With this being a year that, at the very least, will deliver a new system reveal from Nintendo, it should be no surprise that the company may have upped its spending on research and development. Of course, the flipside of the argument is that the hardware will have been concluded in prototype form, at least, for some time, so the bulk of spending could have been in the past.
Nevertheless there's been some eager chatter around a report by market research firm Technavio, which focused on leading companies in the area of motion controlled remote markets. That may sound dull, but the talk is around the firm's estimate that Nintendo has spent nearly $527 million on research and development this fiscal year. That may seems a lot but, actually, that's a lowball prediction.
In Nintendo's most recent Q3 financial reports it reported "research and development expenses" that were only a tiny margin higher than the equivalent figure from the 2014 / 2015 financial year. Its forecast for the year-end total spend (on 31st March this year), which is presumably what Technavio is projecting, was actually higher than the research firm's figure. Nintendo's forecast is for an R&D spend of 65,000 million Yen for the fiscal year, which roughly converts to a little over $582 million.
In general Nintendo's R&D figures only vary modest amounts across multiple years, suggesting that the company is - generally speaking - always researching and considering its future products on a consistent annual basis.
We'll have official figures, in any case, when Nintendo releases its annual financial results in late April.
Thanks to all that sent this in.
[source nintendo-insider.com, via nintendo.co.jp, technavio.com]
You guys seem to be tired. There's errors in this article and the Pokemon one.
Well I remember one of Nintendo's figureheads saying years ago that development of a new console takes around a billion US Dollars, all in all, so this figure isn't that surprising, really.
Remember this article about Wii U R&D sinking profits for the console early on?
And of course, we all know how the Wii U turned out, with the almost total lack of marketing through budget cuts to "balance out" losing profits from R&D. (In other words, self-imposed austerity.) Nintendo isn't spending any less on R&D than before, so they need to be careful not to make the same mistake with NX. Otherwise... we'll be able to say, "You've met with a terrible fate, haven't you..."
I'm not clued up on what is considered a good amount of spending on R&D, is this any more or less than what either Sony or Microsoft spend?
@AVahne Not to mention reporting on a joke as if it were a dead serious announcement. (The Pokemon article)
HA! I was wise to Nintendo's strategy ages ago. Step 1: Hint at new console in unrelated announcement. Step 2: Gather wild speculation and hype from internet. Step 3: Throw hundreds of millions of dollars at RnD to try to make the speculation real.
@FragRed Edit: Hold on, those links for Nintendo and Sony were in Yen, not Dollars, I'll post them again after converting the values. I found an older example, though. This is a chart of Sony and Microsoft's revenue and R&D from 2000-2009:
This is a quick rundown of Nintendo's net sales from 2008-2015:
According to that first link's chart, Sony spent close to 5 billion dollars on R&D every year, and Microsoft spent between 5 and 10 billion dollars on R&D every year. That amount has probably continued to increase. Granted, Nintendo is much smaller than either of them, so they are hit harder by R&D costs, even if the total spent is smaller.
Nintendo's net sales since the DS/Wii days have also dropped off a cliff, so it hurts much more now to keep spending another half-billion dollars on R&D every year, compared to when the 3DS and Wii U first came out.
Some of the best research you can do is ask your fans what they want. It's been a while since I have taken a survey because I haven't had an opportunity to express what I want or how I feel about what Nintendo has done or will be doing. They send me emails and notifcations about products and software they would like me to purchase but they never ask me what I want.Your customers are everything. My current employer Is consistently one of the top Fortune 100 companies every year and the #1 priority is the voice of the customer and our enormous amount of success is because we make their opinions count and we are here for them. We shape our business for them and we destroy our competition. Spend some money on asking, might not hurt.
65,000 million is 65 billion dudez. Save some time.
Uh, think you're at the wrong place value. If Nintendo were spending that sort of money, they'd be bankrupt in a week. Same thing for Sony. Heck, Microsoft would also collapse after a couple of weeks, even with the greatly reduced sum.
I think you meant to talk in millions, not billions.
@PlywoodStick "You've met with a terrible fate, haven't you..."
They'll probably want to walk around with masks to hide their shame if the NX fails and it all blows up in their face again...
But obviously, that is not going to happen. The NX is going to be a wonderful little device and it will sell like hot cakes...
@Donderpants Yeah, I edited the post. When I looked at it again, I noticed Nintendo and Sony were in Japanese Yen, not US Dollars. Which should have been obvious, but I somehow missed that... Woops!
I love the idea of someone's job being to research how much research people do.
@PlywoodStick That edit makes a lot more sense than your initial post. I just spent a good half an hour trying to work out where Nintendo found fifty odd billion a year for R&D 😛
Obviously Sony and Microsoft have other avenues to research into, so that makes sense as for the high costs on the department, which is a relief otherwise I'd be real concerned about the budget Nintendo has.
Words like 'reckons' 'chatter' and the precise estimate of 527 million suggests that this is just another rumour.
Compare it to pre investments for the Wii U and the 3ds and we might be somewhere near.
I agree sadly but it's true. My son plays his Xbox 360 all the time because he can speak to his friends and play at the same time. Meanwhile the Wii Uand 3ds collect dust. Sony will be the winner in the end for him and all of his friends because the topic they bring up daily is they can't wait to get Ps4's. I promote Nintendo to him daily and try to hype him on the NX and Zelda but that ship has sailed. Him and his army of friends are pumped about Ps4.
Less then they normally do.
PS4 and Xbox are popular. That sort of thing is to be expected. It's predominantly adults who rationalize to the extent of playing what they enjoy most rather than what's popular (and even then, most adults just stick with what they know, and many grew up on PSone, PS2 and Xbox).
All you can do is plant the seeds, and later in life they'll come back to Nintendo.
@J9er9er I recently filled in a questionnaire entitled "Researching Research: Why are some GP surgeries willing to be part of research initiatives whilst others are not?"
No joke. That does exist as an actual job.
@PlywoodStick Ah, that would explain the pretty much zero advertising of Wii U and all big Wii U software. Not to mention the wall of silence for months when Nintendo and Wii U hate hit its peak.
A self fulfilling prophecy. Makes me even happier to know Miyamoto has been kicked off the hardware development team.
So, who researches how much the research firm spends on research of research spending?
They have their work cut out for them, that's for sure. I don't blame them for going in different directions, companies have to do that to remain relevant in these fast changing times, but I can't say I'm all that excited about the directions they are taking. I still feel burnt on the Wii U. I bought the system when it was full priced, but seriously, drop the price already. And if the PS4.5 rumors are true, I am done on modern gaming. Which is weird because I've always been a gen or two behind, but for some reason decided to bite with the Wii U and the PS4.. Two major regrets, sorta.
I should have stuck to my scouring the bargain bins for generations from the past instead of jumping in as a new adopter. Won't be doing it again unless there is an F-zero at launch for NX, which I doubt
Not surprising, R&D is not an inexpensive proposition and the real numbers will probably be higher.
@FragRed Lol, yeah, I screwed that up big time. Here it is again:
So after converting from yen to dollars, that's between about 465 and 642 million dollars spent each year on Nintendo's R&D, from 2011 to 2015.
After the yen to dollar conversion, that's between about 3.8 and 4.2 billion dollars spent each year on Sony's R&D, in the same time period.
And finally, between about 9 and 12 billion dollars for Microsoft's R&D, in the same time period.
Combined with the previous post, it seems that everyone's average annual R&D costs have significantly increased over time, but Nintendo's and Sony's have leveled out for the time being, except during big console conception years, while Microsoft's keeps rising with every year regardless.
In particular, the forecasts in this NL article of Nintendo's recent R&D costs are in the outer ranges of the 2015 R&D cost in the marketwatch link above. It dropped down from 2014's ~642 million dollars in R&D, which means 2014 was probably the big NX conception year, while 2015 was for prototyping.
What this means is that NX may be more likely to come out at the end of this year, rather than the beginning of next year.
This is standard fare for research and development but the real question is if it will pay off big this time! Not too much longer now until the curtains are lifted!
@liveswired It pains me to say it, but yeah, Miyamoto leapt off the deep end with the Wii U Gamepad. It probably should not have had a touchscreen, and instead should have just been more like the Pro controller. A circular clickable touchpad could have replaced the d-pad, while the middle of the controller would retain the motion control features and NFC reading. Almost no Wii U games would have suffered from this.
This would have saved money to put into making the Wii U a slightly more powerful and attractive console, which may have been able to entice 3rd parties to make more games for it, instead of just late ports and low selling exclusives. (And with less R&D involved, Nintendo would have felt comfortable spending more money on advertising, with less lost profits to recoup)
Any of that expensive research tell Nintendo that the casual market for console gaming no longer exists and it's never coming back and attempting to pander to casuals or recreate the original success of the Wii is a lost cause?
Hopefully some good things come from it.
@Project_Dolphin Well, like @DarkKirby and others have said many times before, the so-called "casual" market captured by the Wii already moved on to mobile and tablets by 2012, so it would have been a logical decision to make a return to what core gamers would have preferred. It was a total waste of effort to try to replicate the Wii, when they should have tried to make the Wii U it's own console... and probably named it something different, too.
The Gamecube didn't just get "some third party games here and there," it got the lion's share of the same multiplatforms as the PS2 and Xbox! And only the idiots labelled it as a "kiddy console." Most core gamers recognized it had good games, but Nintendo squandered their opportunity to get into online infrastructures, while Xbox and PS2 went ahead.
It's really impossible to get useful information here. R&D costs can be capitalized and expensed over time. Some those expenses are probably Wii U and 3DS development costs as well as DeNA and MyNintendo in addition to early NX costs. After NX is launched their base R&D will likely be higher.
@Project_Dolphin I dunno, one of my longtime friends is such a hardcore PC gamer that he even gave up on the PS4 and XB1, yet he wants a Wii U for games like Mario Kart 8 and Pokken Tournament...
How do we know for a fact that core gamers don't want to play Nintendo games? Because of low sales? Is that all?
Well, since Nintendo didn't do jack to advertise or let people know they exist, and their online infrastructure sucks, and their social features are inadequate, of course no one bought their stuff...
It doesn't matter what their principles are if no one knows they have things on offer, or if it just isn't comfortable to use. They don't have to satisfy someone else, but they do have to at least match or surpass their competitors...
Why are people always so surprised when Nintendo spends a lot of money on R&D? Especially when it peaks early on. They're literally in the business of R&D.
When Nintendo is spending more on R&D? It's not like the basement of Wayne Enterprises. It's literally them paying the wages of the guys who make games. People to build game engines, developer tools and so on. People creating assets for the next big AAA title they're working on. And yes there is also hardware R&D some ideas that don't make it to market. But at the end of the day it's all about making games.
So when you say "Nintendo should spend less money on R&D and more on marketing". Well. You're literally saying they should make less games and more ads.
Lol @ "sixtyfive thousand million".. Aka a number made up by kindergarteners.
It's OK, I still love you NL.
Hopefully they learned a few key things about online play and how the gaming market has changed as the Wii U woefully underperformed because, frankly, they failed to judge the current gaming market. While innovation is nice it takes a good deal of game variety for people to line to buy your console and the Wii U had a distinct lack of games. All too common was a 3-4 month drought (this lasted the entire life of the system which is unacceptable regardless how you try to spin it) of NO releases, and I don't even mean major ones, I'm talking no new games period.
Hopefully Nintendo has a system with decent specs, good online with party chat, a proper account system, and a controller that doesn't alienate users by a) being underutilized and b) driving up the price of the console that clearly made compromises to suit the controller.
@Project_Dolphin Well, what would you suggest? Nintendo has already started chasing the mobile market to chase the "casual" market, but what about the NX specifically? Can they find a balance this time, or will they just get stuck again?
@jbopatrick that's not an error, it's a way of talking about larger numbers. Very common in companies that deal in them. Look at any earnings statement.
Seeing what Nintendo reported in 2015 as gross sales as well as net operating income, along with their projections for 2016, .5 billion $ in R&D is no small matter.
I remember when I was younger, I was always confused by the R&D on the door in DK64. It took me quite a while to figure it out.
I see no reason why Nintendo would have to change their focus when it comes to developing their own games. They need to create an environment conducive to third-party development. For years now they've been crippling their machines chances of competing. The N64 was greatly held back by having cartridges, the Cube was hindered by its storage medium, its controller lacking a couple of buttons and lack of online, Wii was greatly different to its nominal competition, Wii U was underpowered and had a controversial controller.
Saying Nintendo couldn't sell to self-titled 'core gamers' is only an opinion as there isn't a case study that allows us to know why their machine struggled. Nintendo have never put out a machine that matched the competition (in technology, storage options, online services, social connections etc.) and attempted to differentiate itself through Nintendo's games. They always have to have something else to hide behind, as if they're not confident enough in their games.
I doubt we ever will see that machine but until we do there's no way to know how r would do. There certainly isn't any evidence that says Nintendo would have to change their own games in any way to compete if they had full third-party support and a competitive machine.
But you're supposing that it has to be one or the other, that it would sell to either the dudebros or Nintendo players. If Nintendo makes a console that appeals to Nintendo fans Mario isn't going to sit on the shelf, regardless of what the "core" gamers are playing. What isn't rocket science is what Sony manage to do each generation. They've realised that the 30-year-old male playing COD may well have kids, a partner, family get-togethers, the occasional multiplayer session with friends. That's why though they market at the core first, they (with help from third-parties) also put out software for everyone. They've figured out that Battlefield, Little Big Planet, Singstar, Lego, Final Fantasy, and FIFA/Madden can coexist on the same machine and if they do, that machine will do well.
@Project_Dolphin so what if they are "secondary" they still exist dont they?
Nintendo seems to be the only company in the world that spent billions on researching FUN.
It doesn't matter whether they're secondary or not, Sony is selling to the mass market and doing it without it being their focus. Theres no reason why Nintendo can't do this. It doesn't mean them "having to change....their gaming principles" or that "Their IPs would be negatively impacted" by "going for improved console sales". Theres no evidence for that at all.
If people just "came back" to Nintendo, their sales and market impact would be better. The reality is that no one is coming back to the console, but people who did grow up with Nintendo are moving--permanently--to Playstation, Xbox, and/or Steam.
There is no logical reason to assume people will just "return" to the company, especially after spending 4 generations continually falling behind in every capacity. Sales, market impact, innovation, 3rd party support, game libraries, longevity, etc. Only the Wii and DS had sales, and that was only because they were flukes, fads. Even on their systems with sales, they lost tons of 3rd party support and they failed to create a long-lasting impact on the industry.
No one is coming back to Nintendo. The only thing happening is that people are out-growing Nintendo.
On what do you base that totally unwarranted assumption?
Nintendo almost never spends time or money promoting 3rd party games, and this has been one of their problems for generations. There was an obvious difference in how Nintendo marketed their machines compared to Sony or Microsoft. And the biggest difference was that Nintendo almost never promoted 3rd party games. MS and Sony, on the other hand, often did ads with many 3rd party games shown, or fully supporting a single major release.
This is just another way Nintendo is behind the times in modern gaming. They still think they can just magically go it alone forever. Instead, they are becoming more marginalized each generation.
Cheerful as ever I see.
I came back. My brother came back. My co-worker came back. So, ya. Believe whatever.
You don't outgrow fun games. No such thing. Taste and preference can certainly change with time, but that's not the same thing as outgrowing.
And I'm not sure what you're angle is here. Trying to spin Nintendo to be as much of a failure as possible?
I don't care. Talk all the trash you want. I'm still playing their games. I'm still loving every second of it. So I really don't care what you or anyone else says or does. And nomatter how much you spin it to make it seem no one cares about Nintendo anymore, I still care. And 60+ million 3DS and Wii U owners still care. Those are just the facts.
Nintendo has been on a decline for some time. Yes. And their platforms aren't as successful as they used to be. No. But let's not act like no one cares about Nintendo anymore. Or that no one ever returns to Nintendo after they've matured and gotten past socially popular gaming. There are still tens of millions of gamers who value Nintendo's games, who enjoy the unique titles they release, and don't let a lack of bells, whistles and cutting edge horsepower deter them from what matters most to them- games they love.
Hopefully that R&D money will be put to good use. Nintendo could do with the NX being a huge success and attract both new and old customers.
It's too early for doom and gloom. There's still little known about the NX, and for all we know it could end up being fantastic.
@Quorthon I just had a look in your profile at the comments you've made and 100% of them are Nintendo doom-and-gloom, putting things down, even positive things, and generally being extremely negative. From what I understand you released some game to positive reviews but virtually no sales and you seem sour about it.
So tell me, why on earth are you still here? Clearly according to you, Nintendo has gone down the craphole, one of which it will apparently never recover from ever. Nintendo has nothing left to offer you. Why stay here then? Why haven't you left for greener pastures.
@Quorthon pops into NL threads like:
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