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Nintendo Supports US's Anti-Piracy China Measure
Earlier today we discussed the China/US Piracy clash, and it's worth noting that yesterday Nintendo came out in strong support of the US's position. Gamasutra reports that an estimated 7.7 million counterfeit gaming products have been seized in the last four years of piracy raids. "According to Nintendo, China has continued to be the leading production site and exporter for counterfeit Nintendo products, and has the largest domestic consumption, and in 2006 alone the company estimates that the overall industry lost $762 million due to piracy. Commented Nintendo in a statement: 'Despite the millions of counterfeit Nintendo products seized from retailers and manufacturing plants in China through the years, there has only been one criminal prosecution. Numerous factories, where tens of thousands of counterfeit Nintendo products were seized, escaped with only trivial fines or no penalty at all.'"
If only the Chinese would pirate (clone) the Nintendo Wii hardware... so I could actually get one.
Say what you will about the cost of the goods, but the fact is, if China never gets its act together on IP, it'll never be attractive for more than grunt work R&D. We're not talking about an economy like the US where there is an argument for liberalizing IP laws; we're talking about an economy where there seems to be no reliable enforcement of IP rights except when the Chinese government needs to make an example out of someone to appease foreign interests. This is not a fight over fair use rights, this is a fight over whether there should be any practical protection at all for people who make creative works and do intense research.
Wow, the freaks come in all kinds today. I really do not buy this Nintendo manufacturing a shortage argument. If shortages really created this sort of buzz and sales, then Sony would have held back on PS3s as much as possible to keep demand low. You have to remember that unlike most console makers, Nintendo almost always shoots for as close to a world-wide launch as possible. There is not this 8-month gap between launch in the US and launch in Europe like other consoles do.
You have to remember Nintendo is trying to meet demand for all regions at once and not just one or two. You also should realize that the shortage is not unique to a single region and sales of the Wii are through the roof. I do not remember Nintendo having continual problems with keeping items in stock. The only other item I remember is the DS Lite, which is also quite popular for its own reasons.
Honestly, I tend to believe Nintendo when they say they are cranking out at max production. They have no real reason not to, since they are not meeting current demand. This buzz-factor is bull-shit. I have wanted a Wii since before launch and still have been unable to find one, and I know I am not alone in this regard. Nintendo's profits could only grow by increasing production, assuming they had the capacity to do so, buzz or not. They have no reason to "out buzz" the over-priced PS3 or the "old" Xbox 360.
Do you have any evdience? The world you describe sounds plausible, except that it assumes that Nintendo cares about media buzz more than profits. In the real world, it is Nintendo that cares about profits, and Microsoft and Sony that care about media buzz. Note that Nintendo is earning a profit and getting media buzz, but MS and Sony are only getting media buzz (and a lot of that buzz is negative, too). I don't think Nintendo needs to be playing with supply in order to boost their long-term profitability.
In fact, I don't see how an artificial shortage could help Nintendo at all at this point. They are already guarenteed at least some (positive) buzz from the geriatric market, so the Wii is not in danger of disappearing below the radar. Right now, the Wii needs to build up a large installed base so that third party developers will take it more seriously and actually make games that are well suited to the Wii.
Daydreaming is exactly what you are doing. Think it through.
Company A R&Ds a product through conception, marketing, design, and release. Suppose the unit cost to manufacture and distribute is $14/unit. Now if R&D etc costs 1,000,000 and you want to pay that back in two years, and you project sales at 50,000 per year. Then you'll need to charge $20 to cover that cost, plus a modest profit margin of say 15%. Your price would then be $39.99.
Company B, buys the product and replicates it, skipping all the r&d, marketing, paying only manufacturing and distribution. They can charge $21.00 per unit and make 50% profit margins. (And that's before they cut corners on quality or materials.)
So they make a bunch of money undercutting you.
Then your solution is for Company A to buy Company B, thereby enriching they guys behind it even more, and increasing your costs, which will have to be reflected in your product price.
At which point they'll just start up another factory undercutting you.
I'm just annoyed that everyone quoting piracy never says how many items they estimate on the black market, but always say - we lose $XXX BILLION DOLLARS every year,' etc... That is a red herring. You are first assuming that legitimate paying customers are reaching the market and choosing the cheap 3rd party knock off over the official product. People who pirate to pirate generally do not intend to buy - therefore reducing that figure by 1/2 to 3/4 as I think its safe to say half or more would not buy the official product if piracy was not an option. I agree that the piracy has to stop, but to pretend as though the RIAA or Nintendo would be the recipient of billions of dollars in added revenue if piracy stopped tomorrow is ludicrous.