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Since the gamecube is under 100 bucks  

post #1 of 23
Thread Starter 
Since the cube is under 100 bucks and Nintendo is giving games away with the console how much do you think it costs to produce? I have always wondered about this myself...Also does anyone know any other production costs by Nintendo for their consoles and handhelds as well?
post #2 of 23
At $149.99 Nintendo stated in an interview they lose "A little money, not so much as our competitors". Within a few months they dropped to $99.

The reality for every product is that consumer demand sets pricing. Consumer demand for the GC was low at higher prices, not that its any higher at $99, but really there had to be a floor and $99 is it for now.

What it costs to produce the unit is irrelevant. Nintendo swore to stay in the market and will pay whatever they need to do so.
post #3 of 23
Quote:
Originally Posted by spinksjinx
Since the cube is under 100 bucks and Nintendo is giving games away with the console how much do you think it costs to produce? I have always wondered about this myself...Also does anyone know any other production costs by Nintendo for their consoles and handhelds as well?
Nintendo has never really disclosed how much it costs for them to produce hardware. There are snippets here and there were people might claim that they make money or they lose money, etc. but they've never brought those numbers to the public.

One thing to keep in mind is that Nintendo likes to reuse many of the same components over and over again. A/C adapers for the GBA SP and the DS are the same. A/V cables from Nintendo's past consoles are the same as the GC. D-pads on GC controllers are the same pad they used on the original GBA. So, there is added savings in that.

In Japan, Nintendo is considered to be one of the smartest run companies around. In the last 45 years, Nintendo reported a loss in only one quater, which was mainly due to exchange rates. So, while people will say that the GC was a loss for Nintendo, there's really no numbers to prove this. Nintendo is in the business of making money and if they feel they can't make money on something, chances are they will get out of it.

Here's an insteresting article that goes into more detail:

http://1up.com/do/feature?cId=3147953
post #4 of 23
Good article. I always like to see realistic articles like this one that seperate Nintendo's success from the Gamecube:

Quote:
And while GameCube is smarting, with little to offer in 2006 outside of Twilight Princess and Chibi Robo, it's hardly the only iron Nintendo has in the fire. The DS is, against all expectations, holding its own against the PSP, and the GBA continues to be a tiny 32-bit money farm.
Late last year this came form Nintendo showing that the GC is not helping sales but hurting them:

Quote:
October 7, 2005

Nintendo Lowers Operating Profit Estimates
Officials from Nintendo of Japan have announced that the company is to cut its first half operating profit estimate, while at the same time increasing its net profit estimate. The net profit rise is primarily due to currency-related gains, while the operating profit drop is attributed to poor sales of GameCube hardware and software, as well as the recent Nintendo DS price cuts.
Its interesting to note Nintendo lost $$ on one currency change in 2005 and gained on another... I woner what the end result was.
post #5 of 23
The key words there frank are estimates and profits.
See, low sales of GC's have caused Nintendo to lower profit estimates, because they estimated GC would be selling better. However, it doesn't say anything that low sales of GC are causing Nintendo to take a net loss.

The article is good because it shows that while many equate that Nintendo is losing money, they are actually quite a profitable company despite people's perception of Nintendo being in last place. Its no surprise that a large portion of their profits are due to their presence in the portable game space, but that the gamecube cannot really be considered a failure as there aren't net losses to be associated with it. Again, lower estimates are a lot different than actual loss.
post #6 of 23
Since Nintendo shelters the GC numbers in with all of their other products (handhelds amoing them) we will never know the hard done (or not) by the GC's existance.

That said we also have no idea how much the XBox cost MS, after all the Home division has many products in it.

Ignoring the obvious and saying the GC did not cost Nintendo money is like saying the XBox was profitable and the Sidewinder series made the division lose money.

The reality is the GC lost 10 million consumers for Nintendo from the N64. In no business is a product considered a success when you lose customers from one model to the next unless your cost to produce and market changed DRAMATICALLY.

Since we know the cost to develop and market indeed went up and not down from the N64 generation to the GC the only possible way the GC could be a success (given the 10 million loss in purchasers) would be for the GC to cost almost nothing to produce (To offset the development and marketing costs).

Hopefully there will not be a need to hide the Revoloution information, hopefully Nintendo can reclaim the sales of the 80s where giving out their console sales data was a matter of pride.
post #7 of 23
Quote:
Originally Posted by FrankJ.Cone
Since Nintendo shelters the GC numbers in with all of their other products (handhelds amoing them) we will never know the hard done (or not) by the GC's existance.

That said we also have no idea how much the XBox cost MS, after all the Home division has many products in it.

Ignoring the obvious and saying the GC did not cost Nintendo money is like saying the XBox was profitable and the Sidewinder series made the division lose money.

The reality is the GC lost 10 million consumers for Nintendo from the N64. In no business is a product considered a success when you lose customers from one model to the next unless your cost to produce and market changed DRAMATICALLY.

Since we know the cost to develop and market indeed went up and not down from the N64 generation to the GC the only possible way the GC could be a success (given the 10 million loss in purchasers) would be for the GC to cost almost nothing to produce (To offset the development and marketing costs).

Hopefully there will not be a need to hide the Revoloution information, hopefully Nintendo can reclaim the sales of the 80s where giving out their console sales data was a matter of pride.
If Nintendo is selling hardware at a profit(or even at cost) then, despite having 30 million customers or 20 million customers, then there are no net losses associated with said device. All of the current console makers "shelter" their manufacturing costs. Just how the industry is.

We just don't know how much it costs Nintendo to make the Gamecube. Nintendo has quite a good relationship with Panasonic and could be getting many components from them extremely cheap.

The reality of this is that Nintendo is ONLY in the gaming industry and has a presence in both the portable and console market. Their marketshare in the console market has weakened, but that does not necessarily translate to a net loss for the console sector of their business. It does translate to lower profits though.

Let's face it, the XBOX really messed things up for Nintendo this generation. Had it not come out, Nintendo would've had the more powerful console and probably would've had comparable sales numbers as they did with the N64. However, Microsoft's entry into the console market left Nintendo in between Sony and Microsoft. That's a tough place to be because the Gamecube didn't have the game selection the PS2 had and it didn't have all the bells and whistles the XBOX had. So, its no wonder why Nintendo's numbers went down this generation. However, they seem to have learned from this and have now differentiated themselves from the competition, offering bells and whistles that no one else will with the Revolution. That in itself will help entice many gamers back to Nintendo along with whatever new ones Nintendo is trying for(similar to what the DS is doing).

While the Gamecube may not be Nintendo's greatest achievement in their 45 year history, it certainly is no slouch and is a heck of a game system with some excellent games to boot. Sales numbers might cause people to assume that its a failure, but again, there isn't any sales data to show that it failed for Nintendo in any respect profit wise. Whether Nintendo is "sheltering" this data or not, its data that all the major companies don't typically reveal nowadays. One thing is for certain though, Nintendo is the only one of the current gen companies that are solely in the games business, so whatever profits they do get are coming from something game related.
post #8 of 23
Only in the gaming industry? One word: Pokemon

Recent washington newspaper placed Pokemon associated sales at 15 billion for its 10 year life span. Thats of course 15 billion retail but thats quite a bit of non-gaming money.

I prefer to think in a glass half full way: The Xbox was the best thing to happen to Nintendo since the release of the SNES. A brief look at Nintendo shows why.


Obviously the NES saved gaming, sold 30 million when everyone thought the whole home gameing system was a fad that had run its course.

The SNES faced stiff competition from Sega and a little from NEC. It suffered a small loss in users but that was probably to be expected given that the NES never really had any competition.

The N64 was where things started to go down hill. Believing that developers would just continue making games for them no matter what they stuck with them the N64 lost a great deal of developer support over the format as well as very high royalties. The N64 ended up losing quite a few formerly loyal customers along with third party titles.

The N64 should have been a wake up call. It had arguably two of the best games ever made and still sold poorly compared to the systems before it and was clobbered by the Playstation.

Instead we got the GC. A system designed to be the N64 part 2: Built to play Nintendo first party games. The controller while loved by a vocal minority is drastically different than the controller the vast majority of gamers knew and loved (The dual shock), and quite honestly was third party unfriendly.

The failure of the GC to turn around the adoption slide leads to the Revoloution. Instead of trying to compete with Sony (A losing propsoition for anyone) we have a system that both preserves Nintendo's desire to do thinsg their way but ads unique features that shouldk entice the ever important third parties.

If Nintendo had "succeeded" with the GC and sold 40 million units what are the odds we would not get the N64-3? Just another system that fails to beat Sony at enticing consumers and is relegated to a few 1st party titles?

Given how Nintendo's first party titles sold on GC (If you add Super Mario Sunshine and Zelda:WW their two biggest titles you get to about half of what Zelda:OOT sold and are 3 million short of half of what Super Mario 64 Sold) that would not be a good thing for anyone but Sony.

The XBox takes the pressure from Nintendo. It allows them to say: We're not a part of that. Look at what we are about over here. If Sony had only Nintendo for competition that would not be possible, they would be compared at every turn.

And lets not forget online. Nintenod was one of the first, their system however did not work very well and was not adopted by the Japanese. They then declared online DEAD. The XBox showed everyone online for consoles was just getting started.

And how about downloading games from past systems? Live Arcade pioneered whats considere one of the Nintendo Revoloutions key features. And seveal years before it (Live Arcade was actually on Xbox, though a tad clunky!)

Competition is good, competition that changes the market as much as the XBox did is GREAT!
post #9 of 23
Quote:
Originally Posted by FrankJ.Cone
Only in the gaming industry? One word: Pokemon

Recent washington newspaper placed Pokemon associated sales at 15 billion for its 10 year life span. Thats of course 15 billion retail but thats quite a bit of non-gaming money.

I prefer to think in a glass half full way: The Xbox was the best thing to happen to Nintendo since the release of the SNES. A brief look at Nintendo shows why.


Obviously the NES saved gaming, sold 30 million when everyone thought the whole home gameing system was a fad that had run its course.

The SNES faced stiff competition from Sega and a little from NEC. It suffered a small loss in users but that was probably to be expected given that the NES never really had any competition.

The N64 was where things started to go down hill. Believing that developers would just continue making games for them no matter what they stuck with them the N64 lost a great deal of developer support over the format as well as very high royalties. The N64 ended up losing quite a few formerly loyal customers along with third party titles.

The N64 should have been a wake up call. It had arguably two of the best games ever made and still sold poorly compared to the systems before it and was clobbered by the Playstation.

Instead we got the GC. A system designed to be the N64 part 2: Built to play Nintendo first party games. The controller while loved by a vocal minority is drastically different than the controller the vast majority of gamers knew and loved (The dual shock), and quite honestly was third party unfriendly.

The failure of the GC to turn around the adoption slide leads to the Revoloution. Instead of trying to compete with Sony (A losing propsoition for anyone) we have a system that both preserves Nintendo's desire to do thinsg their way but ads unique features that shouldk entice the ever important third parties.

If Nintendo had "succeeded" with the GC and sold 40 million units what are the odds we would not get the N64-3? Just another system that fails to beat Sony at enticing consumers and is relegated to a few 1st party titles?

Given how Nintendo's first party titles sold on GC (If you add Super Mario Sunshine and Zelda:WW their two biggest titles you get to about half of what Zelda:OOT sold and are 3 million short of half of what Super Mario 64 Sold) that would not be a good thing for anyone but Sony.

The XBox takes the pressure from Nintendo. It allows them to say: We're not a part of that. Look at what we are about over here. If Sony had only Nintendo for competition that would not be possible, they would be compared at every turn.

And lets not forget online. Nintenod was one of the first, their system however did not work very well and was not adopted by the Japanese. They then declared online DEAD. The XBox showed everyone online for consoles was just getting started.

And how about downloading games from past systems? Live Arcade pioneered whats considere one of the Nintendo Revoloutions key features. And seveal years before it (Live Arcade was actually on Xbox, though a tad clunky!)

Competition is good, competition that changes the market as much as the XBox did is GREAT!
You need to give credit where credit is due. It was really Sega that pioneered many of the things you credit XBOX with. I'm not trying to dismiss what MS did with XBOX Live, as its truly impressive, but MS essentially stood on the shoulders of Sega and were able to sustain the losses to see it through.

Pokemon is actually split into its own division at Nintendo. So, money Nintendo makes from Pokemon is separated from their other earnings. Still, Pokemon started out as a videogame and took a life of its own. The demand was there and Nintendo basically fed that demand, but it all comes back to the smash hit videogame that started it all.

I do agree though that had it not been for Microsoft, we probably wouldn't be getting the Revolution so quickly as Nintendo would've kept competing against Sony instead of trying to branch off into their own area. Had it not been for the PSP, we wouldn't have the DS. So competition definitely forces Nintendo to be creative and its definitely good for everyone
post #10 of 23
I think it's entirely feasible that Nintendo would sell the GameCube hardware at a small loss at this point in the system's life. The reason being that most people buy the system to play Nintendo games, and Nintendo knows they'll easily sell at least a couple of their own titles per system sold. At this point, each game sale is almost pure profit - therefore, overall profit on a system sale, even at a hundred smackers.

Of course, none of this has any numbers to back it up, but it seems logical to me.
post #11 of 23
Quote:
Originally Posted by CallMeJean
You need to give credit where credit is due. It was really Sega that pioneered many of the things you credit XBOX with. I'm not trying to dismiss what MS did with XBOX Live, as its truly impressive, but MS essentially stood on the shoulders of Sega and were able to sustain the losses to see it through.
Online gaming goes back much farther than Sega. Sega like the others that came before it of course helped pave the road but it took MS to put up the street signs open up all four lanes. Live is a whole new evoloution designed not only to provide online gaming (Which works just fine on PC's) but to provide an infrastructure well beyond just connecting to someone else's game.

Trust me, I see Jay's gamertag and he's been sucked right in!

I'd bet even money we not only see Sony mimicing it but Nintendo as well. After all in Japan they tried an online service themselves. Now that MS has shown the time is right (Mechassault sold tens of thousands of maps at $5 each) for consumers ot pay for a service and features everyone should be joining them.
post #12 of 23
Quote:
Originally Posted by ShawnPeters
I think it's entirely feasible that Nintendo would sell the GameCube hardware at a small loss at this point in the system's life. The reason being that most people buy the system to play Nintendo games, and Nintendo knows they'll easily sell at least a couple of their own titles per system sold. At this point, each game sale is almost pure profit - therefore, overall profit on a system sale, even at a hundred smackers.

Of course, none of this has any numbers to back it up, but it seems logical to me.

Solid theories up until

Quote:
At this point, each game sale is almost pure profit
Unless they have indentured servants Nintendo must pay their artists, programmers and developers. They then need to pay for the disks, printing of instructions and packaging. Then they must pay to have the product shipped to retailers. And of course they market these games in television and print.

Thats all eating into the retail of the game sold. We are not talking about 5+ million or even 2+ million sellers here. For all the time, effort and expense put into a Nintendo first party game we are looking at sales of 100K+ to almost 2M. Sure the 1.5M games like SMS probably make a tidy profit but what about Pikmin 1 and 2? What about Luigi's mansion and F-Zero?

Many of these produced units will go entirely unsold or sold off for $5 to $10 in clearance. There will be no profit from these. (Pikmin 1 and 2, FZero and Metroid were all part of the recent $10 sale Toy's R Us did to clear out old inventory they could not move)

On the GB side Pokemon Red and Green alone sold 2.6M copies and certainly cost less to deliver to market than any of the under 2M selling GC titles.

Again the entire linup of first party games does not equal the sales of the big two on N64. (SMB64 and OOT sold just shy of 20 million units!) that means even if they were "pure profit" then the profit for GC is a tiny percentage of the N64 profit and that can't help the GC be considered a 'success" very much.

The GC is a speed bump in Nintendo's history. Given how many AAA systems they have released (NES, GB, GB color, GBA, SNES, GBA SP, DS and N64 (Slightly lesser extent than the others but nobody was expecting Sony to come out so strong) having two lemons (VB and GC) is hardly a long term problem.

HOLY SHOOT! Another number to put the sales of GC first party titles into perspective:

1,034,264

Thats the number of units for Famicom Mini version of Super Mario Brothers in Japan only. A TWENTY year old game released 6 months ago has outsold most GC first party titles!

Not quite the 40M the NES version sold but hey a damn good number for 2005/2006.
post #13 of 23
By the time a game has sold a million copies worldwide at full retail price, all of the development and advertising costs have been long ago paid off for most games. You are left with production, packaging, and shipping costs. We all know this is a small chunk of even a budget-priced game. These are the games I'm talking about. I'm assuming at least one or two of these will be sold for each current console purchase.

My question is - does it make any sense for Nintendo to suddenly sell its console at a loss(including games potentially purchased) at the end of its life when there is absolutely nothing to gain from increasing its installed base? As far as I know, Nintendo hasn't announced that it stopped producing GameCubes, so it's not an inventory firesale. It's just smart business. I recall Nintendo mentioning a couple of years ago that a large amount of profit comes from the tail-end of the console's life. I'm sure they have a plan, and it is profitable in some way.

As for gauging the system's "success" relative to other systems, I don't see how that really fits into this topic.
post #14 of 23
Again, you keep saying the GC is a lemon, but there are no numbers to back that up.
The VB I will give you but if you look at it, Nintendo didn't support it very well or very long.
The GC Nintendo has supported and continues to support. They are not in the business of sinking money into a losing investment. Chances are they continue to support it because they do make something off of it. It may not be as much as they would like, but its probably still a positive number nonetheless.

Also, check your numbers. I don't have recent sales data, but I managed to find sales data back from Sept 2005 that had US Life To Date numbers on some of the top GC games:

Super Smash Bros. Melee - 2,909,585*
Super Mario Sunshine - 2,100,334*
The Legend of Zelda: The Wind Waker - 1,956,861
Mario Kart: Double Dash!! - 1,903,955*
Luigi's Mansion - 1,718,470
Metroid Prime - 1,308,052*
Animal Crossing - 1,062,012
Mario Party 4 - 977,513
Pokemon Colosseum - 934,985
Mario Party 5 - 831,269
Star Fox Adventures - 821,771
Mario Party 6 - 706,708
Pikmin - 678,379
You can bet Nintendo probably made quite a bit of money off of these titles since all of them(except for Starfox) are first party games.

I also remember reading the amount of money Nintendo makes from GC software versus GB software. The GB install base is nearly 5 times as large as the GC install base, but the money earned from GB software is I believe only 2-3 times more than what they make from GC software. So, while the install base for GC isn't nearly as big, Nintendo still generates sizable income from it.
post #15 of 23
Quote:
Originally Posted by CallMeJean
You can bet Nintendo probably made quite a bit of money off of these titles since all of them(except for Starfox) are first party games.

I also remember reading the amount of money Nintendo makes from GC software versus GB software. The GB install base is nearly 5 times as large as the GC install base, but the money earned from GB software is I believe only 2-3 times more than what they make from GC software. So, while the install base for GC isn't nearly as big, Nintendo still generates sizable income from it.
Thats almost 18M for all of those games, VS 19+M for TWO titles last gen.

Can you honestly say you believe that developing and marketing 13 titles in order to sell the same numbe rof units as two titles is a sucess?

On what basis can the GC not be considered a lemon? Nintendo consoles sell first party titles... and the GC is selling less than the N64 did by quite a margin.

Sunshine sold over 10M less than 64 and WW sold 5M less than OOT. Those are massive drops in sales that (IMO) are solid proof that the GC did not grow the market for Nintendo first party games (where you say the profit is from) but caused it to shink.


Certainly fair points about the GB market share. As for 2-3 times I have never seen that mentioined anywhere.
post #16 of 23
Quote:
Originally Posted by ShawnPeters
As for gauging the system's "success" relative to other systems, I don't see how that really fits into this topic.
We've been off topic for a while, since Jean's first post brought us into the interesting and expanded topic we have now. The original topic cannot of course be responded to due to (As Jean mentioned) Nintendo bundling their console and handheld profit/loss. The numbers to continue along the original post/topic are unavailable to anyone outside Nintendo.

I'm not sure I believe the 1M mark as the point where things turn to pure profit, not for anyone. 1M for most of these games came after price drops, some to as low as $20 (Pikim) Not every game that hits 1M really means 50M retail. Some of course Like MK: DD are packins. You could get that game for free with a GC so that was a loss of $50 per unit sold with the GC at that time. (Same with WW as well). Others like Metroid Prime hit 1M at $50, so there is most likely huge profit after that, though the 4 year development time and MASSIVE advertising had to eat a fair chunk.
post #17 of 23
Those numbers I posted above do not include packin numbers. That's what the * means. Sorry for not pointing it out. Keep in mind those numbers are US only. Those numbers probably would go up quite a bit if looking at worldwide sales.

One thing to keep in mind is development costs. GC discs are much cheaper to manufacture than the N64 cartridges. Plus, the GC is supposedly much cheaper/easier to develop for than the N64. These 2 things could help offset(although probably not completely) for the loss in total number of software sales. So, while those N64 games you mentioned sold way more than the GC games I mentioned, it very well could be that it cost Nintendo less money to make those GC games than it did for those N64 games. So the percentage profit from each unit of a GC game sold could be more than what it was for the N64 ones. This is all speculation. But, I state again, Nintendo is in the business of making money. If they can't make money on a product, they probably won't support it. Their continued support of the GC leads me to believe they continue to generate money from the GC.

Also, I did some digging and did manage to locate some older numbers comparing GC sales to GBA sales. I believe this data is from December.

GameCube

Worldwide

GCN Software: 169.51 million units

GameBoy Advance

Worldwide

GBA Software: 296.12 million units

As you can see, the GC ships more than half of what the GBA ships in terms of software units(worldwide), yet the GC install base is nearly one fifth that of the GBA.
post #18 of 23
Good info. I am curious (but we of course have no way of knowing) how many units in the 115M sold are "retired" units. Its somewhat likely that many GBA's were replaced by GBA SP's and that number fo course would lower the actual users of GB systems below 115M.

Nintendo really has no choice but to support the GC. The combination of the standard Japanese pride (The Japanese firmly believe Nintendo invented home gaming) and Iwata's promise to have a console until the end of the company.

That and its just good business sense if you plan to have another console you keep this one around, to maintain a market presence. Meeting the long term goal (Successful Revolution this generation) will require shelf space and good relations with the companies Nintendo is pouring money into with the GC. Rebuilding those relationships might cost more actual dollars if the GC has been allowed to die when it failed to sell 3 years ago.

The continued existence is certainly no indication of profit from the unit. Just look at the XBox. Microsoft is in the business of making more money in a quarter than Nintendo makes in 10 years and yet they not only kept the XBox going, they provide sales data listing its losses using it as a spingboard to their next gen console.

Edit: Just read the GB family is up to 130M with all of them combined, that means the actual use is probably far lower than you would expect from the total sales, after all the GB family goes back what 15+ years? Not too many GB players out there are there? :)
post #19 of 23
Okay, Frank. What are you actually saying? Are you saying that you think the GameCube is currently losing Nintendo money or not?

I say no.
post #20 of 23
I believe it is.

I say we send Jean to Japan to work for Nintendo and find out who is correct :)
post #21 of 23
Quote:
Originally Posted by FrankJ.Cone
I believe it is.

I say we send Jean to Japan to work for Nintendo and find out who is correct :)
Send ME, please :)
post #22 of 23
I would also have to say no.
The numbers I listed above show that Nintendo ships quite a sizable amount of software on the Gamecube and probably generates a decent amount of income off of it. They may not make large profits off of it, but I do believe they're not losing money on it either.

What's to say I don't already work for Nintendo? ;)
post #23 of 23
Jean, are you Perrin Kaplan? If so, please step down.
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