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.

Comments

Price Difference?

[ajuda]

I didn't see anything that talked about the difference in price between the two units. DVD playback is a nice feature, but as the costs of dedicated DVD players are dropping, I wouldn't pay much for it.

Re:3do

[man_ls]

3D0 was a very brilliantly engineered piece of hardware. IIRC, it had ability to play VCDs (not DVDs, but those weren't out yet), along with 32-bit and the new released 64-bit M2 games, at a very high framerate. They just got beat down by the PlayStation, and you never heard much of them when M2 never really took off. It was slightly too "niche" to be mainstream, and relatively expensive, but very high quality.

JKoebel

Re:This isn't the first time

[Anonymous Coward]

To plug a SNES into a computer, you just need a TV capture card. You can't use your computer's controller, but SNES controllers are better anyway (I have a SNES controller hooked up to my parallel port, and use it to play games on a SNES emulator). You can probably buy a used SNES for really cheap now, and a TV tuner is around $70.

Do console makers REALLY lose money?

[alexhmit01]

Everytime a thread on Slashdot takes place about gaming consoles, 5-6 people get scores of 3-5 (insightful) for pointing out that game makes lose money on the hardware to sell the software.

This gets mentioned frequently, and 3DO is mentioned as an example of what happens when they don't do that.

I've always been wondering, do we really know that this is true? Has anyone any financial data to prove this?

If there is some proof, can the Slashdot editors include this information in each posting, so those of us browsing at higher thresholds don't see half the posts with this insightful fact?

I also don't really buy this theory. I mean, how much can the licensing fee be for each $50 game? Also, in an age of video game rentals, how many games does the average console owner own?

I mean, if you figure that the average game now sells for $50, the store pays AT MOST $35 for the game. The distributer probably picks it up for $25 (so the BIG stores get the bigger margins, no separate distributers). This leaves $25 to be split among the maker and the console. I can't imagine that the license is more than $5. Maybe it is $10? That would explain WHY Nintendo and (until recently) Sega made systems, $5-$10/game is a nice margin, plus they get the revenue for the author when they sell their own games.

Let's figure that the average console owner owns 10 games/console (that seems REALLY high BTW, I owned 30-50 NES games, but they were mostly the original $30 games, and their weren't rentals in the early NES days), plus rents enough games to result in the local store stocking an extra 10 games. This is 20 games/console, at $10/game, yielding $200 in licensing.

Now, how much of that licensing is Nintendo or Sony willing to spend subsidizing the hardware?

I had always heard that the stores make little margin on the systems (not a loss, but a trivial profit) and make their money on the games/peripherals. This makes more sense, as they trade a little bit of store space to get the margins on the games. The games are good for toy stores, as the space/product is minimal compared to real toys and the prices are high.

However, the console maker subsidzing the hardware (more than a trivial fee) seems absurd. I mean, MAYBE the launch versions get subsidized, but given the demand (preorders, unavailability for 2-3 months), why would they subsidize sales when they could clearly move the units at cost or above cost. Now, I could see subsidizing post-launch consoles to move sales, but manufacturing costs should go down over time, allowing the prices to drop (which they do) or the profits on consoles to increase.

Now, I COULD buy that the console makers sell the machines at cost. This would result in a subsidy of the "fixed" costs (R&D, setting up manufacturing process), but still, this wouldn't be real. As the costs go down (consoles stay on the market for 5 years, electronics go down tremendously in 5 years, but consoles rarely drop THAT significantly in price... i.e. a $300 console may drop to $200, but the manufacturing costs 2 years out should be half the initial costs), maybe they recover the initial subsidies?

I mean, the common Slashdot belief that the 3DO was $700 because of no subsidies and needing a profit, while the $200-$300 consoles are sold at a loss is ABSURD. That implies a $400-$500/console subsidy (or $200-$300 with an extra $200 in profit for 3DO makes), which would result in assinine losses.

In computers, processors are sold at a premium when new, but moved at lower prices after R&D is recovered and Intel was traditionally trying to move more units. This is simple price discrimination, not a value judgement on valid profits.

I mean, maybe you sell consoles at a loss to create a software market. Then the software market creates a demand for the console which allows profits on the later consoles, but this subsidized hardware "theory" makes no economic sense.

Realize that 3rd generation games are planned AFTER the launch (first generation hit with the product launch or soon after, the second generation normally starts in after the first round are finished before launch, and the third generation don't start planning until 6-12 months of sales are known), so creating a demand by moving consoles allows third generations products to be made.

However, I'd like someone to either provide EVIDENCE of this subsidy, or at a MINIMUM some economic analysis to show WHY companies would do so. This simple assertion ("remember, consoles are sold at a loss") is neither insightful or useful.

Alex

P.S. Apologies for singling out one of the posts, this could apply to any of dozens of Slashdot posts on the subject.

Re:Do console makers REALLY lose money?

[vitaflo]

I think you're reading too much into things...

The 3D0 system Panasonic produced was overpriced, plain and simple. It had a lot of things nothing else on the market ever had before (CD based, sliding tray, 32-bit, VCD, etc), and wasn't marketed as just a game system, it was a do everything system, so they thought they could charge a premium and make a truck load of money. When this didn't light a fire, the 3D0 basically sank (and the price came down quickly, it was just too late to save it).

This however does not mean that it costs Nintendo $700 to manufacture a Cube. All reports that I've seen (and I've been covering game news for a long time) is that most manufacturers sell for about $50 below cost initially. Anything over that and it's a risky proposition.

The problem is that nobody really knows how much it costs the manufacturers to make a system. To my knowledge there have never been statistics to say "Playstation costs exactly $xxx to build per system", and I've looked quite a bit for this info through the years. They just don't publish this info.

So it's mostly a guessing game from people who understand the technology in the systems and can determine how much it would cost someone to build such a thing. Historically that figure has proven to be about $30-$50 more than what it is sold for at market.

Problems come when it's more than that. Sega Saturn had a problem because Sega knew they had to come in at $300 to sell mass amount of units, but they're cost per system was over $400. They decided to sell at $400 and launch early to try and gain hardcore games, who would pay the extra cash, and then hopefully drop the price when the real competition came in. That plan didn't work obviously.

There has been speculation that the XBox costs a lot more than the $300 price tag to build (some say it's almost $100 more). Obviously MS can eat the loses just to get its name out there (they've done it before), but when you start losing that much money per console it becomes that much harder to be profitable in the long run with a system just making money on games.

So to answer your questions, it's been comonly accepted since the 2600 came out that consoles were sold at a loss. Both the public *and* at the companies themselves have accepted this fact. However, what they actually do cost the companies to build is really anyone's guess. And that's pretty much the best we can do.

Re:Unique

[L-Train8]

While it's true that the some game manufacturers lose money on the hardware and try to make it up on games, that is not the case with Nintendo. Nintendo has never lost money on a console it has sold. With the purchase price of the GameCube at $200, this is the first time they have come close, and there's speculation that they are only breaking even.

However, the money-losing formula changes down the line, as production costs go down and the fabrication plants get paid for. I believe Sony is now close to breaking even or making a profit on the PS2, and in a year, Nintendo will be making money on each console sold.

Re:Nintendo, slap a suit on Microsoft!

[alexhmit01]

Microsoft has a monopoly on desktop OSes on the x86 platform. This results in games having to adapt to Microsoft APIs to compete.

Therefore, all PC games had to support the APIs. Microsoft is clearly leveraging its monopoly on the desktop to establish a monopoly in the console market.

Sure, the X-Box games won't pop into a PC, but you can probably share between 95% and 100% of the code between the versions.

I think that the dumping arguement is stronger, but the shared APIs help the case.

Alex

This isn't a clone.

[Anonymous Coward]

This device isn't a clone, it's another proper version of the console. Nintendo teamed up with panasonic for the cube, since they needed to get a
realitively inexpense dvd reader for their console somewhere. Out of that partnership came two products, the game cube and this. Nintendo wants to focus on Games and wanted to keep the cost of their system down. So the base unit is the gamecube which is marketed by inintendo, and since panasonics market is DvD players and other more expensive electronics they are the ones handling the the sales and marketing and branding of the DVD capable one.

not new-wondermega anyone?

[Anonymous Coward]

theres been many cases in Japan where big console names have let their partners manufacture their own branded consoles. sometimes they are very similar (theres a few different models of the Sega Saturn), sometimes they are all in one type machines (the JVC wondermega, someone mentioned the Sharp twin famicom, and now this alternate Cube). while this practise appears to be a strange new concept to the visitors of this board, its neither strange nor new in Japan.