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GameCube (Games) Businesses Nintendo

Nintendo Won't Pull A Sega 133

Posted by Zonk from the first-party-all-the-way dept.
AztecL0B0 writes "Nintendo Insider takes a look at the reasons why Nintendo is not leaving the console race anytime soon. From the article: 'To have a successful system, you must not only sell a lot of the system, but make money off it, too. You can sell all the systems you want, but if you don't turn a profit, you'll go down the drain as a company.' This is the second part of a three part series. The first article discusses the background to this round of console fighting."
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Nintendo Won't Pull A Sega More

Nintendo Won't Pull A Sega

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  • Obvious... (Score:2, Interesting)

    by Ailure ( 853833 )
    I never saw a sega saturn in shops as kid, and I only seen one shop with dreamcast around here. Nintendo is nowhere like that currently... I see Gamecube in every shop I goto. And DS have swept the floor with PSP, in both in terms of sales and money earnt...

    And I remember when people told me that PSP would kill DS... lovely trolls. Not that i'm against the PSP, I even have considered to buy it too as soon it drop in price.

    • I see Gamecube in every shop I goto.

      I'm in the UK, and I don't. It's now only availible in specialist game shops (always the smallest section out of the three consoles), and big music / video / games shops like HMV and Virgin Megastores (again, with the smallest section). Dixons don't carry it anymore, my local ASDA stopped selling the games the day the DS came out, Woolworths stopped around Christmas. Argos does still have it, but with a pitiful selection of games that hasn't changed since the last cat

    • And DS have swept the floor with PSP, in both in terms of sales and money earnt...

      I'd hope so considering the DS has been out longer than the PSP...
  • There were some iffy points in there, but overall a fiarly well written piece. I look forward to the other sections. Regardless of market share, it's known that Nintendo doesn't lose money on hardware and has much loot in the bank. They aren't going anywhere...
  • It's about the quality of the games, not so much the quantity. They have been steady, and I have been a fanboy since '87 when I got my first NES. They produce great quality games, even though it may be Mario as the main character.

  • Good news (Score:2, Informative)

    by ArcticFlood ( 863255 )
    This is good news for all gamers, not just Nintendo fans. Nintendo will force other gaming companies to keep on their toes and continue to innovate. Though Nintendo hasn't done very well compared to the PS2, they have a strong hold on the portable gaming market.
    • "Though Nintendo hasn't done very well compared to the PS2, they have a strong hold on the portable gaming market."

      Nintendo may not have made #1, but they still made a healthy profit. If anybody's curious, that's also why Apple's still around.

    • Re:Good news (Score:5, Interesting)

      by hoggoth ( 414195 ) on Thursday June 02, 2005 @02:04PM (#12707026) Journal
      > Though Nintendo hasn't done very well compared to the PS2

      The whole point of TFA is that Nintendo HAS done well, better than SONY and Microsoft combined when your measurement is profit. Nintendo has made ONE BILLION dollars in profit in the past year, Sony has made 400 MILLION dollars in profit, and Microsoft has LOST 550 MILLION dollars.

      If you measure by market share or third party support or sales volume or even income then Nintendo doesn't win, but if you measure who is making (and keeping) the most money, Nintendo wins hands down.

      • That's exactly the point the FA made, and I was refering to marketshare. Sorry about not making that clear.
      • Nintendo may be lacking in third party support, but the previous article [nintendoinsider.com] says that they're ahead in market share. (Is sales volume the same thing? I'm an engineer, not an economist).

      • Re:Good news (Score:3, Interesting)

        by antifoidulus ( 807088 )
        IIRC, Nintendo has only had 1 quarter in it's entire history(which goes back quite a bit to when they were a Japanese card manufacturer) which was unprofitable. And even the reason behind losting money wasn't lackluster sales so much as Nintendo didn't play the currency game correctly and ended up getting burned on a weak dollar.
        • I believe that was only one or two quarters ago, and it was not the entire history. Only the past 50 years.
          • It was Q3 2003 (the quarter that ended Dec 31, 2003). They still made around $400 million profit that fiscal year.

            Nintendo has had only one losing quarter since they have been public which i9s about 50 years. However, the grandparent is right in that Nintendo did not make video games back then.
      • I did better than M$ and Sony combined by those numbers.
      • Why would a gaming consumer care a whit about a company's profitability as long as they know the company is going to stay "in the game." The most Nintendo's profits mean to me is that I know there will be Mario and Zelda games every couple years. Other than that, who cares?

        It may give Nintendo fans a warm and fuzzy feeling to know that Nintendo makes a bunch of profit, but how much good does that warm and fuzzy feeling do if someone with a Gamecube wants to play NFL 2k5? Or GTA3? Or, to use an upcomin

      • It shows that, yes, you can still stay around as long as you make money.

        OTOH, that's going to change soon. Most companies release terrible, terrible crap games for the GBA because, since it's the only game in town, and the vast majority of GBA game purchasers are ill-informed parents, shit in a cartridge will sell.

        The Nintendo DS is reflecting this port-itis: Madagasdar and SW: Ep 3 are both movie tie-in games (which are the biggest % of the GBA library), and both are unchanged from the GBA version with
    • If you pay attention to what Nintendo has been saying, and you look at their strategy, and you notice that they make big, bold moves, you'll notice that Nintendo tries to make moves to stay in the game. They've even said as much, in many interviews. All this talk of "Nintendo should do what Sega did" has been wishful fanboy flaming and speculation to begin with. It's hardly news, Nintendo knows what it is doing. They're a business, they aren't going to fold so easily, and they have the cash reserves to

      • Re:News? Hardly (Score:1, Funny)

        by Anonymous Coward
        Hrm, to turn an old slogan around...
        Nintendon't what Sega does!
  • Not to exaggerate, but Nintendo has become a part of our culture - not just video games, but society in general. Most people know Donkey Kong, Mario, Luigi, Princess Peach, etc.

    As long as Nintendo can maintain this "awareness" that the general public has of them as being a major part of video games and entertainment in general, I can't see them fading away.

    • Not only that, but... (Score:3, Interesting)

      by LePrince ( 604021 )
      You know, when my mom, my grand-dad, whatever, means to tell me "you've been playing too many videogames", what do they say ? "You've been playing that Nintendo too much"... It's like we don't say "tissues" but "Kleenex" most of the time; for most folks, the "baby-boomer" generation (people who are 40-60 today), video games = Nintendo, even if they SEE in PLAIN SIGHT that I'm playing on a PS2 or something...

      Of course I don't have those problems now, being that I own my own house and my mom doesn't live wit

    • Yeah, but that doesn't necessarily mean much either as staying power goes. I'd venture to say Sonic the Hedgehog is almost as popular as Mario. Didn't help Sega too much.

      Also I used to get a huge kick out of the old modem sales ads in the early to mid 90s where "Hayes command sets" and "Hayes communication standards" were prominent in the ads as the Gold Standard of good modems. Y'see because while all that was happening, Hayes was busy going bankrupt. All the brand recognition and mindshare in the wor
  • Hopefully this article will put to rest that myth that the PS2 was never sold at a loss.
    • Unless I'm missing some other reference to PlayStation pricing -- it talks about the PSP being sold at a loss, not the PS2.
      • "Sony is facing a similar situation with PlayStation Portable (and the PS2 before that, but the PS2 was able to overcome this obstacle very quickly because of strong sales)."
  • Biased or not, this article is great. Just looking at that profit graph makes me smile.

    $$$ for Nintendo = Lots of Nintendo games to come = :)
  • A great article about the business of video games on BuzzCut. [buzzcut.com]

    "And even though the announcement at E3 of the Game Boy Micro was greeted with a certain amount of skepticism and curious musing by the game press, from a business strategy standpoint, I expect that it will turn to pure gold.

    Without making a significant investment in R&D or manufacturing, Nintendo repackages current technology and resells it at what, I would expect, is a healthy margin. Not only will the Micro put GBA technology in new h

  • A lot of people know that the GBA sells nearly as well as the PS2. PS2 fans tend to call that unfair, citing reasons such as the GBA costing way less and providing way less. The article also mentions that Nintendo doesn't have any room for losses, but their handheld franchise at this point is basically the equivelent of Microsoft's XP.

    Of course, Nintendo isn't going to "pull a Sega." The first reason being that Sega has been going downhill ever since they pulled a Sega themselves. Sonic Heroes was out for
    • Calling their handhelds their equivalent to XP(Windows) for Microsoft is kind of accurate, but it's not entirely accurate in this case. The thing is, that even without their portable line, and just the Gamecube, Nintendo would probably be surviving. They've made money off of the gamecube, even if it is third place in terms of sales. The GBA isn't really subsidizing the gamecube, it's just something else that Nintendo does, which happens to make them lots of money.

      Microsoft lost over $500 million dollars se
      • "Microsoft lost over $500 million dollars selling Xboxes. There aren't many companies in the world that could afford to do business like that. It's really quite amazing. They are, of course, taking a longer view of things, hoping to build a marketshare that will eventually lead to profit down the line. I think that's a very questionable strategy, it reminds me a lot of the dot com era."

        Taking a loss to squeeze a competitor and focusing on long term revenue versus short term loss is a viable business tactic
        • I understand what their plan is, I just question how well it will work. For starters, MS is going up against a big company in Sony. In your example, the local company has to just roll over and take it. Sony can fight back competitively, and they aren't afraid to do so.

          I know MS isn't stupid. They didn't get to be the huge company that they are by being bad at business. Like you, I have no doubt that this is going to play out over a long time period, and the future is really up in the air at this point. I j
          • It'll be a long fight for sure. Sony has a huge momemtum in the industry right now. I think the best thing Microsoft could do would be to have a serious bundle at launch (say Halo 3 included with the system) or undercut the market on the software side. I doubt that will happen, I guess it's one thing to lose money on the hardware, but no one seems to compete on software pricing.

            • I think the best thing Microsoft could do would be to have a serious bundle at launch (say Halo 3 included with the system)

              You mean a CD of Head Like a Hole by Nine Inch Nails [wikipedia.org], ready for import into Custom Soundtracks? That's the only Halo 3 that will be out by the holiday season that Microsoft is shooting for. Rumours on the Internets are that the second sequel to Halo: Combat Evolved won't be ready until around the PS3 launch.

              • Based on how long it took them to release the not quite ready for prime time Halo 2, I would imagine you are correct. Unless MS is really dumb and throws a whole lot of money at it resulting in some maybe pretty but playability is shitty Halo 3.
                Of course if they launched a Halo 3 bundle at the time of the PS3 launch, that also would be a good tactic.
          • According to BillG, Halo 3 won't be ready for the Xbox 360 launch but will be present when Sony tries to debut the PS3. You can read about it here: http://www.gamespot.com/news/2005/05/15/news_61245 92.html?part=rss&tag=gs_news&subj=6124592 [gamespot.com]

            Rumors place the PS3 launch around Spring 2006. I doubt Halo 3 would really be ready by then, since Halo 2 was just released a couple months ago. But I'm also guessing Sony won't be ready for a Spring 06 launch, especially considering their hardware isn't quite
      • "Sony didn't kick ass with the PS2 because of more raw power. Its games don't look that much better than the N64. It won because of things it did differently (innovation). Integrated DVD player, optical media, backwards compaitibility, etc."

        Sonny won also because of Final Fantasy X and XI, and the GTA and GT titles. These were some of the biggest selling games in NA. If I remember correctly, more copies of Vice City has been sold than any other video game in the U.S...ever.

        It will be interesting to see

        • I hope nintendo offers some good possibilities with online play. I'm sick of split-screens.

          Not all same-screen multiplayer games are split-screen; a lot are shared-screen, where all players interact in a single third-person-omniscient view, such as Bomberman, Smash Bros., or several of the Mario Party minigames. Making games LAN- or online-only by ditching split-screen play would raise the price of a $300 console to $900 in a house with three players.

          "So play with people who live elsewhere and have b

          • You're right. But the games that ARE split screen would be much better online (assuming you have a good connection). Personally, I like being able to see my rank against other people, play against many different tactics, etc...And having your whole tv to yourself is so much easier on your eyes.

            And I'm not saying take away split screen. I'm just pointing out the if I have the money and theres two different versions of a same game...im gonna probably get the one with online capabilities in addition to th
      • I don't know about that... $500mn is a large loss, but I think most companies--regardless of their size--expect to lose money the first 2-3 years of entering a new market, especially one with stiff competition. Also, on the grand scheme of things, $500mn isn't that large in an industry that shuffles $23.2bn a year around.

        If Sony had to do it, they would probably would as well.
    • " PS2 fans tend to call that unfair, citing reasons such as the GBA costing way less and providing way less."

      "Your honor, I object!"

      "Why?"

      "It's devastating to my case!!"
  • They're forgetting Microsoft has a bottomeless pit of money to use up. They can lose money until both are bankrupt.
    • They're forgetting Microsoft has a bottomeless pit of money to use up. They can lose money until both are bankrupt.

      At some point, losing money year after year while their main competitors profit isn't going to seem as attractive anymore.

      Maybe i'm wrong. Maybe Gates will hang on forever out of sheer spite. However, this assertion that Nintendo and Sony will lay down and die just because Microsoft has more money to lose is unfounded BS at this point.

  • They already haven't pulled a Sega (Score:4, Informative)

    by alan_dershowitz ( 586542 ) on Thursday June 02, 2005 @03:21PM (#12707767)
    They'd have to have like six failed consoles before they've pulled a "Sega". I say this as a proud Dreamcast owner, by the way.

    Sega CD: Buggy, crashy, still only 64 colors, looked like crap compared to SNES. Sega USA helped kill it with tons of terrible Full Motion Video games that nobody liked. Sound CPU still sounded like a singing greeting card.

    32X: Developed by Sega of America at the same time as the Saturn was being developed in Japan because sega of japan DIDN'T TELL SEGA USA THEY WERE MAKING A NEW CONSOLE. Never well supported, died with a handful of games.

    Saturn: not a 3D system, Playstation came out, say goodbye to Saturn. Dual CPU, too hard to develop for due to lack of standard dev tools for SMP programming.

    Dreamcast: Good, but too little too late. PS2 helped kill a year in advance by simply lying about how great the PS2 was going to be. Several game batches on release were bad and had to be recalled, sending sega into the hole even further.

    I don't know about anyone else, but After the Sega CD, I didn't even consider Sega consoles because I knew they'd be failures. I realize this is a self-fulfilling prophecy, but they really weren't that good, at least until the Dreamcast. I still have my Dreamcast, and I still love it. I miss Sega, but only since the Dreamcast, and for the Genesis, which had some great games.

    Nintendo has had some failures, but they were never flagship products, and it seems they cut their losses at the right time, because no one tends to remember the Nintendo failures.
    • The dreamcast really was a great system with some great games.. I wish Capcom's Powerstone had found its away to the other consoles.

      What were the nintendo failure products?

      Virtual boy is the easy one. umm.. what else?
      • The NES ROB comes to mind immediately.

        It was a robot add-on peripheral for the original NES that was total junk. I've read that even in product tests, kids were saying things like "this sucks!", but an exec's reputation was riding on the product, so they greenlighted it anyway. It failed as expected.
        • As the AC above me said, ROB was developed because many America toy stores flatly refused to carry a game console unless it was marketed as a "toy", and more than a game system. This is also why the original NES value pack in america had 2-3 games bundled - retailers demanded it, after the video game crash.
      • I suppose the 64DD for the N64 was a failure, it got a very limited Japan release and that was it.

        Other than that I guess the light guns for the NES and SNES were pretty much ignored too.

        And I still play my Dreamcast today, I just wish Sega would make Shenmue III...
        • Part of the 64DD failure was just becuse it was simply released too late I heard. It's a shame, since there was a quite few nice things for 64DD. Such as a F-zero track editor...
    • Actually, the Sega CD was capable of doing 128 colors for games and 256 for FMV.
      • They could get extra colors by using a software trick from the Amiga, "Hold and Modify", where they would change palette values in the middle of an horizontal blanking interval. However, that eats up CPU that could be used for important game logic. It should have been possible on just the Sega Genesis. You can do a similar trick on the Gameboy and Gameboy Advance to boost colors, but it eats the crap out of your battery.

        Only one game ever used 256 colors. I do not know if it is implemented in software or h
  • It is quite clear that Nintendo is doing a great job running a profitiable company. Nintendo is making money on all of its platforms in this generation of games.

    It could be argued, however, especially with the difference in the installed user base, that only Nintendo is able to make a meaningful profit out of its Gamecube platform.

    Its not enough for Nintendo to be profitiable and backing the Gamecube. They also need to make sure that Capcom, Namco, Sega, Electronic Arts, Konami, Activision, THQ, Midway,
  • I dont see why nintendo and Sega dont join forces at this point!! with their combined intellectual properties they could make a killing!!!
  • Ok, for you fanboys that don't seem able to understand what's being stated in the article (and judging by some of the other comments posted, there are a lot of you), here's a summary in terms that I hope you can understand.

    It goes like this:

    The console wars are like highschool. The fanboys and some idustry people spend all their time talking about who's got the most riced out car or who is the better looking. However, they are all failing to look at the result; Who's getting the most pussy? Sure X-Box m

  • whatever that means, hope it doesn't become some new meme..

    The only way Nintendo could "Pull a Sega" is if they decided to run Windows CE on the Revolution, then have its copy protection smashed wide open say..three months after launch.

    After which all the developers move to other console platforms and they decide to quit the hardware business and stick to producing software.
  • The ONLY company that has been building little boxes to play video games on, since the days of YARS Revenge, is also the only company that broke a billion in PROFIT in the video game wars. Wow I am stunned.

  • Nintendo is the only company of the major 3 console makers that is completely a video game company. They reported profits of over 800 million USD this year. Thats far from turning away from consoles, Not only are they making money, they are making a lot of it. Whereas Microsoft has recorded over 1.6 billion in loses from the Xbox. I believe Sony also reported some sort of lose on the PS2 hardware.(I can't confirm that so does anyone know), Nintendo makes a point, they may sell less consoles then the other
  • I don't believe Nintendo is going anywhere in the hardware market, they're comfortable in their niche. They sell hardware that is accessible by families with lower price points and high quality. At $99 the gamecube has pulled off graphics better than the PS2 on many games. Even at low price points, they make PROFIT, which is more than MS can say. Sure, they don't turn out expensive do-it-all machines, and they don't churn out as many games as the other consoles. When they do churn something out, its a

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