As much as I like to poke at Nintendo, I think the main reason behind this was that they ordered (read: paid for) alot of GameCubes and didn't sell them 1st half. Thus, they stop production (read: stopped spending money) and will sell them in the 2nd half, thus boosting profits. I mean, there are alot larger macro issues at work, but I think that's the gist of this situation.
Nintendo loses Money
- Thread starter mat
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Well they lowered price as well, so I'm not sure what (if) they're making on console sales themselves. Of course more units out there means more games being sold...
Still, it's not like they can go back on this either. The prices they've dropped to is what they'll have to live with, since even if they sell off surplus and start production again and sell more, it's not like the consumer will be all fine and dandy with them raising the price again. ("Overstock problem's over, guys... Back to $149, ok?
)
Still, it's not like they can go back on this either. The prices they've dropped to is what they'll have to live with, since even if they sell off surplus and start production again and sell more, it's not like the consumer will be all fine and dandy with them raising the price again. ("Overstock problem's over, guys... Back to $149, ok?
)Of course the GCN keeps getting cheaper to manufacture too so maybe Nintendo is still making a profit from the hardware or at least breaking even? After all they were selling the GCN with a free game for $150 and at the time Metroid Prime was selling separately for $50 which makes the GCN $100. Zelda was selling for $50 too when that bundle was announced therefore the GCN was effectively selling for $100 long before this announced price drop. So in terms of hardware costs to Nintendo, it should actually be better for them now than before since they kept the selling price the same while lowering manufacturing costs.
Well we can't wholly tell their hardware costs from that either, since obviously Metroid Prime and Mario didn't cost them $50 to produce and distribute. Plus it's still good to deliver a quality game as a bundle even if one takes a loss on hardware+software, as you automatically get people in and get people playing a GOOD game--and therefore likely to want to get more games.
They're probably not taking a loss even on $99 (and if some, not much), but it still cuts into the profit, and they're not guaranteed to sell as many more machines to make up for it. (Though they do have greater margins on the games--especially their games--so they might make up for it even with only marginally better sales.)
Of course the moment they start bundling again, it's just $50 less than they would have made otherwise...
Plus it's still good to deliver a quality game as a bundle even if one takes a loss on hardware+software, as you automatically get people in and get people playing a GOOD game--and therefore likely to want to get more games.They're probably not taking a loss even on $99 (and if some, not much), but it still cuts into the profit, and they're not guaranteed to sell as many more machines to make up for it. (Though they do have greater margins on the games--especially their games--so they might make up for it even with only marginally better sales.)
Of course the moment they start bundling again, it's just $50 less than they would have made otherwise...
At $99 I don't think they'll be making any actual profit on console sales. But then they really don't need to make a profit per console to balance out the first half loss. Because the consoles they'll be selling in the second half of the year are the consoles they made that loss making in the first half of the year (well some of the loss anyway)
Regarding Nintendo making a loss in the first half but expecting to make a decent profit overall this year. I think that's probably because of games like Mario Kart that will be out this Christmas. Correct me if I'm wrong but Nintendo didn't have any really big Nintendo published releases in the first half of this year. If Mario Kart is a million seller over Christmas then there's $50,000,000 for Nintendo right there.
Lots of things messed with nintendo. Most of thier big tittle games were pushed back. Fzero was supposed to come out in febuary. That was a major hit . Billy hatcher was also supposed to come out in that time frame. There were also a few others that were pushed back . Though the names slip my mind. Then they ordered to many systems with no new software to sell them. Then they were loosing alot of money with the free game tie in . THe will make more money off selling the system for a 100 and then people buying the games for 20-50$ . Then they made from selling the game with system for 150$. THen there was the fact that the first half of the year is hard for the game industry as a whole . If you look at ms and sony you will also see a huge contrast between first half and second half .
TheMightyPuck
Newcomer
Glonk said:
I suspect Nintendo has already booked the expenses associated with development on that title. Still the store gets its margins. There's shipping. Marketing costs. A peice of the action for anyone else in the channel. But this is all dumb. It is clear from reading this thread that no one here--including me--knows jack about Nintendo's financials
Development costs won't really come into it as I'm talking about second half profit. Marketing will of course (though how much Nintendo will spend on that is debatable), and manufacturing costs and store margins. So yeah it will be less, more like $30,000,000 if Mario Kart is a million seller. That alone would more then cover the first half loss, and Nintendo may even be expecting higher sales then that. Worldwide I'd be suprised if Nintendo are expecting to make less then somewhere in the region of $60,000,000 second half profit on Mario Kart (probably more).
Anyway my main point was just that a big Nintendo release in the second half of the year could be one of the reasons for Nintendo's belief that they will end the year with a $550,000,000 profit after the first half loss of $27,000,000.
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