Is Nintendo getting squeezed out?

[g35er]

Every generation, they continue to lose market share. NES they were 90%+ and now what is it, 20%?

We know that MS and Sony will likely lose money or at best break even for every 360/PS3 sold. We know that Nintendo in the last couple of Generations has undercut their competition's price. If they have to do this again, can they afford to lose that much per console? By the time Rev releases, 360 might have a price cut and if Rev releases later than PS3, Sony's system might also have a price cut.

They're profitable now and yes, it's software that makes profit, but you still need to push lots hardware to sell the software. Are they turning into an Apple? I'm seeing their console something like the Macintosh and the Gameboy like an Ipod. Just like Ipod is saving Apple's rear, it could be that Gameboy will be the only thing really keeping Nintendo afloat.

Nintendo is the last pure Video Game company in the hardware business after Atari and Sega left. Is it inevitable that they'll also get squeezed out?

 

[Carl B]

My vote: no. I see Nintendo sticking around for quite a long time. And even if one were to fall in line with your Apple analogy, Apple's still here, are they not?

 

[ralexand]

I'm sure they will have something that will please their fan base.

 

[g35er]

Of course Nintendo and Apple are dif companies so the analogies aren't perfect. But do you see Nintendo eventually just making software and Gameboys? If the trends continue, I see it as a possibility.

 

[Carl B]

Of course Nintendo and Apple are dif companies so the analogies aren't perfect. But do you see Nintendo eventually just making software and Gameboys? If the trends continue, I see it as a possibility.

Why would they though? GameCube is profitable for them (get ready for this to turn into a monster thread), and as long as an operation is profitable, why would it be discontinued? I see Revolution as being more rather than less successful for Nintendo as well - the fact that you can access the existing library of prior N consoles alone will sell me on it.

 

[Evil_Cloud]

Of course Nintendo and Apple are dif companies so the analogies aren't perfect. But do you see Nintendo eventually just making software and Gameboys? If the trends continue, I see it as a possibility.

I am sure the market will look a little bit different next time around. Nintendo can't afford to lag behind too much though.

 

[RancidLunchmeat]

Has it ever been confirmed that the GC was profitable for them?

I thought nobody had access to those figures because all of N's profits are a mirade of software, hardware, and licensing characters, pokemon, etc?

The only firm announcement that I was aware of was N saying they were losing money on the GC at the 99.99 price point.

N isn't like Apple though, because N is making a profit off its library, and it certainly seems like N is going to leverage their library even more next generation rather than compete head to head with MS or Sony.

So the real issue, IMO, is how long N can continue to leverage its library before the current crop of gamers have no need for the nostalgia and memory of the characters?

In most parts (showing my egocentric NA bias), Kleenex is still tissue paper, Coke is still soda pop, Band-Aids are still adhesive bandages, etc. But "playing video games" is no longer "playing nintendo", in fact, I know a fair amount of people that would claim to be "playing playstation" regardless of the console they were actually using.

It shows a shrinking market share, but it also shows a shrinking social awareness of their product.

 

[Carl B]

Good points Rancid, but even in spite of that there is a new generation of gamers that have grown up and become Nintendo fans the same way that a new generation of kids has grown up to become fans of the new Star Wars movies, while not neccessarily being fans of the original.

Nintendo has an appeal, whether with parents or with children I don't know, that gets their games in kids hands, and it seems almost regardless of generation, even though these kids may not have grown up grabbing magic mushrooms and tossing fireballs, they still grow up with Mario.

 

[Diplo]

Nintendo should swallow their pride and stop making consoles and stick to a) making handheld units and b) making software for both Xbox and PS. Sega bit the bullet and did it because it made sense.

Many people want to play Nintendo games, but not many want to buy one of their consoles just to play the limited array of games available. It's sad, but that is the truth.

 

[Carl B]

Nintendo should swallow their pride and stop making consoles and stick to a) making handheld units and b) making software for both Xbox and PS. Sega bit the bullet and did it because it made sense.

Many people want to play Nintendo games, but not many want to buy one of their consoles just to play the limited array of games available. It's sad, but that is the truth.

Ridiculous.

 

[Diplo]

Ridiculous.

That's what Sega fanboys said too...

 

[see colon]

Nintendo should swallow their pride and stop making consoles and stick to a) making handheld units and b) making software for both Xbox and PS. Sega bit the bullet and did it because it made sense.

it made sense for sega because they were loosing money making hardware and software. nintendo has been successful from a fiscal perspective. why would they want to stop doing something that's making them money.

nintendo pulling out of the console arena this generation would only be good for microsoft. with the launch of next gen nintendo being in the game helps microsoft. if ps3 and rev launch together, and halo 3 comes out on xb360 at the same time, new console buyers might have to choose between ps3 or rev, while xbox 360 owners might hold off on new hardware while they play halo 3.

 

[Legend]

so far, Rev hasn't shown anything. we need something to go on. the 'retro access' is directed for hardcore Ninty fans. casual gamers want to play the new titles, not 15 year old games.

 

[Geeforcer]

Nintendo should swallow their pride and stop making consoles and stick to a) making handheld units and b) making software for both Xbox and PS. Sega bit the bullet and did it because it made sense.

Many people want to play Nintendo games, but not many want to buy one of their consoles just to play the limited array of games available. It's sad, but that is the truth.

Ridiculous.

Why? We talked about it in the other thread, but if ROI disparity between the divisions becomes very large, Nintendo might leave home console market and focus on more profitable businesses.

 

[Carl B]

Why? We talked about it in the other thread, but if ROI disparity between the divisions becomes very large, Nintendo might leave home console market and focus on more profitable businesses.

I know we did, but I never myself subscribed to the theory - if the ROI is even there at all as a positive, no matter how slight, it behooves Nintendo to stay in the game, if only for mindshare. I agree that if it were to begin tolling losses, through hardware and software combined, then it would be time to maybe consider pulling the trigger - but I just don't see things getting there just yet.

My, admitedly rather short, comment was more just to dispel the comparisons between SEGA and Nintendo as being anywhere in near the same financial situation historically as it applied to SEGA's decision to drop out of consoles.

 

[ralexand]

Nintendo should swallow their pride and stop making consoles and stick to a) making handheld units and b) making software for both Xbox and PS. Sega bit the bullet and did it because it made sense.

Many people want to play Nintendo games, but not many want to buy one of their consoles just to play the limited array of games available. It's sad, but that is the truth.

Have to say I agree with you there unless they can create something that is truly a "revolution" and not just a marginal gimmic.

 

[Geeforcer]

Why? We talked about it in the other thread, but if ROI disparity between the divisions becomes very large, Nintendo might leave home console market and focus on more profitable businesses.

I know we did, but I never myself subscribed to the theory - if the ROI is even there at all as a positive, no matter how slight, it behooves Nintendo to stay in the game, if only for mindshare.

My, admitedly rather short, comment was more just to dispel the comparisons between SEGA and Nintendo as being anywhere in near the same financial situation historically as it applied to SEGA's decision to drop out of consoles.

I agree that Sega = Nintendo is really a bad stretch at this point. I also agree that there are intrinsic benefits that go along with being in the home console business that go beyond profits and losses. I do think that it would not be out of question for them to leave the market though.

 

[RancidLunchmeat]

I know I'm sure not going to spend even $99 on a GC (actually don't have any place to put it and I find them ugly), to play Animal Crossing [girlfriend just thought those commercials were the cutest thing ever!] and RE4.

Were either of those games released on the PS2 or Xbox, I'd have bought both of them.

So, sure.. I don't think there's any question they'd sell more software if they weren't exclusive. I guess the real difference between N and Apple is that while both Apple and N are software manufacturers using hardware as a "software distribution system", Apple charges a premium for its hardware. While N feels that they cannot (and they're probably correct).

Whether it's true in real world performance or not, I do know that Apple users love to brag about their Dual G4s or whatever. My response of "Great! How does HalfLife 2 run?" is usually met unkindly. So Apple at least has a perceived power advantage to go with their cost and their exclusive software.

N has a perceived power disadvantage, and it looks like that's going to carry over once again with the Revolution. Which means they have to target a lower price point, which puts them into an unbreakable cycle.

At some point, N will either have to take huge losses on its consoles to win back the power perception (actually having the best console doesn't mean you can still cover your costs.. it just means you can afford to charge as much as the other guys or maybe a slight premium), or they'd better come through with a real revolution in terms of user interface and game play.

Bongo's don't count.

 

[Diplo]

it made sense for sega because they were loosing money making hardware and software. nintendo has been successful from a fiscal perspective. why would they want to stop doing something that's making them money.

Yeah, but how much of Nintendo's money is made from handheld console sales and how much from software licensing sales? Everyone knows that you don't make money on console hardware (and despite what Nintendo claim I am certain they don't on the GameCube at it's present price point). By making software for both Microsoft and Sony they would vastly increase their potential market.

Yes, they would loose some control and some licensing costs, but potentially they could make up for it with what is profitable, and that is selling games. The fact is you are hard pressed to find many game shops in the UK that still even stock Nintendo hardware and games. What's the point of making innovative, original software if no one wants to buy the hardware to play it?

 

[Teasy]

Why can't people just read the numerous threads we've had on this in the past?

RancidLunchmeat

Has it ever been confirmed that the GC was profitable for them?

Well look at it this way. Since release GC has been either at a very small loss per unit ($10), breaking even, or a small profit ($10). So overall its likely to have broken even on hardware costs. Meanwhile they've sold something like 60 million of their own games on the system and well over 100 million third party games. Bringing in profits of anywhere from around $3-4 billion from GameCube games alone. Then you have peripherals like controllers, GB players ect which all sell at high profits. Even with expenses such as advertising taken out of that there's no way GC isn't profitable.

Diplo

Nintendo should swallow their pride and stop making consoles and stick to a) making handheld units and b) making software for both Xbox and PS. Sega bit the bullet and did it because it made sense.

I just can't believe it when people say things like this, there's no sense to it. Sega had no money left and were losing money hand over fist. Nintendo have huge stores of cash and are making money, that's a significant difference. Sega went third party because it made sense for them. That doesn't automatically mean it makes sense for every other company. If it did then we should also tell Sony and MS to go third party yes? I've said this before but staying in the console making business makes sense for Nintendo even outside of the profits they make from it. Because it backs up their most profitable business, handhelds.