Wii console profit margins

[Rob2600]

I just read this on ign.com:

In an article from the Financial Times, Nikko Citigroup analyst Soichiro Fukuda estimates Nintendo's gross profit per console is 1,500 yen in Japan ($13). In the U.S. and Europe, the Wii comes bundled with Wii Sports, so its price and profit margin is considerably higher. Mr. Fukuda estimates the profit margin for each console is $49 in the U.S. and $74 in Europe.

That means so far, the Wii has generated roughly $200 million in profit in ten months in the U.S. alone.

The Financial Times notes that Sony is not expected to start making a profit off PlayStation 3 hardware sales until at least 2009.

http://wii.ign.com/articles/820/820658p1.html

- - -

This was also just posted:

According to a series of recent reports by the research group DFC Intelligence, the game industry is poised to see enormous overall growth in 2009, and the Nintendo Wii is set to reign supreme until at least 2008.

The Xbox 360's selling power could be on the wane, according to DFC's research. The company has raised its forecast for the Nintendo Wii and PlayStation 3 and lowered its forecast for Microsoft's console, predicting that the Wii will stay on top through 2008 and that the PS3 will move into overdrive in 2009.

"The Xbox 360 will need to build a strong base outside North America to avoid being in a fairly distant third," said DFC analyst David Cole. "We could have a situation where the Wii sells more hardware units, but by 2012 the PlayStation 3 is generating more software revenue."

He also predicts, "The Nintendo DS could eventually become the best selling game system ever in five years."

http://wii.ign.com/articles/820/820688p1.html

[gum_drops]

Why not keep your weekly sales figures updates in the "Wii Passes Xbox 360 in Worldwide Sales" post. As in stands,that post keeps getting bumped with new sales data anyway.There is no need to post a whole new topic every time a analysis/forecast article is on the internet.

Its especially silly when your motive is, as you put it to "brag and get payback". Your words not mine.



One of the reasons Nintendo fans are touting the Wii's high sales figures is because that's what Sony fans had done for nine years (1997 to 2006). Now, the tables have turned and Nintendo fans are giving Sony fans a taste of their own medicine. Sony fans hate it! So far, they've had to put up with nine months of bragging and have been complaining about it nonstop. Nine years vs. nine months. Evidently, Sony fans can dish it out, but they can't take it.

Sony fans claim to like mature adult games. If that's true, then accept your comeuppance like mature adults and stop being childish sore losers.

Again, consider all of the bragging about Wii sales data as payback for nine years worth of bragging about PlayStation and PlayStation 2 sales data.

[Bluteg]

The Xbox 360 will stay a float, its been confirmed MS will not give up and its got a huge user base to gamers (many Wii owners are non gamers). XBL rocks and MS and 3rd party companies are making decent bank off the downloadable content. The US is the biggest market and MS knows that, and is getting a huge market share. The Wii in like the DS is more of a gimmick, I don't hate either and love my DS. I really don't see sales improving for the Wii until SSB and Mario Galaxy are released. 360 has Halo 3, Mass Effect, GTA IV with exclusives coming out soon. Japan may 'seem' important to some people but look at the Sega Saturn... It was a hit in Japan but compared to the US... meh.

[neogamer]

The Xbox 360 will stay a float, its been confirmed MS will not give up and its got a huge user base to gamers (many Wii owners are non gamers). XBL rocks and MS and 3rd party companies are making decent bank off the downloadable content. The US is the biggest market and MS knows that, and is getting a huge market share. The Wii in like the DS is more of a gimmick, I don't hate either and love my DS. I really don't see sales improving for the Wii until SSB and Mario Galaxy are released. 360 has Halo 3, Mass Effect, GTA IV with exclusives coming out soon. Japan may 'seem' important to some people but look at the Sega Saturn... It was a hit in Japan but compared to the US... meh.

Your not looking at the "big picture."

As for right now you are correct, Microsoft will not abandon the Xbox 360 now or in the near future. That being said, the shareholders of Microsoft stock (those that control a lot of the action -to put it another way), expect to see results. Microsoft is still a software company in a hardware business. The stock price reflects this, as it hasn't moved at all (in any major deviation) since Microsoft announced they were buying back some of there own stock (this happened) about 12-18 months ago.

Your going against every analyst's opinion about the market! Microsoft would make a great third party publisher (like Sega), but as a hardware company, they have major problems that go way beyond the "three rings of death" console issue!

I'm sorry, but if you go and do the research yourself, you'll see that unless Microsoft does something magically (i.e. start to reduce hardware costs, increase support in Japan, or even get a higher stock price somehow), the signs are starting to show.

The only thing that helps the company is, point one, it has the deepest pockets of any company in the word.

Point two, I hate to say this, but Microsoft has a rather large ego! This has gotten them through "interesting" times before!

I love my 360, don't get me wrong. Halo 3 will help the company greatly.

I, like most analysts, just don't see another major Xbox console looming on the horizon anytime soon. By "major Xbox console", I mean one that doesn't share 360 in its name! We could be wrong, if the market changes. One thing about the video game market, is that it is full of surprises!

[chrisbid]

these same analysts predicted the PS3 would stomp the competition.

the gaming industry's growth looks like a bubble. sony and ms are not making a profit, and are relying on continuing growth to turn a profit down the road. like the housing market and .coms, that is a dangerous route. the good news is neither company is likely to shut down, but if profit never materializes, that wont be good for the industry or us.

[Rob2600]

Why not keep your weekly sales figures updates in the "Wii Passes Xbox 360 in Worldwide Sales" post. As in stands,that post keeps getting bumped with new sales data anyway.

This topic is unrelated to the one you mentioned, which is why I kept it separate. It has nothing to do with weekly sales data. In addition, I've never posted weekly sales data in any topic, only monthly sales data.

Did you even read the original post at all? Perhaps you quickly skimmed it and were triggered by a few key words. Either way, thanks for replying.

[agbulls]

If there's one thing I ABSOLUTELY abhor, it's topics about reports from "industry analysts."

1. They wrong 99% of the time
2. They don't work in the industry, they work for investment firms
3. They're only concerned with changing people's investment strategies
4. They're inheritaly biased and lack historical knowledge
5. They expected the PS3 to win by a landslide and the Wii to fail

In other words, they're a total waste of time.

[Rob2600]

If there's one thing I ABSOLUTELY abhor, it's topics about reports from "industry analysts." ... In other words, they're a total waste of time.

You may be right, but I think the information about how much profit Nintendo makes on the Wii is interesting. If it's accurate, then Nintendo has made roughly $495 million in profit from the Wii console so far, whereas Sony and Microsoft are losing billions.

[neogamer]

these same analysts predicted the PS3 would stomp the competition.

the gaming industry's growth looks like a bubble. sony and ms are not making a profit, and are relying on continuing growth to turn a profit down the road. like the housing market and .coms, that is a dangerous route. the good news is neither company is likely to shut down, but if profit never materializes, that wont be good for the industry or us.

Your taking words out of context.

The analysts predicted that the PS3 would "stomp" the competition over the long haul. Not one analyst ever expected Sony (which launched the PS3 at $599.99) to "stomp" competition right away.

Said another way: The "video game wars" are from over.

You are right though, as far as systems go, Sony and Microsoft are not turning a profit on them yet. (Systems meaning the PS3 and Xbox 360)

Keep in mind one thing though, and this is the point everyone misses:

Sony has always been a hardware (consumer electronics) company that happens to be in the software business.

Microsoft is a software company in the hardware business. Not good for the long run...

at least until they start making a profit on game machines themselves!

[FantasiaWHT]

Neogamer, manufacturers don't just make money if they sell their systems at a profit, they make money from the licensing of every single video game for their system. The whole reason they sell systems at a loss is to increase their install base and increase the amount of money they make from licensing fees (as well as profits from their own, first-party, video game titles).

[ianoid]

Few who play the 360 (talking to you Sony bitches) could imaging it becoming a distant third. 10 mil isn't a userbase to scoff at, and 360 users have a way higher software conversion rate compared to the Wii. The 360 is a great machine (well, aside from the hardware woes, which the general public probably doesn't really notice in making purchasing decisions) and the Live infrastructure is unrivaled. PS3 online is enough to drive anyone back to playing online with a PC. It's crap. And no single future title will change that.

Neither the PS3 nor the 360 are going anywhere. I think that all the PS3 has over the 360 is Blue-ray. You can tell me about Emotion Engine and all that, but graphics won't win this race. I'm afraid that as prices march downward, Blue-ray will be a nice deal for the consumer. That being said, it only has marginal mainstream appeal. But if those 10 million non-mainstream tech-heads go for the PS3 because it's a deal, that will tilt the market at this point. I can also say that MS made a huge mistake by not emphasizing backward compatibility in their design. The most successful consoles of the last two generations have been backward compatible: GBA, DS, and PS2.

I just don't see the 360 crumbling. Clearly the general public has voted for novelty and Nintendo. The other two companies are battling for the more tech savvy and hardcore gamers , which will only benefit us. There is no clear reason why either should win second place at this point.

Let's face it, the educated buyer couldn't possibly choose the PS3 at this time. There simply aren't enough unique and top rated titles for the system at this point, whereas the 360 has many many excellent titles and proven infrastructure.

We'll see, but I know it will be a good race, rather than a clear cut stomping of the 360. This Xmas will be interesting from a sales figures standpoint.

[neogamer]

Neogamer, manufacturers don't just make money if they sell their systems at a profit, they make money from the licensing of every single video game for their system. The whole reason they sell systems at a loss is to increase their install base and increase the amount of money they make from licensing fees (as well as profits from their own, first-party, video game titles).


Yeah, what's your point?

I am answering this from a hardware perspective, not a software perspective.

I know how the industry works in a whole!

BTW: Analysts usually are right in the end. You guys are just looking at their comments they said about this current video game war and are basing them on current fact!

It's not over yet!

[neogamer]

If there's one thing I ABSOLUTELY abhor, it's topics about reports from "industry analysts."

1. They wrong 99% of the time
2. They don't work in the industry, they work for investment firms
3. They're only concerned with changing people's investment strategies
4. They're inheritaly biased and lack historical knowledge
5. They expected the PS3 to win by a landslide and the Wii to fail

In other words, they're a total waste of time.

1. They are right more often than not! I work in the financial industry and can tell you that they just don't hire analysts and focus their efforts on number crunching so you (a gamer) can laugh. Will say this though: It is a high stress industry!

2. They DO NOT work in the video game industry per se, however, they work in investment firms which have billions of assets and ties to any industry! Keep in mind that not only you and I (by way of individual investing), but Sony, Nintendo, and Microsoft, all invest in these same firms (by way of institutional investing).

3. Not TRUE! In the end, it is up to both the consumer and the industry as a whole to interpret the data that the analysts have prepared! I guarantee if I give you a copy of a report that I have sitting on my desk and asked you to analyze it you could not do it (no offense, but 9 changes out of 10, you don't have the financial background). BTW: I anyone would get "fired" if they did do that because you're not allowed to share outside info before it is released.

This is one reason why I don't trust every magazine or newspaper article I read. If someone (at the investment firm or even a journalist) didn't understand what was being said or written, the whole article is false. Did you ever think the journalist writing the article is biased? No, it couldn't be....

4. I won't even comment on how untrue this is! Lack of historical knowledge? I have seen investment knowledge at a firm from 1978 written on the industry as a whole! They are usually NEVER biased. What purpose would that serve? Ever hear of the SEC? Investment firms and analytical data is held under strict guidelines!

5. They expected the PS3 to win and the Wii to fail? Is the current video game war over? Are you saying it's all over for Sony?

Come on....

[neogamer]

Neogamer, manufacturers don't just make money if they sell their systems at a profit, they make money from the licensing of every single video game for their system. The whole reason they sell systems at a loss is to increase their install base and increase the amount of money they make from licensing fees (as well as profits from their own, first-party, video game titles).

You are aware that Microsoft is still in the "hole" (financially), as is Sony, and investors in both companies are not happy.