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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.
This seems like a fantastic idea for Nintendo. Rather than placing all their bets on their ability to produce enough hardware, market to a large enough population, get it in front of enough eyeballs, etc., they're spreading the liability of this kind of venture out.
Imagine if Sony had done the same thing with the PS2 last year. They might have been able to meat christmas production demands, rather than creating an artificial shortage.
Nintendo is banking on licensees sharing in the impact of the GameCube's success or failure.
This isn't the first time Nintendo have licensed their hardware to another company.
Back in the SNES days, there was a TV that had SNES hardware built into it - it looked just like a normal TV, except it had two controller ports at the bottom, and a compartment at the top to put carts in.
There are other non-commercial SNES clones as well, such as the in-flight games on Singapore Airlines and the in-room entertainment at some hotels.
If anything, Nintendo is weary of not being open to partners - after all, the PlayStation only came about after Nintendo shunned Sony from making a CD-Rom addon for the SNES!
For those interested, the Japanese release date is Dec 14th.
Why would anyone engrave "Elbereth"?
From: http://www.dvdgame.jp:
On-sale 12/14, Retail price 39,800 yen (at 110 yen per dollar, roughly $350)
According to http://www.dvdgame.jp/product/index.html, the main feature is really the DVD player and the new looks... they are listed as:
1) Compatable with the Nintendo Game Cube
2) The timer function helps you keep track of play-time. (laf, more like helps parents keep track of kids)
3) CD, DVD playback
4) A handy remote control for CD, DVD playback
5) "ABCD" (Advanced surround, Bass plus, Cinema mode, Dialogue enhancer) features for DVD playback.
6) Dolby Digital/DTS Fiber Out
Advanced surround = 2-speaker emulation of 5.1 dolby digital
Bass plus = the ability to add a subwoofer from a dedicated subwoofer output
Cinema mode = filters put in place to not make the TV screen appear too jaggedy during DVD playback. (shrug, I never knew this was a problem)
Dialogue Enhancer - enhances the center channel on DVD audio tracks where there is no center channel present. This allows you to hear dialogue clearly, even at night, without upsetting your neighbors. (ha, quite useful in Japan..)
They have a pretty darn big picture here -- enjoy.
Can't find the link, but the dvd-enabled GC will arrive in the U.S. next year, 2nd quarter I believe...
:)
The dvd-player in the ps2 was a good idea. I want a gamecube for the games, though. Plus, if you have both, then you're set.
python -c "x='python -c %sx=%s; print x%%(chr(34),repr(x),chr(34))%s'; print x%(chr(34),repr(x),chr(34))"
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
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.
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.
Don't forget that Friday is Hawaiian shirt day.
If the XBox truly costs $375 in marginal costs, and they are selling it for $300, they are engaging in dumping. It is illegal to sell products under marginal cost in an attempt to monopolize the marget.
A combination of Microsoft leveraging Windows (the DirectX API), a monopoly, into establishing a new monopoly through market dumping, should make this a no brainer.
MS got away with IE on a technicality. Because software, as we all know, costs 0 to copy, MS was able to give IE away without engaging in dumping because the marginal cost was 0.
They did spend bandwith. However, as bandwith is a fixed cost (you pay $X for Y Mb/s), the marginal cost for the copies remains zero.
I don't know if the idea of selling below marginal cost to make up backend revenues matters, but the entire Microsoft practice smells of dumping.
They are using their cash reserves and selling below cost in an attempt to put Nintendo out of business (Nintendo is a games company!) and cause Sony to bleed red ink.
This seems like a plain approach of market dumping.
The interesting thing is, most publically traded corporations are stereotyped at looking at the quarterly returns. Microsoft Corporation is unique in that it DOES look out for the big picture. The successfully leverage their monopolies and cash reserves to "cut off the air supply" of their competitors.
If Microsoft is selling under marginal costs to establish marketshare and monopolize the market (where they can then jack up the licensing fees, etc.) this should be clear cut.
Are any of the lawyers on Slashdot around? Am I on the right track?
Alex
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.