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The 7 - Video Games - Nintendo vs Everyone Else
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Jaguar
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#1 Posted on 3.6.05 1809.35
Reposted on: 3.6.12 1810.04
Very interesting article here.

http://www.buzzcut.com/article.php?story=2005053122342247

The author talks about why Nintendo is where they're at in the gaming industry (third place with a 10% market share) and goes on to say why it's actually a good thing.

A snippet:

    Originally posted by The Article
    Since videogames are a big business, itís a good idea to understand how the game of business is scored. And the most impressive stat of all is net profitóthe amount of money left over after the business has done what it has to do. This isnít money collected from customers, but still owed to suppliers, lenders or the taxman. This is cash, free and clear. This is the companyís walking around money that either gets paid out to stockholders or saved for investment in new business opportunities.

    In this light, itís odd how few game commentators seem to understand just how profitable Nintendo really is. With a net margin of over 20%, Nintendo is a financial rock star. Just by way of comparison, General Electric, that monster global conglomerate whose executives write the books about corporate leadership that other Fortune 500 execs read, clocks in with a net margin of 11% Nintendoís business engine is so efficient that even though they sell far less than Sony, they make, bottom line, about as much as all of Sony, Yes, thatís right. Little Nintendo generates about as much cash as giant Sonyóelectronics, movies, the works. (For a bunch of good financial data on this subject in one place, see PCVSConsole).


Quite an interesting read.

-Jag

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JALman
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#2 Posted on 3.6.05 2338.27
Reposted on: 3.6.12 2339.32
I've read about Nintendo's profitability for a while now. This is the reason why Nintendo isn't becoming the next Sega. When the Dreamcast was released, Sega was in massive debt and the DC consoles along with its first-party game library were desparation attempts to make a profit. When we finally get to see the Revolution launch, Nintendo can bank on marketable franchises and their portables. Their path to oblivion isn't quite set in stone yet.

Another interesting quote:
    Originally posted by Buzzcut

    Yes, [the announcement of Game Boy Micro] makes for dull news. And the GBM canít come close to generating the excitement of a PS3 or an Xbox 360. But this is where the fan-fueled press keeps going off the rails. We get excited about big ideas and the glitz and glory that colossal investments can create. But we miss the simple, sober successes of a solid business plan.



In my opinion, many gaming reporters who are lack experience in financial matters nearsightedly see video games as pure "art" and don't care for the business side of the industry.

(edited by JALman on 4.6.05 0040)
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