Topic: Iwata Acknowledges Third Party Wii U Challenges, Get-Well Plan

[pokepal148]

It's like Iwata thinks this is high school. "If I dress really cute in these first-party games, that cute third-party boy will stop ignoring me and be my Valentine."
That's one hell of a business plan.
 

considering that in this day and age a game can sell 3 million copies and still be considered a failure it may not be that bad of an idea...

But unless Nintendo makes some effort to make porting games from other systems as painless as possible the chances of them turning to Nintendo are slim...

[Agent-X-]

marty, the way I understand Nintendo's declining revenue is due to two forces. Of course, one of those is declining sales. However, by itself, declining sales will not result in operating losses. The launch of a new game console could result in operating losses, however the system turns a profit on every sale. They shipped many more units during the launch window than they were able to with the Wii.

The other force is the Japanese economy and strength of currency. Without doing any research right now, it's been my understanding that their losses were considered "paper losses." A declining Yen to the American dollar would appear to be a loss.


Basically, I'm claiming that Nintendo isn't doing anything that would actually result in a net loss. Is their software selling? Are they going to be able to sell software? The fear is that the core Nintendo audience may give up on the company, but until that happens they're going to continue to turn a profit. They are not hurting for money.

[Sarail]

@ agent-x-
Are you aware that Nintendo hasn't made themselves any money in the last 2 (financial) years?  They saw a steep decline in revenue in fy 2010 as well.  If Nintendo were raking it in, I think you could say that Nintendo is doing what's best for them despite what "core" gamers are complaining about on the web--but that's not at all the case. 


I'd also like to add that the word profit has a specific meaning and takes into account ALL costs, explicit and implicit.  It's hard to claim something will be profitable (or is profitable) without seeing the books and all projected costs and earnings as well as alternatives.

Marty, I think you're getting turnover (or revenue) confused with profit (or net income.) Profit, of course, being total turnover minus total expenses in a given time frame.

Nintendo continue to post profit on the majority of products they release. This is fact. The only recent exception being the Wii U console - as Nintendo have mentioned they were taking a small loss on each console sold. Surely by this autumn season, that loss will be non-existent.

[marty]

@ agent-x-
@ racht
I don't mean to address points out of order but when agent-x- is talking about eventual profitability, he really should take into account all costs/investments/alternatives (opportunity costs) over an extend time frame--economic profit.  Eventually isn't a timeframe you can measure accounting profit in, which only looks at revenue and explicit costs.


Think of the choice Nintendo gave Retro:  Make a DKCR game OR make a Metroid game.  The explicit costs (office leases, computers, staff, marketing) for both games would probably be roughly the same.  It's also unlikely that Retro could make a Metroid game that would sell better than a DKCR game.  Releasing a DKCR game means that they're losing all the benefits of releasing a Metroid game (Metroid might not sell the same number of copies, but it could move more WiiU's than another 2d platformer).


Also consider that Nintendo outright lost 1/2 billion dollars in FY2011 and was operating at a loss in FY2012.  From an accounting profitability standpoint, Nintendo would have been better off, scaling back or shutting down for those 2 years than making/releasing hardware and software.  That doesn't mean that that would be a long term, economically profitable move for them to make, despite it being more profitable in the short-term.


OR: The standard Econ-101 example is that quitting a job that pays 30k a year to go to college where tuition 10k a year doesn't cost you 40k over 4 years, it costs you 160k.   Like I said: without knowing exactly what Nintendo is doing and how they are spending money on, it's nearly impossible to know exactly how profitable Nintendo is, will be, or would be.
 
Their stock sure took a tumble the last few years after being one of the biggest companies in Japan.  Nintendo cites weak dollar/strong yen for some losses... but I just don't believe it considering how badly sales tanked on the Wii the last few years as well as the fumbled 3ds/Wiiu launches.  It's not like they would have lost even more money if they sold more games.  I'm sure the terrible sales weren't helped by international economics, though.  Nintendo pretty much lives and dies by game sale revenue.  Yes, they can survive and still sell less games and less hardware, but they've said that the margin on hardware is considerably smaller than that of their software.  Nintendo also says that they make hardware just to make sure they always have a way to sell their games.