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Topic: Is Nintendo the only company making a profit nowadays? Something is wrong here....

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eugenewrayburn

1. Posted:

Why is Nintendo the only company doing REALLY well? Even mega publishers like EA - in the midst of a huge gaming boom - are experiencing losses. Meanwhile, Nintendo's profits are at record levels. (Of course MS has RROD to eat their profits, their rushed/botched hardware, and Sony has struggled to get PS3 profitable....it cost money to build a giant trojan horse, and not everyone can afford to pull it through their gate...)

But did the industry get too stagnant, too repetitive, too PREDICTABLE?

Nintendo certainly thought they were too predictable, because they have developed New IP's like the devil is at their heels....

Nintendo :http://www.edge-online.com/news/nintendo-reports-record-sales-and-profit Net sales rose 9.9 percent to more than 1.83 trillion yen (£12.5 billion/$18.5 billion) as operating profit swelled 14 percent to over 555 billion yen (£3.7 billion/$5.6 billion).

EA : http://www.edge-online.com/news/ea-losses-hit-109-billion-in-... The company posted an annual net loss of $1.088 billion, compared with a net loss of $454 million for the prior year, thanks largely to a series of charges and impairments totalling over $800 million.

I think EA is pretty generic game company nowadays, and do not egg me, I thought Boom Blow was overrated - it's so EASY. World of Goo is a much higher quality and pleasing physics puzzler, imho.....

Hardcore, casual = marketing. The real divide is between arcade and narrative games.

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irken004

2. Posted:

my opinion:
wii games:$29.99-$49.99
PS3 Games:$29.99-$59.99
360 games: same as PS3 games

DS games: $19.99-$35.99
PSP games: $19.99-$45.99

Nintendo is cheaper!!! that's why i got the wii and DS

Backloggery

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mastersworddude

3. Posted:

I agree with irken, because price comes into play..

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Moai_Head

4. Posted:

Nintendo's business model for a long time has involved being able to sell every piece of hardware at a profit, unlike the likes of Microsoft and Sony who operate on what is referred to as a "razor/razor blade" system where you sell the console (ie the "razor") at a loss and make up the difference through peripherals like controllers, as well as software (ie "razor blades"). This is why the Gamecube was still profitable despite being outsold by the Xbox and PS2 and is why the Wii is so ridiculously profitable now.

Also, bear in mind that first-party Nintendo software very rarely gets a price drop.

Moai_Head

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eugenewrayburn

5. Posted:

XBOX and GC were nearly a wash as far as install base, well behind the casual PS2 and it's legions of EA fans - of course if you look at the first party software sold by MS, SCEA, and Nintendo in that same span, well.......that is not a wash, but a wash out.

Nintendo is kinda like soul patrol ' We'll do it all, everything, on our own. We don't need, anything, or anyone, if I lie here, if I just lie here, will you lay with me and just forget the world,'

Hardcore, casual = marketing. The real divide is between arcade and narrative games.

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eugenewrayburn

6. Posted:

But your other ocmment, well 'why?' does Nintendo software rarely drop in price, and every other company, including EA does.

Why is their brand so much stronger???

Hardcore, casual = marketing. The real divide is between arcade and narrative games.

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Nanaki

7. Posted:

eugenewrayburn wrote:

But your other ocmment, well 'why?' does Nintendo software rarely drop in price, and every other company, including EA does.

Why is their brand so much stronger???

They have a lower turnover of games than EA do, and most of Nintendo's main titles only have one incarnation per platform. Metroid and Pikmin are casing examples of Nintendo titles going down in price when sequels came out, but there are others that went down (Mario Sunshine). But the long and short of it is that titles such as Mario Kart are usually only one per generation, and Nintendo have no need to reduce the price - supply and demand is always in their favour.

EA, however, release a string of titles and sequels that are closely related, so it is only logical that the must reduce the price on the older games.

Also, on a side note. You can use the edit button to add to a post you have made (you don't need to reply to yourself)

Nanaki

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eugenewrayburn

8. Posted:

I just thought it was because EA's games were not as good.

Hardcore, casual = marketing. The real divide is between arcade and narrative games.

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Nanaki

9. Posted:

eugenewrayburn wrote:

I just thought it was because EA's games were not as good.

Well, that's intrinsically tied to games with a higher turnover. Less is expected from them, and so they satisfy the market by releasing titles with greater frequency. If EA adopted the mindset of Nintendo, they may be able to emulate their success, but EA are a reputable software giant and they are one of the more stable seeming companies out there (although I bloody wish they would release a new rugby game!)

Nanaki

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City_Of_Delusion

10. Posted:

MS and Sony make a loss (and in the case of Sony, a pretty big one) for every console sold. Nintendo make a profit for every console sold. EA don't make consoles.

That said, apparently sales are starting to slack, largely because of with the lack of games Nintendo's releasing recently, apparently. It's enough to spook Teh Stock Market.

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madgear

11. Posted:

To me it seems this all started with the start of the Dreamcast. Sega made a monster of a machine before its time and sold it at a loss. As far as I'm aware, this is the first time this happened. Of course that meant Sony also had to release a technically superior machine in order to compete - as did Microsoft.

To be honest the Wii is where gaming technology should be at the moment from a business point of view. It uses currently affordable technology and sells it for a profit, yet is also seen as affordable to the consumer. It's just good business sense.

The PS3 and the XBox 360 use technology that costs a lot more than that of the Wii's and, in order to make their machines affordable to the consumer, they also have to sell them at a loss. Come future generations, if Sony and Microsoft keep trying to out-do each other technically, then they're going to be loosing more and more money.

Whilst EA still sell bucket loads of games, they're not doing so well financially because they're developing for more than JUST the Wii, unlike Nintendo. Developing games for the PS3 and 360 costs a lot more - so, for example, FIFA on the Wii will generate more profit for EA than FIFA for the PS3 or 360 will even if they sell the same number of copies for each format.

Of course if EA just developed games for the Wii, they still might not make such a great profit. If the market is flooded with games, this will cause a problem too - games take a lot longer to play than watching movies, they cost more and people buy fewer. Nintendo's games, however, are for their own machine and have a stong following. Each new Zelda, Mario etc will sell well - especially on a machine as popular as the Wii. FIFA may also sell well, but will any of EA's platform games or shovelware? Not as much as they'd like.

Basically only Nintendo seem to have a good business model at the moment, with the exception of one or two developers. Something needs to be done or we're going to be seeing a lot of games companies disappearing.

madgear

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Adam

12. Posted:

Don't forget the Saturn and Virtual Boy. I don't think either did well (certainly not VB). And if we are counting non-standalone hardware: N64DD and 32X. I don't think any of these were profitable. Poor Sega. I don't understand how they stayed in it as long as they did. There are probably quite a few less popular examples, too. CDi? 3DO? Jaguar? Not sure about any of these, just guessing. But I am absolutely sure Dreamcast wasn't the first sold to a loss.

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To the bear arcades again.

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Jeph

13. Posted:

Nintendo made $ off WII since launch day and hasn;t dropped the price. That combined with the hype of a totally new type of experience is why they are the only ones making $.

Jeph

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madgear

14. Posted:

__adam wrote:

Don't forget the Saturn and Virtual Boy. I don't think either did well (certainly not VB). And if we are counting non-standalone hardware: N64DD and 32X. I don't think any of these were profitable. Poor Sega. I don't understand how they stayed in it as long as they did. There are probably quite a few less popular examples, too. CDi? 3DO? Jaguar? Not sure about any of these, just guessing. But I am absolutely sure Dreamcast wasn't the first sold to a loss.

We're not talking about consoles that just didn't sell. There's a big difference between selling a console for a loss and not selling one at all. Sega could have made the 32X to make a profit with each one sold, but they're still not going to make any money if no one wants to buy them and they're just piled up in a warehouse somewhere. Two completely different scenarios.

madgear

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Adam

15. Posted:

Sorry, I don't understand the difference. That explanation is a bit unclear. If you're talking about consoles that sell but are priced cheaper than they cost to produce in the hopes that software sales will make up for it, doesn't that go for most consoles? That is what I've read, anyway, but I wouldn't know.

Come on, friends,
To the bear arcades again.

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madgear

16. Posted:

Yes it does go for most consoles now but it didn't used to. The PS3 and 360 are sold at a loss and make their money back from software sales - the Wii, however, is sold for a profit. That means it sells for more than it costs to produce.

Failed consoles like the 32X, CDi, 3DO and Jaguar are simply failed consoles. Whether they were sold for a profit or at a loss makes no difference - they still lost money as no one bought them. Unsold stock will never make a profit.

Machines from older generations were always sold for a profit like the Wii so this didn't use to be much of an issue in the past. When the likes of the Sega Megadrive and Super Nintendo were released, they'd have cost you close to £300 on release and that was hardware nowhere near as powerful as what you found in the arcade at that time.

madgear

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nintendoduffin

17. Posted:

I'm pretty sure the SNES was only £110 when it came out (or £150 with Mario World).

nintendoduffin

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madgear

18. Posted:

Actually I think you're right - I'll take that last bit back then. I was probably thinking of when a school friends got that much spent on them for a gaming machine by their overly generous parents back then - was probably Amigas (or Mega CDs).

madgear

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gameaddict247

19. Posted:

Nintendo remembered these are games consoles and also should not cost a small fortunes -ok so price drops are making things more even now.

My You Tube Video Game Reviews

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warioswoods

20. Posted:

I'm bothered by the strategy of selling at a loss, and in some ways I wish it could be better curtailed through effective regulation, but that's never going to occur.

The way I see it, there are two levels of selling at a loss:

(1) Selling the console at a marginal loss with the expectation that software and peripherals make up for and exceed it. That's annoying to me somewhat, since I like to see technology that actually keeps pace with real affordability up front (I hate phones whose technology is far too costly but that recoup this through requiring your soul in a service plan).

Much worse, however, is (2), selling the console at a substantial loss not only in order to make it up with software but in order to push some larger agenda beyond the business of video games. Microsoft clearly has a grand scheme in mind that involves the relative ease of porting between the Xbox line and home PCs, the whole Games for Windows initiative, and the real point of it all, which is to bolster Microsoft's popularity with the gaming generation so that they'll be retained on the Windows side of the aisle. Sony's rollout of PS3 was utterly disgraceful as far as I'm concerned, selling it at a price that is well beyond what any console should cost, and even then selling at a huge loss due to all the tech crammed into the box. Their strategy was to make sure that they won the Blue Ray format war, and it evidently was quite successful on that point. I just find it incredibly problematic, not to mention damaging to proper and equal competition within the business of gaming, for these companies to be pushing out higher spec technology than is really affordable if you actually balance your ledger with each sale, but being enabled to do so by larger agendas that originate from other parts of these massive multimedia companies.

Call me overly stubborn on this point, but I simply won't ever buy a gaming system from a company that is not primarily a gaming company, or that has some further agenda attached to it that subsidizes its features. I'd love for Microsoft and Sony to have their gaming divisions severed from the rest of the company, or for another strictly-gaming company to enter the fray alongside Nintendo, but it doesn't seem likely anytime soon.

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