Slashdot Mirror
Nintendo GameCube Clone Out In Japan
Jon F writes: "I saw this picture on Yahoo! today, it looks like Nintendo decided to license out the GameCube to Panasonic to make a clone. It's a hybrid DVD player/GameCube that came out in Toyko today. The only other article I came across about this was on IGN a few months ago. It has a mirrored surface and trippy purple lights on the controller port." Gaming guts (and purple bits) aside, this is one of the nicest-looking DVD players I've seen. Update: 11/01 23:50 GMT by T : As several readers have pointed out, this looks like just a tease for now, but will be out (in Japan) next month.
Okay, here goes. First, my (sort of) credentials: I was assistant manager for nearly 2 years at a mom & pop videogame store. I handled inventory, pricing, and ordering issues. The owner/manager pretty much just paid the taxes (and my paycheck).
First, the issue of profit on the unit:
When the PS1 came out, it cost $299. Sony WAS selling that unit at a loss. No question. My cost (to purchase one to re-sell at my store) was about $297. Unless I was willing to purchase LARGE quantities of units, my store actually lost money on selling the units (after we paid shipping).
Flash forward a few years, and the PS1 prices at, say, $129. Now, it still costs my store about $127. However, by this time, the fact that Sony is using (pretty much) the same equipment means that thier cost has dropped. They are actually turning a mild profit on each unit (maybe $10). Also keep in mind that this is the point in a console's lifetime when the majority of the supporters jump on board. This means that the greater numbers of people purchasing these units is outweighing the people who purchased them when it was a loss-leader.
Now for the game pricing issue.
Take your typical PS2 game, pricing at $50. Some are DVDs, some are CDs (it's up to the developer if they need the additional space). My store would have to pay approximately $42 for one of those games. We would order them from a distributor, who typically made $2/unit. So the total money going back to the publisher is $40/unit. That would allow Sony to charge anywhere from $10 to $15 a unit, and still leave a publisher with a very profitable unit.
Your estimation of ~10/person is a ways off. A not-so-hardcore gamer will purchase 10 games in the lifetime of the system. Assuming $10/game, that means $100 total to console manufacturer for licensing alone. Most gamers will purchase 15-20 games in the life of their console, and many will purchase 30-50. I can't tell you how many people I whom I saw on a nearly weekly basis in my store. There are quite a few folks who purchase the new sports games each year. So we can figure that maybe 20% of Sony's installed base is far-and-away exceeding the ~10 game estimate.
Now consider the issue of add-ons. A Dual Shock 2 PS2 controller retails for $35. That's pretty much the price you'll find everywhere. The markup in those units is about $6 by the retailer. Now consider that Sony only packs the system with 1 controller; 90% of PS2 owners will purchase at least one additional controller. Chalk up another $10 in Sony's pocket.
Oh, wait... you want to save your games?!? Well, you'll need this memory card. It's 8MB of flash RAM, but it retails for $35. Again, 90% of owners will buy at least one of these. Chalk up another $10.
Wait, wait... you're hooking that up to the ancient television in Junior's bedroom?!? Well, unless his TV has composite input, you'll need to purchase this Sony-brand RF convertor: $20.
The bottom line: videogames are designed to make a profit for the manufacturer only. No store that I know of can survive on new game sales alone. EB, Funco, GameStop, and all the Mom & Pop shops depend on the ~$15 margin they make on their used games, and the ~$50 margin they make on extended warranties. Best Buy, Circuit City, Fry's, et. al. use videogames to lure customers into the store for bigger purchases ("say... I could use a new car stereo while I'm here"). So, basically, the lack of margin in the games and such allow maunfacturers to keep a lot of the money.