Curmudgeon Gamer
Curmudgeoning all games equally.
24 January 2006
Nintendo: Profitable to death
Most folks are focusing on "PSP to kill DS" in this Next-Generation report, but the really interesting bit is tacked on to the end:
[The] software revenue mix in calendar year 2005 will be Nintendo 58% / third parties 42% for DS, but Sony 24% / third parties 76% for PSP.
I figure game companies are going to like the 76% of the PSP revenue over the little 42% that Nintendo is giving. Don't forget that PSP games are averaging a higher retail price than Nintendo DS games, so developers will get 76% of an already bigger pie. I mean, I know a couple of game developers, and they seem like the kind of folks who could find use for the extra dollars, should the opportunity came along. Heck, this one game developer in the IRC channel where I hang out can't seem to stop talking about his company stock.

As the historically dominant player, Nintendo is surely comfortable charging those kinds of licensing fees. And, yes, it appears they're doing well even against the PSP. But they've never really had a serious attempt from a determined competitor like they have now with Sony and the PSP. If they keep up that kind of licensing structure, they may well remain profitable, but it may lead developers to jump to the PSP where the playing field is in their favor. If Nintendo loses the handheld market, what then? Pray for a Revolution?

I suspect that it's more of a question of when rather than if the PSP will get more developer support and therefore more decent software. When that day comes, soon afterward we may see a news item like this one from November 2001 where Nintendo lopped $2 off their per-game licensing costs for the GameBoy Advance. Ah...the consumer benefits of a competitive market!


--Matt Matthews at 18:16
Comment [ 2 ]

Comments on this post:

With your price comment, I think you may be misreading the statement.

I don't think it means Nintendo is taking 58% of the profit. Rather that 58% of the units sold are expected to be Nintendo's.

Nintendo is a strong support of its systems. As well, Nintendo has had to offer strong support to the DS just to get developers and gamers to consider supporting the system. Sony doesn't do so much of the 1st party game offering, and had developers and particularly gamers foaming at the mouth to buy PSPs even if they never released anything for it themselves.

The article does predict the PSP to continually outsell the DS, but that doesn't necessarily directly relate to game purchases. The article has a vague general game prediction, but it is very likely based in part on the estimated console sales, making it more suspect.

We just don't know where this will go yet, as there really hasn't been enough time to establish a basis. The hype still hasn't worn off the PSP, but at the same time PSP owners are still grumbling about a lack of worthwhile games to buy. The DS still hasn't been fully embraced (and Nintendo didn't help by denying it to be the next system in the Gameboy line.) Will the GBA market shift to the DS, or will developers shift to the PSP? Will the PSP ever get a killer app? Will Nintendo ever come close to another Pokemon-level hit?

By Anonymous Baines, at 27 January, 2006 04:10  

Baines, I think you could be right. Maybe this is a breakdown of first-vs-third party games.

If we move on from me being wrong...

I think the playfield is still slanted more in favor of third parties on the PSP. The huge chunk of first party revenues on the DS means that third parties are probably getting swamped by the first party titles Nintendo puts out. How do you get your game noticed when you've got the platform's own big games to compete with *and* you're paying more to publish?

Sure, Sony's still going to put out its own games at a lower price, but they're letting third parties make their own space. Of the three games I like most on my PSP, two are third party: Ridge Racer and GTA:LCS.

Not that it relates to sales numbers, but I took a look at rankings on GameRankings. Out of top ten games for PSP, three are Sony games. Of the top ten games on Nintendo DS, eight are Nintendo games.

By Blogger jvm, at 27 January, 2006 14:23  

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