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Wii Hardware To Be Profitable At Launch

Zonk posted more than 7 years ago | from the cash-on-the-barrelhead dept.

191

Next Generation reports on comments by Nintendo's Reggie Fils-Aime, stating that the Wii will be profitable out of the gate. It's been well-publicized that the consoles offered by Sony and Microsoft are subsidized by those companies. From the article: "Nintendo, however, has traditionally avoided the 'razor and blades' business model by selling its consoles above what they cost to make. Fils-Aime confirmed to Reuters that the Wii would carry on the tradition. 'We will make a profit on the entire Wii proposition out of the box -- hardware and software,' he said. 'That really is a very different philosophy versus our competitors. We are a company that competes only in the interactive entertainment space so we have to make a profit on every thing we do.'" The comment is undoubtedly meant to assuage analysts nervous about the relatively late release date and somewhat higher than expected price for the Wii.

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nintendo is a game company (2, Informative)

192939495969798999 (58312) | more than 7 years ago | (#16112419)

Sony and microsoft are not game companies. They both make money from other things. Nintendo is a game company. They make money (i.e. NEED to make money) from the game system and games. OF COURSE they will sell them at a profit!

Re:nintendo is a game company (2, Interesting)

minus_273 (174041) | more than 7 years ago | (#16112439)

um, hello, nintendo is far more than a game company. The part of the company you know as nintendo is the games division. There are many many other things that it has its hands in like pretty much any other major company in japan. Nintnedo has its hands in things like realestae, finance, insurance and other random industies (at one time even a brothel).

Re:nintendo is a game company (5, Informative)

antifoidulus (807088) | more than 7 years ago | (#16112536)

Actually Nintendo, which started out(and still is) a card manufacturer did branch out into a lot of other industries, but nowadays aside from a large stake in the Seatlle Mariners and owning a big chunk of Gyration Inc(where they got most of the wii controller technology from) Nintendo really doesn't own much else outside of the realm of games.
At one point, yes they did own a taxi service and "love hotels"(which are not brothels, they are basically hotels rented by the hour with the express purpose of having consenting adults do things in them which one would rent a hotel by the hour for)

Re:nintendo is a game company (4, Funny)

Rob T Firefly (844560) | more than 7 years ago | (#16112644)

At one point, yes they did own a taxi service and "love hotels"(which are not brothels, they are basically hotels rented by the hour with the express purpose of having consenting adults do things in them which one would rent a hotel by the hour for)
They got out of that business after all those complaints from male clients who just couldn't make it past World 2.

Re:nintendo is a game company (1)

freakmn (712872) | more than 7 years ago | (#16112980)

I think for that you need the power glove. It's so bad.

Re:nintendo is a game company (1)

JFMulder (59706) | more than 7 years ago | (#16114495)

Actually, they couldn't make it past the second base.

Re:nintendo is a game company (5, Funny)

Scherf (609224) | more than 7 years ago | (#16114522)

No no! It was because the receptionists kept telling them that the princess is in another castle!

Re:nintendo is a game company (2, Funny)

kalirion (728907) | more than 7 years ago | (#16113019)

"love hotels"(which are not brothels, they are basically hotels rented by the hour with the express purpose of having consenting adults do things in them which one would rent a hotel by the hour for)

Based on plenty of anime and manga, you can remove "adults", and perhaps "consenting" from that statement.

Re:nintendo is a game company (1)

nappingcracker (700750) | more than 7 years ago | (#16114415)

owning a big chunk of Gyration Inc

Ahh! that makes total sense, I always thought the Wiimote looked like a gyration mouse.
The old gyration mouse [zdnet.co.uk] || the new one looks even more like a remote [cnet.com]

it was pretty cool a few years ago when I had one for htpc, the tech is probably even better now. i feel better about the wiimote now.

Re:nintendo is a game company (1)

minus_273 (174041) | more than 7 years ago | (#16114448)

WTF, I am talking about nintendos finances in an article about nintendos finances and it is Offtopic? great one mod.

Re:nintendo is a game company (5, Insightful)

The Grey Ghost (884000) | more than 7 years ago | (#16112518)

To look at it from another angle, Sony and Microsoft's strategies are only profitable when they max out the number of consoles they sell. The larger their userbase, the more game profits that roll in. Both companies need to be number 1, and thus the struggle. Nintendo on the other hand doesn't need to be number 1 at all. By turning a profit on each console plus each game, they're safe as a niche player and even better positioned if it really does take off. For me, I'll be first in line to get a Wii based on the type of games available and the novelty of their design.

Re:nintendo is a game company (1)

FonzCam (841867) | more than 7 years ago | (#16112721)

That assumes that Nintendo sell enough units to break even on their development costs. But you're right, it allowed them to stay in the game whilst Sega was out priced by Sony just as Microsoft is trying to do to Sony.

Re:nintendo is a game company (5, Informative)

squiggleslash (241428) | more than 7 years ago | (#16112680)

This is really a misunderstanding of the issue here.

All three companies intend their console businesses to be profitable overall. While Sony and Microsoft clearly want to wipe each other out, none actually wants the businesses to make a loss at the end of the day.

Game console businesses have two sources of revenue (well, three now, with the recent addition of online services) - the major two being the console itself, and the game sales.

The expenses are the costs of making the consoles (including the costs of the console's development), and the costs of reproducing the games media together with the royalties that get paid to the developers to cover their costs and profits.

What Microsoft and Sony are doing is lumping the whole lot together. The problem for them is that the consoles cost considerably more to build than anyone would be prepared to pay. So they're selling them for a price that doesn't recover costs, and hoping revenues from game sales (and online services) will counter the losses they're making on that. This is called the razor blade model, as it reflects a supposed business model used by Gillette where the prices of razor blades were designed to offset subsidies given to razor blade holders.

Despite a prevailing wisdom that this is common in the games console industry, for the most part it's a recent development. Sega did it for one console, and failed miserably. Microsoft did this for the XBox, but there's no evidence that Sony or Nintendo did the same thing for the PS2 or Gamecube.

What Nintendo just said is that that's not the model they're using. The Wii is low cost because it's low cost, not because it's subsidized. While the exact hardware specs of the Wii are still unconfirmed, it is known that many developers received overclocked Gamecubes as development platforms early in the Wii's history. The graphics are designed to look good on standard definition TV sets (480 lines of resolution, or thereabouts.)

Nintendo plans to make a (small) profit on each Wii, and on the games. As such, each sell is guaranteed positive revenue. If it has to make more consoles and finds it sells fewer games than expected, they're not going to go into the red because of that.

Despite barely making a dent in sales last time around, Nintendo ended up being the most healthy in the games console business of all three players. Nintendo can follow this strategy for decades, be in "third place" every time, and, as long as they're realistic, they'll stay alive and healthy even if Sony and Microsoft, following the opposite strategy, end up close to death's door.

Re:nintendo is a game company (2, Insightful)

Volante3192 (953645) | more than 7 years ago | (#16113142)

none actually wants the businesses to make a loss at the end of the day.

Actually, I think in this case they don't care. There's much much more at stake to drive the other (Sony or Microsoft) out of the business. For Sony, the PS3 doesn't just mean game revenue, but in their eyes, Blu-Ray revenue. Winning the HD format feud is much more lucrative in the long run than game consoles.

As far as Microsoft, they're desperatly trying to establish a foothold in the home theater environment. They want (perhaps need) another reliable market; their accounting department may have realized their software lines are starting to flatline and even start dropping.

Given the loss on the consoles, it would take a large number of games and services to break even. They're probably just using those to help soften the blow. Sony and MS still have large, profitable markets in their portfolio to subsidize the production of these consoles. HDTVs and Office software, respectively.

I think they're fully expecting their game console markets to take losses, even taking into account games and services. The eventual profits in the home theater market are greater for them than the console.

Re:nintendo is a game company (1)

JoeKilner (930306) | more than 7 years ago | (#16113882)

PS2 was sold at a loss for a large part of it's life, although I believe it is now sold at a profit. Remember, even if sale price > manufacturing cost there are all the r&d costs etc. to be recouped

Thankyou Captain Obvious. (0)

Anonymous Coward | more than 7 years ago | (#16114038)

You've saved the day.

Re:nintendo is a game company (1)

MBraynard (653724) | more than 7 years ago | (#16112997)

No, it doesn't need to make money from the console sale itself. THe reasoning from you and Reggie is specious (like most first posts).

You can STILL sell the console at a loss. Look at it this way.

By lowering the price from 250 to 150, they go from making 50 per console to losing 50 per console. But they sell 2 million rather than 1.5 million consoles. If there is an attachment rate of 3, and a per game profit of $25 (half - since most N games are first party anyway), they make 12,500,000 more.

So the 'must profit on the console' is a bad move if it's true and probably a relick of poor, overly conservative Japanese business practices. By making a 'profitable', underpowered, overpriced console they are going to loose a lot of cross platform publishers.

Re:nintendo is a game company (2, Interesting)

Phisbut (761268) | more than 7 years ago | (#16113115)

By lowering the price from 250 to 150, they go from making 50 per console to losing 50 per console. But they sell 2 million rather than 1.5 million consoles.

Except that, just like the Xbox 360(1), and unfortunately (let's be realistic here) the PS3, the Wii will most probably sell out this holiday season. They won't sell more by lowering the price, because there won't be any more to sell. By selling it $250 instead of the expected $200, if they manage to ship and sell all the 4 millions of the units they promised, that's an extra $20,000,000 they get to invest back in games, online stuff and much more.

(1) Ok, I know the Xbox 360 didn't sell out in Japan, but it wasn't because of the price... MS could have priced it at $10 and Japan still wouldn't have bought it.

Re:nintendo is a game company (1, Interesting)

xtracto (837672) | more than 7 years ago | (#16113138)

y making a 'profitable', underpowered, overpriced console they are going to loose a lot of cross platform publishers.

Sir, agree completely with you in that the Wii will make some publishers loose, at their stomach of course.

Other than that, I cant find a relation between those two concepts. More publishers will be attracted to the Wii ifnot for anything else for the mere dev kit price, and as everybody says, those "cross platform" publishers have certainly used the GameCube already, so (as Wii bashers love to say) being the Wii a reboxed gamecube with a fancy controller they wont need a lot of effort to port their game to such platform.

And about your calculations, what makes you even think that the console costed $200 to make?, if I recall correctly one analyst predicted the price to be $180 after looking for the harware used so hey, they are screwing you more! muwahahah.

Not that I care, what I care is that the Wii is the ONLY console that will allow me to play something that I can not play in my computer. I know that maybe the HaloXXXMegaBox360-2 wont be available for my PC but at the end it is just another FPS played with the typical controller (w00t I've got a £10 PS2 like controller from GAME).

Also, the Wii stupid sport games that (I have been reading) a lot of people think are not as valuable as one game, is in fact what some of those non-gamers ...

(including, my mother, a greek friend who is archeologist and didnt even know how to turn on a computer when she started her master one year ago), my girlfriend (granted, she does plays GBA and mario party/mario tennis with me in 1964)) ... are looking forward to see, this 'half assed' games will allow ALL OF US (hardcore,softcore,noncore) gamers to *learn* to use the controller in a friendly way (how many times I have tried to master the FPS controller just to be 707411! PWN3D by my brother who is a Playstation fan.

The coolest thing (for me), is that it was since SNES that my mother played Pilot Wings and Mario Kart, but she found it too complicated, now with the Wii I have a chance to play along her again! and this time Nintendo is pushing to do everything they can to make her ENJOY the game =o).

Re:nintendo is a game company (1)

theckhd (953212) | more than 7 years ago | (#16113147)

It's a gamble nonetheless. What happens if the attachment rate drops to 2 or 1.5? The scariest part is that this can happen due to forces outside your control.

By the way, I think your math is incorrect.
($50+3*$25)*1.5 million = 187.5 million
(-$50+3*$25)*2 million = 50 million
They'd have to sell 7.5 million consoles (and 3 games for each) just to break even in your scenario.

Re:nintendo is a game company (3, Insightful)

BenjyD (316700) | more than 7 years ago | (#16113272)

I would imagine that Nintendo has amassed a large amount of data about console price elasticity, game attach rates over console lifetimes etc. and set the Wii price to maximise their profit.

Re:nintendo is a game company (1)

Redlazer (786403) | more than 7 years ago | (#16113713)

Hah, thats a very vaild point actually.

I would find it hard to believe that the big wigs at Nintendo just arbitrarily picked the price for the console randomly and out of thin air, or even better, after a heated game of darts.

-Red

In the realm of Video games, Nintendo INVENTED (3, Interesting)

antifoidulus (807088) | more than 7 years ago | (#16112487)

the video game analogue of "razor blades": the Atari 2600 was not originally designed so that anyone could write software for it. However, other people did(something for which Atari received no royalties for) and eventually the glut of titles(some pushed out by Atari itself) helped to doom the system in the 83 crash.

Fast forward 2 years and Nintendo comes along with their new machine but a different outlook: Nintendo will approve or dissaprove each game released for their system. To enforce it, Nintendo patented a special type of chip that had to be put in each video game before it would play on the NES, and was able to collect royalties on every game sold.

Re:In the realm of Video games, Nintendo INVENTED (2, Interesting)

Anonymous Coward | more than 7 years ago | (#16112718)

I'm actually worried about a (minor) crash in the Videogame market centered around the PS3 due to how Sony has positioned themselves in this generation. At $600 the PS3 is going to start off selling very slowly compared to how the PS2 sold, at $60-$75 games are also going to be bough at a much lower rate then they were purchased on the PS2, and at $10 Million-$25 Million for development costs game developers are far less "flop tolerant" as they have been in previous generations. What this means is that there are (probably) going to be quite a few developers who are investing tons of money into games that are going to be released on the PS3, and the game is going to sell well below expected; imagine spending $25 Million on a games, with $25 Million on marketing (for a total of $50 Million) and only selling 500,000 units (for a return of $5 Million - $10 Million).

The crash I am refering to is that even very large (well known) publishers with massive franchises could dissapear if they released several games that underperformed; contrast this with how it was on the original Playstation and N64 where you were investing $1 Million on a big-budget game and were (pretty much) ensured that you'd get your money back.

Re:In the realm of Video games, Nintendo INVENTED (1)

FonzCam (841867) | more than 7 years ago | (#16112763)

Razor blades are expensive but I don't think Gillette makes a loss on the razor, that's why they make new ones all the time in different colours (and ones that vibrate!) The Gamecube's discs were also rather tough to copy, I've had anyone try to sell me pirated Gamecube games, PS2 and XBox DVD-Rs can be easily found at many market/carboot sale

Re:In the realm of Video games, Nintendo INVENTED (2, Informative)

Churla (936633) | more than 7 years ago | (#16112785)

I think you're confusing the concept of "razor and blades" marketing to "Intellectual Property" controlled marketing.

"Razor and Blades" is the concept that you sell the base unit (i.e. console or razor) at a loss becuase you sell the consumable (games or blades) as enough or a markup to make the money back and then some. Because once they buy a razor from you they have to come back and buy blades every week. In the long run that can be more profitable by giving the razor away.

"Intellectual property control" marketing is the process of licensing others to produce goods which work with your platform. This is what Nintendo did with the chips in the nintendo cartridges. Sony and MC both do this to developers of games for their respective platforms. In effect this is like patenting your razor, then charging the blade companies royalties to make blades for your razor.

Re:In the realm of Video games, Nintendo INVENTED (1)

IorDMUX (870522) | more than 7 years ago | (#16113730)

Nintendo patented a special type of chip that had to be put in each video game before it would play on the NES

Don't get me wrong... the 10NES chip/code was a great idea at the time... but poor hardware implementation caused--for pretty much any system older than ~1 year--those endless blinking red or blue screens as the system refused to actually recognize the game. The slightest bit of dust or bent pin would throw off the precise timing that the 10NES chip used to verify the games, leading to the famous ritual of blowing on the cartridges.

Now that I think about it, Tengen's later reverse engineering of the lockout system would probably be forbidden by the DMCA... Ahh! How could we have lived without Gauntlet?!?

nice to know (-1, Troll)

legallyillegal (889865) | more than 7 years ago | (#16112488)

nice to know that nintendo is using cheap parts

Re:nice to know (3, Insightful)

Spad (470073) | more than 7 years ago | (#16112514)

Well it always helps when you don't have to stick a $400+ BluRay drive in each unit.

Re:nice to know (1, Insightful)

Ford Prefect (8777) | more than 7 years ago | (#16112522)

nice to know that nintendo is using cheap parts

Yep - and this should mean that the full-price games will be a lot cheaper, too, since Nintendo doesn't need to claw back money lost on the hardware.

... Right?

If cross-platform games end up being the same price on the Wii as on PS3 and Xbox360, albeit with cruder graphics, then it's time to get suspicious.

Re:nice to know (1)

gEvil (beta) (945888) | more than 7 years ago | (#16112554)

I believe Nintendo's already said that they're keeping the price point the same for A-list titles ($50), while both Sony and MS are charging $60 or more.

Re:nice to know (2, Interesting)

UbuntuDupe (970646) | more than 7 years ago | (#16112699)

You know, you bring up a good point I don't think a lot of people fully appreciate:

- and this should mean that the full-price games will be a lot cheaper, too, since Nintendo doesn't need to claw back money lost on the hardware.

Since Sony/MS are trying to claw that money back, it means that perfectly legal things that hurt their software license revenue will probably be targeted by them with lawyers who should know better. Imagine that because of the expensive PS3 titles, some kids in a dorm or the same college set up a system whereby the share their games with each other. Not copy -- just share the individual game. That's 100% legal. But then Sony will probably find some way to sue them on the grounds that it interferes with their business model.

Re:nice to know (1)

theckhd (953212) | more than 7 years ago | (#16113040)

I'm not sure that they'll go through the effort to sue. With file sharing via p2p, it's possible for one person to share with many other people, making the resultant copyright infringement "damages" much higher. Hence the ridiculous amounts quoted per song in RIAA lawsuits.

If you loan a video game to your buddy down the hall, Sony would be hard-pressed to claim that you deprived them of more than one extra sale. Perhaps if you organized a floor-wide or dorm-wide game swapping club, the liability would be higher. But with the damages on the order of hundreds of dollars, I doubt that it's worth Sony's lawyers' time to file suit.

Re:nice to know (1)

0xABADC0DA (867955) | more than 7 years ago | (#16114032)

The broader point is that Nintendo will be shipping a system capable of graphics, wireless web browsing, playing music, storing data, and whatever else but they don't need to do much of anything to protect it or lock it down.

Nintendo can create a Linux boot disc that lets you do web browsing, play music / videos, write documents in ooffice using wiimote as a 'giant pen' to write in 'air cursive', etc. Or if somebody else does that they won't care one bit, because even if people buy their system and never play a single game they still make money on it. In fact the only thing they would even care about is if you can use that to boot illegal copies of games, but even then only if it's easy enough for the masses to use and then only to protect some of their extra profit from games and to protect other developers making games for Wii.

Re:nice to know (1)

Pacifist Brawler (987348) | more than 7 years ago | (#16112526)

It's worked for the last twenty years, no reason to stop now.

Re:nice to know (1)

Guppy06 (410832) | more than 7 years ago | (#16112697)

It's nice to know that Nintendo isn't trying to reinvent the wheel (and charging us for it in the process).

Re:nice to know (0)

Anonymous Coward | more than 7 years ago | (#16113328)

Well they did put a total pos wireless adapter in the ds, and didn't fix it for the lite (read: cannot even see many routers, even with all security disabled). Lets hope they didnt skimp this time, especially since they didnt even put an ethernet adapter.

Re:nice to know (1)

MobileTatsu-NJG (946591) | more than 7 years ago | (#16113795)

"nice to know that nintendo is using cheap parts"

Yeah because Nintendo is widely known for releasing consoles you have to turn upside down just to get them to work. /sarcasm

No surprise here (3, Interesting)

Pacifist Brawler (987348) | more than 7 years ago | (#16112500)

Nintendo continues it's strategy of not being dumb. Of course they want to sell the console for a profit. The 360 and PS3 count on every sale leading to X number of games before they start turning a profit, whereas Nintendo counts on every sale turning a profit and every game turning more profit. Selling consoles at a loss is a risky business. Yes, it gets your console out there, but you then need to sell a good number of titles. Selling consoles at cost is the smartest way to do business, because you don't assume a damned thing and you make money on any games people buy. But yeah, being slightly above that doesn't hurt at launch. Nintendo does one thing and does it well: Video games. It's not that they are in dire straights right now, it's that they know this market very well. They made the Gamecube profitable. They know this industry. Selling consoles for profit is brave in that it can hurt your ability to get up your market share. But losing money on every single console so you can sell more consoles and lose more money doesn't make a lot of sense, does it?

Re:No surprise here (1)

MindStalker (22827) | more than 7 years ago | (#16112559)

What I really want to know, is just how much profit they are making.

If for say their actual cost is $230 or something and they would lose money on a $200 console $250 sounds like a nice price point. If in fact that are making these (including all other cost) for $190 and selling it at $250 one could argue it might be worth it for them to sell at $200 for a tiny profit, leading to more game sales.

Either way its their buisness and they can run it how they want to. (shocking idea on slashdot hu?)

Re:No surprise here (2, Interesting)

Volante3192 (953645) | more than 7 years ago | (#16113222)

One thing to keep in mind for Nintendo is their cost is in yen.

The one time Big N had a losing quarter was during a period of currency fluxuations between the yen and the US dollar.

In Japan, the price is Y25,000 ($213) so they'd have to match at least $213, (it's more important that the foreign markets are priced higher, see above), so probably $225, but that's just a bizarre round number, so toss in Wii Sports and ratchet it to $250. Simple.

Added bonus is Wii Sports is a good showoff of the remote, it's a non-threatening game for console newbies, and it doesn't take away from other more lucrative titles like Zelda, Red Steel or Mario.

Re:No surprise here (3, Funny)

Calinous (985536) | more than 7 years ago | (#16113356)

225 is a perfect square... Why would that be bizarre?

Re:No surprise here (1)

anti-human 1 (911677) | more than 7 years ago | (#16113788)

225 is a perfect square... Why would that be bizarre?


Because the GameCube was last generation. :P

Re:No surprise here (1)

jZnat (793348) | more than 7 years ago | (#16114573)

Because it doesn't end with 99 or 95.

Re:No surprise here (1)

Phisbut (761268) | more than 7 years ago | (#16113335)

If for say their actual cost is $230 or something and they would lose money on a $200 console $250 sounds like a nice price point. If in fact that are making these (including all other cost) for $190 and selling it at $250 one could argue it might be worth it for them to sell at $200 for a tiny profit, leading to more game sales.

I really doubt the $50 price increase will hurt sales that bad. They expect to ship 4 million units by the end of the year, and unless there's a horrible hardware failure worldwide (which I really doubt, this is Nintendo after all), they will most likely sell all of those 4 million units. Selling each of them at $50 more means they will get an extra $20 million that they can reinvest in first-party titles, online service, and other cool stuff (maybe even R&D for the next Wii 360).

I will be getting one at launch, and although it sucks a little that I will have $50 less in my wallet to buy games and accessories, it's nice to know I'll get a pack-in game to show off the controler. I don't expect Wii sports to be the ultra-amazing-fun game, however, it will be the perfect thing to put when my sister comes at my place and asks what this gizmo is. Wii Sports will be the viral part... "Hey [insert non-gamer relative's name here], check out my new gadget, you can play bowling on TV with that."

Re:No surprise here (1)

poot_rootbeer (188613) | more than 7 years ago | (#16114157)

I really doubt the $50 price increase will hurt sales that bad.

It may reduce demand at launch -- I know I for one would have been a first adopter at $200 but am having second thoughts at $250 -- but in the long run I don't think Nintendo will be hurt by it. The first few production runs will sell out to the diehards at $250 easily. Maybe next year, once demand has begun to wane, Nintendo will be able to make a price cut or improve the bundle to make the system more attractive to non-acolytes.

My biggest concern with the launch package is that there is no "classic"-style controller bundled. This is akin to if they had released the DS with a touchscreen, but without a D-pad or ABXY buttons. They're betting everything on the new interface with little consideration for the old.

It's a console truism that if a controller is not bundled with the base console system, developers will not support it. R.O.B. was only packaged with a fraction of NES's sold, and there was only one game beyond the pack-in that it was ever compatible with. Even the Zapper, more ubiquitous but still not standard-issue, only ever worked with a handful of games. The PowerPad, the SNES Mouse, the PSX Flight Stick, the GBA/GC link cable... the story repeats itself over and over again.

What is a publisher to do when they want to create a game for the Wii that does not lend itself to waving a remote control? Do they hope there's enough gamers out there that have already sprung an extra $15-20 for a custom controller to make such a game profitable? Do they bundle a controller in with the title itself, causing large increases in production and distribution costs?

This concern is relevant to the Virtual Console service, too. Are players going to be expected to map all the stick and buttons of an SNES or N64 gamepad onto the wiimote/nunchuk layout? How is that going to be anything close to an authentic experience?

Re:No surprise here (1)

Rob T Firefly (844560) | more than 7 years ago | (#16112679)

This makes sense.. during the whole PS2 era, I've only bought maybe three new games in all that time. I usually only buy off the used racks or trade with friends, which I imagine doesn't put that money in Sony's pocket again. I'm not sure exactly how the math works out, but I wouldn't be surprised if I haven't even subsidized my console yet despite having a sizable library of games.

au contraire (2, Interesting)

Manmademan (952354) | more than 7 years ago | (#16113282)

This makes sense.. during the whole PS2 era, I've only bought maybe three new games in all that time. I usually only buy off the used racks or trade with friends, which I imagine doesn't put that money in Sony's pocket again.

On the contrary. By buying off the used racks, you're making it possible for those who purchase new to continue doing so. Joe Gamer is more likely to purchase Madden 200X at $50 new if he can trade in the last two new games he purchased for credit; credit which comes from you buying used games. So, indirectly, Sony still sees your money.

Re:au contraire (1)

Rob T Firefly (844560) | more than 7 years ago | (#16114012)

Interesting! Thanks, I never thought of it like that.

Re:No surprise here (1)

Calinous (985536) | more than 7 years ago | (#16113386)

Microsoft is dumping money in a market hoping to obtain monopoly in that market. Once a monopoly is obtained, they will become profitable. If I remember correctly, Microsoft is profitable (extraordinary so) in the Windows and Office areas, the rest of the markets they are involved in shows them at a loss or small profit (I don't know about their hardware division, but I would like a Microsoft Natural keyboard)

Re:No surprise here (1)

buswolley (591500) | more than 7 years ago | (#16114580)

I f there isn't two controllers in the package, then they are being dumb. They market the machine for its social aspects. ie have fun with the family. As it is, I have to pay 60 more dollars above the initial investment just to experience the social aspect that they promote.

Strange concept (3, Funny)

dlc3007 (570880) | more than 7 years ago | (#16112510)

This is something new. Imagine a company making money by selling a product they manufacture. Bizarre. Wonder if this radical concept will ever catch on. It is truly shocking.

Re:Strange concept (1)

syrinx (106469) | more than 7 years ago | (#16112569)

I love how "selling its consoles above what they cost to make" is called a "tradition".

"Yeah, we thought about selling our consoles BELOW what they cost to make, but we decided the tradition was too strong to stop now."

Re:Strange concept (1)

InsaneLampshade (890845) | more than 7 years ago | (#16112690)

I guess Sony and Microsoft don't like traditions then. =/

Re:Strange concept (1)

FonzCam (841867) | more than 7 years ago | (#16112950)

Sony loves traditions, theirs involves forcing proprietary media formats on their customers. Microsoft has a proud tradition of buying its way into new markets.

Re:Strange concept (0)

Anonymous Coward | more than 7 years ago | (#16113207)

Sorry to ask but, does anyone know where to get informaiton from the London Nintendo event?? I cant find any place that is covering the event :(

Re:Strange concept (1)

cluke (30394) | more than 7 years ago | (#16114207)

There are quite a few articles about it in the Guardian Gamesblog [guardian.co.uk] . It's gonna be £180 - ouch!

econ 101 (1)

EddieBurkett (614927) | more than 7 years ago | (#16112573)

I get the impression that Nintendo was perfectly willing to sell the system at a loss, but given the amount of room that Microsoft and (especially) Sony left as far as price differentiation, it makes sense for Nintendo to sell the Wii at the highest price point possible. Its still cheaper than the alternatives, and I don't expect demand to lessen significantly, and should MS or Sony ever lower their prices, Nintendo has room (and now a budgetary surplus) to respond in kind.

If anything, if the PS3 sells as well as Sony seems to be hoping (and despite all the bad PR and angry fanboys, it still could), you have to give the console makers credit for starting to acknowledge that people will pay almost any price for a console at launch. It sucks to be the consumer, but this is basic economics at work.

Re:econ 101 (1)

cgenman (325138) | more than 7 years ago | (#16113008)

Maybe. But as far as we know Nintendo has never sold a system at a loss. They generally optimize during the design phase to keep manufacturing costs low. The also license external IP to recieve a cut of hardware and software profits rather than hardware cost (see the Nvidia / Microsoft fight), thus effectively spreading risk around their partners.

Note that this way they don't need to be #1 to be profitable, and that it's actually difficult to lose their shirts.

So while Nintendo might have been willing to sell the systems at a loss if necessary, the plan all along has probably been to keep costs down and sell it affordably / profitably. Just look at the specs.

Re:econ 101 (2, Funny)

bazorg (911295) | more than 7 years ago | (#16113985)

But as far as we know Nintendo has never sold a system at a loss. They generally optimize during the design phase to keep manufacturing costs low
And not only Mario & Luigi get lower salaries than their GTA counterparts, as they also help sell merchandise items, which would be hard to do legally in the case of GTA and similar franchises.

Late? High?? (3, Insightful)

Aladrin (926209) | more than 7 years ago | (#16112580)

The comment is undoubtedly meant to assuage analysts nervous about the relatively late release date and somewhat higher than expected price for the Wii.

People have predicted for months that it would be $250. Only recently did the media put their fingers in and try to 'predict' it would be $225 or even $200. The only reason they even considered those crazy prices was:

1) Every Nintendo console so far has been $200 at launch. Obviously, they couldn't keep that up forever, especially since this system is quite a bit more complex than the previous ones.

2) Exchange rates. Any fool knows that exchange rates only set the price range of a product, not the exact price. The fact that it was $225US when converted on that date didn't mean anything except that it wasn't likely to be $200 here. Nobody in their right mind uses an odd number like $225 when pricing here, at least at launch.

As for the late date... Are we still predicting the PS3 will actually be out before that? I'm still predicting shortages and mayhem for the ps3 launch... It's still a tossup on the Wii launch. I'm hoping they have enough that I get one, but who knows? If there aren't enough ps3's, Mommy and Daddy are gonna buy Wii's for Johnny instead, so he'll have a Christmas present to open.

And maybe that's Nintendo's logic... Capitalize on the failure of Sony. If they launch before Sony, they aren't quite as 'new'. If they launch soon after, amid Sony's sellout chaos, they can pick up extra launch sales and make the figures look better.

I could just see the media spin: Nintendo fails to sell out, slow start for Wii.

But if they wait until after: Sony sells out, loses sales to Nintendo's Wii Launch.

Re:Late? High?? (2, Informative)

Maul (83993) | more than 7 years ago | (#16112762)

Let's look at that "$200 Launch" thing. To keep the $200 price point, Nintendo has continually had to give us less with the system.

80s: The NES is $200 at launch. It comes with 2 controllers, 2 games, a light gun, and a crazy robot accessory.
Early 90s: The SNES is $200 at launch. It comes with 2 controllers and a game.
Late 90s: The N64 is $200 at launch. It comes with 1 controller.
2001: The GameCube is $200 at launch. It comes with 1 controller.

Re:Late? High?? (2, Informative)

Anonymous Coward | more than 7 years ago | (#16112935)

Two annotations for you:

ROB was only in the NES deluxe set, which I believe cost more than $200 and was discontinued shortly thereafter.

Also, an often forgotten piece of trivia: Nintendo 64 was launched in Sept. 1996 at $200, but the price was announced to be $250 at the prior E3 (or spring TGS, I forget exactly) and was dropped only about a month prior to the console's release due to price changes from Sony and Sega.

Re:Late? High?? (1)

Maul (83993) | more than 7 years ago | (#16113883)

I did a Google search, and I believe you're right. The NES seems to have come in two flavors at first:

1. Deluxe Set ($250) which included Duck Hunt, Gyromite, and ROB
2. The Action Set ($200) which included Duck Hunt and Super Mario Bros. (The original version had two cartridges, later they replaced it with a single cartridge that had both games on it...)

Re:even better yet... (1)

Psykechan (255694) | more than 7 years ago | (#16114576)

The NES western launch had two configurations both included the NES, two controllers, RF adapter and PSU:

1. The Deluxe Set which contained R.O.B., a Zapper, and two games: Gyromite and Duck Hunt
2. The Control Deck which came with Super Mario Bros.

Wikipedia has more info here. [wikipedia.org]

The Action Set was not a launch configuration as it came out three years later in 1988. This does not necessarily mean that there were not bundles containing both SMB and Duck Hunt before this date. Sadly, Nintendo altered the bundled games quite frequently without changing SKUs even. I personally own a set which was bundled with Gyromite, Duck Hunt, and Stack Up [wikipedia.org] along with the accompanying accessories. As far as I am aware, this had the same SKU as the Deluxe Set.

Exactly! (0)

Anonymous Coward | more than 7 years ago | (#16114257)

Nobody in their right mind uses an odd number like $225 when pricing here, at least at launch.

Exactly! Everyone knows that numbers like 225, 13, and 666 come with way too much stigma in these parts. Using a number like that is considered suicide as it will drive away most video gamers (video gamers are known to be superstitious).

Re:Late? High?? (1)

blugu64 (633729) | more than 7 years ago | (#16114553)

You forget one thing sure all the past consoles have launched at $200, but $200 back when the NES and even SNES were launched is worth more then $200 now thanks to inflation.

Re:Late? High?? (1)

Aladrin (926209) | more than 7 years ago | (#16114578)

Nope, didn't forget it. You should probably read before you type.

"1) Every Nintendo console so far has been $200 at launch. Obviously, they couldn't keep that up forever, especially since this system is quite a bit more complex than the previous ones."

Not really surprised (1)

ShadowsHawk (916454) | more than 7 years ago | (#16112587)

Have they ever lost money on hardware? I still can't believe the wiimote/nunchuck will cost $60 though..

Re:Not really surprised (1)

revlayle (964221) | more than 7 years ago | (#16112665)

Wait for the MadCatz version ;)

Re:Not really surprised (0)

Anonymous Coward | more than 7 years ago | (#16113888)

That will SUCK BALLS.

F-Zero GX is unplayable on a 3rd party controller. My performance on Mario Kart was also lessened by that god damn madcats controller. Stay away from those pieces of shit.

Re:Not really surprised (2)

dlc3007 (570880) | more than 7 years ago | (#16112692)

Yeah... $60 for the full second controller hurts. Probably still won't stop me from getting one since it is necessary to play the Boxing game in Wii-Sports.
Wii + second remote + Zelda = $360 for unit and two games
PS3 = $600 with one controller and 0 games.
Math still works out for me. :)

Re:Not really surprised (1)

chrismcdirty (677039) | more than 7 years ago | (#16112734)

I don't know if anyone's investigated it yet, but I was wondering if the nunchuk isn't included with the $35/40 wii remote purchase. It would make sense then, that you could buy another nunchuck attachment if something happens to your old one without paying the full price of a remote. Hopefully, what I'm thinking is correct.

Re:Not really surprised (1)

conigs (866121) | more than 7 years ago | (#16113073)

Your thinking is correct. The controller itself is US$40. The nunchuck attachment is US$20.

What happened to "Play together"? (2, Interesting)

Wyrd01 (761346) | more than 7 years ago | (#16113672)

The $250 would be a lot easier to swallow if there was a second controller in the package.

I mean come on, it is the Wii ("We") right? Play together? Wii Sports and one controller makes no sense.

I can see parents buying this for their kids. The kid opens the box, sets everything up and then wants to play baseball, or tennis, with dad. Oops, we can't experience this fun new system together because the system only came with one controller. You can sit still on the couch and watch daddy play though.

Re:What happened to "Play together"? (2, Informative)

alvinrod (889928) | more than 7 years ago | (#16114610)

But look at some of the games that are included in Wii Sports (bowling, baseball, and golf) which really don't need multiple controllers to be fully enjoyed by multiple people. Unless the baseball part of the game allows one person to pitch (I don't think I've seen this reflected in any of the commercials showing it off) and the other to swing, players would just take turns by passing the controller around. The same thing could be said of bowling and golf, where it's not necessary (or perhaps even possible in game) for multiple people to take their turns at the same time. To further this point, my friends and I used to play the golf mini-game from Monkey Ball. Even though we had four controllers plugged in, we still head to wait to take turns, so we really could have gotten by with only one controller.

Tennis (and perhaps boxxing if it supports two players) would require multiple controllers to enjoy fully in a group, but considering that this is at most 40% of the game, I'm not entirely sold on your comment. Perhaps Nintendo packaged Wii sports in such a way that users could get a taste of the games where only a single controller was necessary and have an enjoyable enough experience so that they would want to buy a few extra controllers to play tennis.

I think the fact that Nintendo even bothered to pack Wii Sports in with the console suggests that they are making a serious effort to appeal to other types of gamers. Wii Sports seems simple enough that just about anyone could enjoy it. It doesn't try to look graphically powerful or realistic, which might seem univiting to some people. If a mom who buys this console for her kid thinks Wii Sports is interesting and gives it a try she might start to use the console for other features (such as the news or weather channels on the system) or maybe buy that old Mario game that she used to play way back in the day.

I think Nintendo is trying more than ever to promote a console that can be enjoyed by everyone, at least on some level.

i guess one could say... (1)

acedotcom (998378) | more than 7 years ago | (#16112615)

it has a "wii" small price....hahahaha....please dont kill me

Re:i guess one could say... (1)

joshetc (955226) | more than 7 years ago | (#16112688)

It would be funny if it wasn't redundant. Try "wii" price.

Re:i guess one could say... (1)

acedotcom (998378) | more than 7 years ago | (#16112709)

actually it wasnt really funny either way, oh well

Higher than expected price!? (1)

NekoXP (67564) | more than 7 years ago | (#16112953)

EVERYONE said it was going to be $250. It came true! WTF?

Maybe if you are a delusional idiot would you think they might sell it for $150, and to be fair, I had a small delusional idiot hope that it might be $200 like the Gamecube, but that didn't for one second knock away the reality that it would more than likely launch at $250.

Not surprising (1)

iainl (136759) | more than 7 years ago | (#16112990)

That's not very surprising, when they just announced an hour ago that they're going to pwn the UK for £180 on the thing, only £20 less than a 360 Core model.

For reference, the $250 you Americans will be paying equates to roughly £134.

Re:Not surprising (1)

syrinx (106469) | more than 7 years ago | (#16113307)

That's not very surprising, when they just announced an hour ago that they're going to pwn the UK for £180 on the thing, only £20 less than a 360 Core model.

For reference, the $250 you Americans will be paying equates to roughly £134.


Hahaha.. you said "360 Core model". Great joke.

But seriously, the UK price includes VAT, doesn't it? Which is 20% or so? So that brings the £134 up to around £160, plus the extra importing costs and such.. so maybe you're still getting pwned, but not quite as much as it might seem at first. Most people in the US will have to pay more than $250 any due to sales taxes, which for some reason we don't include in the price. (Makes much more sense in the UK and other European countries; don't ask me why tax is never included here... well, on a national level it's because sales taxes are different across the country, but even when you walk into a store you won't see the full price until they ring you up at the register.)

Besides, the Japanese are paying the equivalent of $220 or so. So you're really getting pwned compared to them.

Re:Not surprising (1)

Yvan256 (722131) | more than 7 years ago | (#16113639)

I'm not saying Nintendo aren't selling the Wii at the right price for the UK, but don't prices in the UK include sales taxe(s)?

Most people in the USA won't be paying 250$USD for their Wii. They'll be paying 250$USD + 8-9% in taxes, depending on which state they live in.

As another example, here in Quebec I'll be paying (279$CAD + 6.0% GST) + 7.5% PST (Yes, that's a tax on top of another. Not just added, multiplied). That means my "279$CAD Wii" ends up costing me 317.92$CAD. That's 38.92$CAD in taxes.

So my question is: how much does the Wii cost in the UK, before taxes are added?

Re:Not surprising (0)

Anonymous Coward | more than 7 years ago | (#16113914)

Um, there are no state sales tax in the US of 8-9%. See http://www.taxadmin.org/FTA/rate/sales.html [taxadmin.org] for more details. Many states have 0% sales tax.

Re:Not surprising (0)

Anonymous Coward | more than 7 years ago | (#16114383)

Wait, my state is 2% higher than that. Now I'm thinking the number's aren't really the numbers >_>

Re:Not surprising (1)

ereshiere (945922) | more than 7 years ago | (#16114650)

There are no state sales taxes of 8-9%, but county sales taxes drive them up: NYC and LA are 8.25%.

If a console owner buys 10 full price games (1)

hattig (47930) | more than 7 years ago | (#16113028)

And the console is sold at a $200 loss, that means each game has to make up $20 just for the console manufacturer to break even. Hence why this generation's games are yet another $10 more expensive than the previous generations.

Online services do add another revenue source however, which can help.

So the Wii will make a small profit for Nintendo, every game will make them a profit, online services may make them a profit. The games can be sold with far less licensing fees as well, hence why Wii games are cheaper. Also because the games are cheaper to make (not HD, etc) they'll be cheaper some more.

Nintendo will make billions in profit. Let's see Microsoft and Sony make billions in profit from their home console business...

Re:If a console owner buys 10 full price games (2, Insightful)

Chosen Reject (842143) | more than 7 years ago | (#16113526)

Let's see Microsoft and Sony make billions in profit from their home console business...

That's hilarious. I was just thinking about this and have come to the conclusion that MS will be out of the console business within 5 years unless something extraordinary occurs this generation. They lost over 5 billion dollars on the Xbox. That is >$5,000,000,000! This all while they had Halo and Halo 2. You may recall Halo 2 sold over 2.4 million copies on its first day and over 7 million in its lifetime. MS even owns the freaking company that made it. They still couldn't turn a profit on that kind of success. The Xbox 360 looks to be heading the same direction. They've had nearly a whole year to without competition and they've only sold 5 million consoles. Considering the Xbox sold ~24 million in 4 years, that's 6 million/year, so they're behind, and this without any competition.

I predict, MS will flounder this generation, and if their investors allow a third generation, that will be their last. Right now, the Playstation name means more than Xbox, and Nintendo is actually profitable so Sony and Nintendo aren't going anywhere after this generation. MS absolutely needs to drop the price of the 360 to below that of the Wii this season if they want to survive.

Re:If a console owner buys 10 full price games (1)

SSCGWLB (956147) | more than 7 years ago | (#16114653)

MS achieved second place [wikipedia.org] in a established market their first try. That is far from a 'failure'. It did cost them some money, but they sure make enough [cnn.com]

Second point, that 5 billion lost, does that include revenue from games and Live? Care to give a cite somewhere?

Third, given the price I don't see 5 million 360s sold to be issue. I am sure they would like to sell more but a lot of people are waiting to see what the other players bring to the market.

Finally, I would be worried a lot more about sony floundering this generation. If you look at their financials [cnn.com] , they have spend a lot of time in the red recently. I expecially liked this part:
Sony: 2006 Revenue $ 63.5 B, Total Net Income $ 1.1 B
Microsoft: 2006 Revenue $ 44.3 B, Total Net Income $ 12.6 B

This is before Sony starts selling the PS3 at a loss. Considering MS made over 10 times Sony's profit on ~60% revenue, maybe you should re-examine your predictions.

also.. (0, Troll)

cheftw (996831) | more than 7 years ago | (#16113079)

Also the Wii will featurea system whereby you will be alerted to the obvious every thirty seconds. Developers hope to make sure that people don't lose their minds while playing and decide to hartm themselves.

It is a lot like razor blades. (1)

Shanoyu (975) | more than 7 years ago | (#16113132)

Like when Gilette was getting OUT BLADED so they were like, "f#@!$ it. We're going to five blades. Why anyone would need such a feature is honestly beyond me, but hey lets pack as much STUFF into the Razor as we can and people will buy it."

PS3 pretty much same deal really :p

Re:It is a lot like razor blades. (1)

KevinH456 (564212) | more than 7 years ago | (#16114331)

Actually, the five bladed razor does wonders when I shave my head. The results are much smoother, with less irritation, than a 3 bladed razor. Never tried four. I would recommend the five bladed razor. If you're shaving your head bald. Daily.

Re:It is a lot like razor blades. (0)

Anonymous Coward | more than 7 years ago | (#16114480)

Ever considered Nair shampoo?

it is $200 (1, Insightful)

Anonymous Coward | more than 7 years ago | (#16113195)

If Nintendo is to be believed and the games are going to cost $50 each and the $250 pack comes with a game then obviously the system is worth ~$200 standalone... which is a very nice price point.

Ugh. If I wanted a Wii I'd keep playing my PS2 (-1, Troll)

Frobozz0 (247160) | more than 7 years ago | (#16113522)

There's a good reason why the Wii will be profitable at launch. It's last generation hardware.

Well duh.....look at the hardware! (1)

Intangible Fact (1001781) | more than 7 years ago | (#16113561)

The Wii is a supercharged gamecube with a faster CPU & GPU using last gen architecture. Even if they sold the Wii at $200 they would still make profit. Greedy! P.S: I'm still buying one!

Re:Well duh.....look at the hardware! (1)

dctoastman (995251) | more than 7 years ago | (#16113778)

Well, technically, the PS2 was just a supercharged PS1 with a faster CPU and new GPU since they were both based off of MIPS processors.

And you could almost consider the XBox 360 a supercharged Gamecube as well, since they moved to PowerPC architechture and ATI graphics. Which is kind of funny considering that Apple just made a significant move away from PowerPC.

But that's all really semantics. I for one am glad that consoles are starting to actually take real advantage of Moore's Law, rather than reinventing the wheel everytime. For example: Sega could've taken steps to make the Dreamcast backwards compatible with the Saturn (Saturn used dual SH2's while the Dreamcast used a single SH4), but decided to make other changes as well that altered the underlying hardware to the point where the processor's instruction set was the least of the concerns.

I'm buying a Wii at launch. There is no reason for me not to. It'll play all of my Gamecube games, I'll be able to download and play classics, SD cards are a really sweet move (sharing saves and other storage), and I'll have a selection of awesome new games when I'm ready.

Does that mean it could have been better? (1)

Megajim (885529) | more than 7 years ago | (#16113698)

Part of me would rather that the Wii launched as an "unprofitable" machine with 720p output. I don't care as much about HD-DVD or BD, but a more competitive resolution would have been nice. That said, I'm excited that it's a realistically priced system. The new controls are really driving a lot of enthusiasm. No one is getting nearly as excited about the PS3. The Wii promises to break out of the "more of the same" approach of the other two major systems with some opportunities for gaming which simply didn't exist in a mass-marketed system. So ultimately the lack of 720p will not stop me from buying the system, but I do wonder if they could have packed in a little more. -Jim

Nintendo is insane. (0, Flamebait)

FarFromHomefish (988271) | more than 7 years ago | (#16114498)

Nintendo is insane. They feature weird (and not always functional, in the case of some 3rd party games, see madden) interfaces, mediocre (but good-looking, at least in the case of the Wii and DS lite) hardware. And... profitability. Which is totally out of the ordinary. Microsoft and especially Sony are REALLY pushing the graphics/hardware bubble this generation - and either of those systems on HD will produce some fantastic experiences. But then I've read that both of those systems may not turn a profit for their companies for years to come. Obviously, this isn't a viable strategy for companies. Great graphics are awesome for the end consumer, but if MS/Sony take a huge loss, why did they bother? Sony has a reason with the blu-ray drive... but is promoting a format worth hundreds of millions and potentially billions of dollars of lost profits? Hell of an advertising campaign.

Other Agendas (1)

rlp (11898) | more than 7 years ago | (#16114588)

It's no secret that Sony wants to use the PS/3 as a vehicle to get Blu-ray units into people's living rooms. They expect to lose money on the consoles, but make it back through licensing from game makers and (much) more importantly sales of Blu-ray movies from their entertainment division. Also, if Blu-ray becomes a standard - they'll collect royalties from other consumer electronics manufacturers and other content providers.

Microsoft's stock price as been stuck in a narrow trading range for several years. To increase it they need growth. The Xbox is more about moving from the home 'office' into the living room. Their goal is living room domination by offering a gaming device that morphs into a media center and ultimately a set-top box. If they lose money on the consoles, well so be it.

Nintendo - they just want to sell you entertaining games.

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