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NWR Interactive => TalkBack => Topic started by: King Bowser Koopa on September 24, 2012, 02:58:23 PM

Title: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: King Bowser Koopa on September 24, 2012, 02:58:23 PM

Some financial details about Wii U's production and pricing.

http://www.nintendoworldreport.com/news/31849

Nintendo's latest console is not selling at a loss to the company, a recent interview Games Industry International held with Nintendo of America CEO Reggie Fils-Aime revealed.

According to the company president, Nintendo strongly believes in providing consumers with strong value in their products right from their launch.

"The way that we approach consumer value is we want to make sure we give the consumer a lot for what they pay, and when you look at that basic model you get the innovation in the GamePad (and all of the gaming options that presents), you get Miiverse in terms of a gaming community, you get Nintendo TVii, you get video chat... all of that is included in the base proposition. We think $299 is a really strong value, and it's a value that's going to be strong for a long time."

This philosophy states that the price of their products should remain the same for as long as possible without the need to drop prices as time goes by.

"...We don't believe in pricing a product and then having to reduce the price some short time later. When we had to do that for 3DS, it was a very painful proposition for us. And what we did with the Wii at $249 and leaving it there for, I think, about three and a half years is very much consistent with our pricing philosophy." 

Fils-Aime admits that after the 3DS price drop, the production of the handheld began costing more than what they were getting for each unit sold, which led to their first ever financial loss. However, he assures that Nintendo believes strictly in making money on their hardware and that trend will continue into the future.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: tendoboy1984 on September 24, 2012, 03:17:42 PM

"Nintendo believes in making money on their hardware"

Just like Apple then. Smart move.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: ShyGuy on September 24, 2012, 04:04:48 PM

I believe in Harvey Dent.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: ByteLicker on September 24, 2012, 04:29:48 PM

@tendoboy1984
Just like Apple all companies in the world then. Smart move.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: Fatty The Hutt on September 24, 2012, 04:35:14 PM

I believe in Crystal Lite. Cuz I believe in Me!

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: TJ Spyke on September 24, 2012, 04:38:56 PM

Quote from: ByteLicker on September 24, 2012, 04:29:48 PM

@tendoboy1984
Just like Apple all companies in the world then. Smart move.

Sony would disagree (they lost money on PS3 for years, still might be). Same with Microsoft (Xbox 360 wasn't profitable til 2010). Video game systems in general tended to lose money with the companies making profit back from their games.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: Fatty The Hutt on September 24, 2012, 04:42:21 PM

Quote from: Fatty_The_Hutt on September 24, 2012, 04:35:14 PM

I believe in Crystal Lite. Cuz I believe in Me!

In case nobody gets the reference;

Lord, I am old.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: Adrock on September 24, 2012, 04:53:04 PM

This is expected and still a smart idea. And, unlike 3DS, I don't feel like Nintendo is selling at a massive profit. In other words, I actually think Wii U is fairly priced and don't feel like they're trying to pull the wool over my eyes. Nintendo could have launched 3DS at $200 instead and probably still made a profit. The Deluxe Set seems like a really good value.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: Ceric on September 24, 2012, 05:52:58 PM

Quote from: Fatty_The_Hutt on September 24, 2012, 04:42:21 PM

Quote from: Fatty_The_Hutt on September 24, 2012, 04:35:14 PM

I believe in Crystal Lite. Cuz I believe in Me!

In case nobody gets the reference;

Lord, I am old.

I miss the Cola Wars.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: Chozo Ghost on September 24, 2012, 06:02:52 PM

A value for the consumer would be if Nintendo sold the console at a loss or at least at cost. If Nintendo is making a profit off each unit sold then its not a value for consumers. Maybe from Nintendo's perspective it is, though.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: Ian Sane on September 24, 2012, 06:05:30 PM

I don't expect Nintendo to take a loss on hardware.  That would be just dumb business sense.  But I don't want the product severely compromised to reach a certain profit margin and MSRP.  With the Wii, I would rather have had better hardware.  I would have gladly paid a higher price for it and it would be even better if Nintendo had shrunk their profit margin (or even sold at cost).  They can't claim I'm getting a good value if the product doesn't have enough under the hood to last a whole generation (the Wii was around for six years but realistically only lasted four).

I don't want Nintendo cheaping out on their hardware because of this.  They shouldn't take a loss but they shouldn't specifically seek to make a profit on the console because I think that just encourages to them to cut back on this or that.  "Well we'll just cut back on RAM here and storage space here and we can go with a slower CPU here."  The priority should be to get the console in households, without going in the red, so as to make a profit from videogame sales (including third party licencing revenue, which Nintendo seems to forget about).  I don't like their focus on peripherals either as it just encourages them to make gimmicks.  Too often with the Wii it seemed the whole business model was to find ways to sell us peripherals like Wheels and Zappers.

The whole console design should be based on meeting three things:
1. Does this allow us and third parties to make the games we want to make and consumers want to buy?
2. Can we sell this at a price point consumers are willing to pay?
3. Do we not lose money while meeting the first two points?

Stepping beyond this encourages the console to be compromised in favour of greed.  The console is merely the tool to play the games which is the real product.  You can **** up a game but if you **** up the console you essentially just fucked up five years.  The console has to be able to do what it needs to do today and five years from now.  Whatever you go with, you have to live with.  It's too important to let stockholders dictate this or that which will make a profit for this year but will handcuff the console two years later.  It's not a product, it's the means of delivering the product.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: TJ Spyke on September 24, 2012, 06:41:07 PM

Quote from: Chozo Ghost on September 24, 2012, 06:02:52 PM

A value for the consumer would be if Nintendo sold the console at a loss or at least at cost. If Nintendo is making a profit off each unit sold then its not a value for consumers. Maybe from Nintendo's perspective it is, though.

So under your warped logic, 95% of ALL retail products are not values for consumers. Guess no food are values for consumers, or cars, video games, movies, clothes, etc. We can't let a company actually make a profit for the work they do.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: Chozo Ghost on September 24, 2012, 07:56:41 PM

Quote from: TJ Spyke on September 24, 2012, 06:41:07 PM

So under your warped logic, 95% of ALL retail products are not values for consumers. Guess no food are values for consumers, or cars, video games, movies, clothes, etc. We can't let a company actually make a profit for the work they do.

Every industry operates differently. In the video game industry it is routine to sell the hardware at a loss and then make a profit off the software. Nintendo would have no problem profiting (and then some) off the software, because they sell oodles of it. This is called the "razor and razor blade" business model. Companies who make razor blades have often given the razors away to people for free, knowing that they would buy the blades in the future. This is the business model that the video game industry works under.

But the thing about hardware is once you've locked it in and finalized it, you have to live with that for its entire lifespan. If it ends up being woefully inadequate you may end up losing developer support, or even marketshare to the competition. Nintendo chose to sell the Wii for a profit from day one but in order to do that they had to skimp on the hardware, which meant few developers supported it, which meant less licensing fees and more customer dissatisfaction and eventually an erosion of marketshare.

Think about it logically. Isn't it better to sell the hardware for a loss in the short term if it will result in much greater profits in the long run? By having powerful hardware that developers are actually interested in supporting you collect licensing fees. This means more money in your pockets. That is what Nintendo should have done.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: TJ Spyke on September 24, 2012, 08:02:48 PM

Nintendo hardware has never sold at a loss (minus the 3DS for a few months after the price-cut). My point was that Nintendo making a profit on the Wii U has no impact on the value of the system to consumers. Does that mean they should cut the price everytime it gets cheaper to make the system? That would mean something like the PS2 should be less than $50 new, and Wii should be less than $100.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: S-U-P-E-R on September 24, 2012, 08:05:44 PM

It's hard for me to not automatically read this headline as "Nintendo taking shortcuts on hardware"

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: TeaHee on September 24, 2012, 10:10:07 PM

I think Nintendo tries to make the best product they can in the $250-300 range that will make them money and provide a unique experience for their customers.  I don't think anyone should have a problem with that, and if you do there is always the competition that doesn't take shortcuts on technology, but also doesn't always provide the best experiences.  A variety of choices for the customer is what is important.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: nhaines on September 25, 2012, 03:09:04 AM

Definitely.  The GameCube was hands-down the best hardware of that generation and it didn't do a thing for Nintendo.

As Nintendo has proven on the Wii (Super Mario Galaxy, Skyward Sword), it doesn't take the best hardware to make the most beautiful games.  Even Factor 5 pushed out the very impressive Star Wars: Rogue Leader engine in 2 weeks for E3, and once the GCN was launched it was practically unrivalled.

I played Wii U on Friday and Pikmin 3 was absolutely gorgeous.  The Wii U Gamepad weighs just slightly more than my 3DS, and is super comfortable to hold.  Every game I saw looked beautiful.  Wonderful 101 looked wacky, Game and Wario looked Japanese.

I agree that the Wii U is a huge value for gamers.

Bonus: the Pikmin 3 attendant throwing herself across the screen and/or gamepad whenever someone tried to take a picture of just one or the other.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: Plugabugz on September 25, 2012, 03:18:40 AM

Nintendo continuing the trend of the last 3 generations and making profit on hardware. Surprised, much?

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: Fjurbanski on September 25, 2012, 07:37:22 AM

Good.


I think people forget that, unlike Sony and Microsoft, Nintendo doesn't have anything to fall back on. They're only a gaming company.


It's best for them that they don't lose money on a console. As for the others, it's still stupid of them to lose money on every console, but it seems they can handle it at least a little better than Nintendo could.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: BlkPaladin on September 25, 2012, 10:08:43 AM

Quote from: Fatty_The_Hutt on September 24, 2012, 04:42:21 PM

Quote from: Fatty_The_Hutt on September 24, 2012, 04:35:14 PM

I believe in Crystal Lite. Cuz I believe in Me!

In case nobody gets the reference;

Lord, I am old.

I got the reference right away, and yeah I'm old.

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: tendoboy1984 on September 25, 2012, 02:54:36 PM

Quote from: nhaines on September 25, 2012, 03:09:04 AM

Definitely.  The GameCube was hands-down the best hardware of that generation and it didn't do a thing for Nintendo.

As Nintendo has proven on the Wii (Super Mario Galaxy, Skyward Sword), it doesn't take the best hardware to make the most beautiful games.  Even Factor 5 pushed out the very impressive Star Wars: Rogue Leader engine in 2 weeks for E3, and once the GCN was launched it was practically unrivalled.

I played Wii U on Friday and Pikmin 3 was absolutely gorgeous.  The Wii U Gamepad weighs just slightly more than my 3DS, and is super comfortable to hold.  Every game I saw looked beautiful.  Wonderful 101 looked wacky, Game and Wario looked Japanese.

I agree that the Wii U is a huge value for gamers.

Bonus: the Pikmin 3 attendant throwing herself across the screen and/or gamepad whenever someone tried to take a picture of just one or the other.

We already know what the GamePad and Pikmin 3 look like, so what's that lady trying to hide?

Title: Re: Wii U Not Selling at Loss, Nintendo Believes in Value
Post by: nhaines on September 25, 2012, 03:26:15 PM

She told me that it was still prototype/development software so I could take a picture of a friend playing or with both the gamepad and TV in frame, but she told someone else the restriction was no detailed closeup photos, so I'm not entirely sure.  It was the E3 demo and she'd also showed off the game at E3 and really knew the game well.  I was quite impressed at her knowledge.  Since I'd chatted a little while waiting, once I got the controller she said, "Okay, since you're already a pro at Pikmin I'll just stay quiet and let you play" which was awesome.  When she explained this or that to other onlookers I'd try to demonstrate what she was talking about.  Not bad for a 3-minute timed demo.

Bonus: the look on her face when someone asked the cost of the game and she said there was no announced price and I said "actually, Nintendo just announced their base price for first party games is $59.95," and how the smile returned when I said "However, Pikmin 3 will release in the launch window between November 18th and March 31st, but because a release date hasn't been announced, there's no official price.  Once they announce the release date, they'll announce the price as well."  The guy asked if I meant it might be more than $60 and I told him that Nintendo tended not to do that and would even price simpler games lower, but that this was a pretty complex, premium game so I expected it to be $60.