nintendo going third party. I would also like to note that this is strictly about them going 3rd party on home consoles, but they would/should keep on making their own handhelds.
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.
However, if Nintendo we're to go third party, they would lose out on those extra 7 dollars per copy. To recoup that loss in revenue, they would have to sell 26% more copies (at the same price of course, 60 dollars). So If DKC TF sells 1 million on the Wii U, it would have to sell 1.26 million on XBO/PS4/PC to make the same amount of cash. Personally I think Nintendo will get a bigger increase in software sales than just 26%, but that's just speculation.
That's not the only thing Nintendo would lose though, as they would also lose 3rd party royalties. As I'm sure you realize though, those royalties are not likely to be too substantial for them (on the Wii U). 32.3 million (give or take) of the 45.64 million software units sold on the Wii U are first party games, meaning that a whopping 71% of the games sold on the Wii U are Nintendo published. If we assume the remaining 29%, or 13.34 million games sold on the Wii U cost on average 40$ (seems fair, right?) and that it follows the same ratio of the above chart (7/60 -> 12%), that that should be about 62.4 million in revenue for Nintendo, just from third party royalties so far this gen.
Back to the point, the Wii U's 1st to third party ratio is ~2.4, meaning that for every third party game sold on their syatem, 2.4 first party games are sold. I'll try and translate that into revenue:
1 third party game @40 (remember we assumed that was the average price?) = 4.8 dollars in revenue for Nintendo.
2.4 1st party games @60 = 81.6 dollars in revenue for Nintendo
Total=86.4 dollars in revenue for Nintendo, on average per 2.4 first party games sold.
To recoup that as a third party publisher, the would have to sell 81.6/27, or roughly 3 games, instead of 2.4 games. And 3/2.4 is 1.25, meaning that they would have to sell 25% more. Now you may remember that when I said even when ignoring third party royalties, they would have to sell 26% more, but here's why it's now 25%:
Third party royalties on the Wii U are so insignificant that my roundings from 3 to 3.02222.... and such have nullified it out. But to be kind, instead of 26% more, let's say 30% more, to be on the safe side.
Aka 1 million on Wii U = 1.3 million on XBO/PS4/PC
Then there are a few more things they'd lose out on, namely profits from hardware and accesories. This one is kinda iffy, because it's hard to predict what type of hardware Nintendo will go for and such, but it's also a sort of "risk vs reward" thing when it comes to hardware. First of all the research and development associated with launching a new platform costs money, which they wouldn't have to spend if they didn't make their own (home) consoles. They also wouldn't have to maintain the online infrastructure for the platform, but unfortunately I have nothing to go on to give any remotely precise numbers. It's risk vs reward, because on one side, you could make a decent chunk of money from hardware, let's say 30 dollars per game console, which if they sell 30 million consoles next gen means 90 million. All of this has to be recouperated through saving money and selling more games of course. They could also still make accesories, although they would no doubt sell as well as they do on their own systems. But the main thing is that they will no longer have to risk that a game is being held back (sales wise) from a platform selling below par. Amiibos would still sell great, and is a part of their business that would benefit greatly from Nintendo going third party, because Amiibos would certainly sell better if they did this, and Nintendo won't have to share the profit from Amiibos with anyone.
But there's also other ways you make money on as a third party publisher. There are marketing deals, which can benefit Nintendo in both that they will get help in their game marketing (which, let's be honest, has been lacking this gen) and they'll also get the marketing for free, in fact, they'll probably even be paid by both Sony and MS for exclusive marketing rights.
They also won't have to go through a lot of expensive R&D each time they develop a new system.
So, after reading this, what do you think? Would it be beneficial for Nintendo to go multiplat on the home console scene? Would they sell at least 30% more copies if they released on more platforms?
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