Hello mr. Malstrom, do you think you could talk more about bundles? I
had an argument with a friend and we couldn’t find out if bundles were
really bad for Nintendo
I do think they consume money, which is obvious when they sell their
own game on a bundle, like Super Mario 3D Land, but do they pay for
bundles like Monster Hunter or they just exchange favors with Capcom?
Does the company lend them their game so it gets more sales and
contributes to a bigger install base?
Thanks in advance for your time.
Third parties and the console companies have a symbiotic relationship. Console companies want third party games to sell so the third party gets money (which attracts more third parties), and it attracts more people to the console.
The bundle has a similar relationship. The third party is overjoyed that people who buy the hardware will be buying their game. And the console company is overjoyed that the game is causing people to buy the hardware. They both make money.
Console companies make their money off of licensing software. The most difficult hurdle is to get people to buy the hardware. No one likes to buy the hardware. So console companies try to sweeten the pot as much as they can with including a game (or some other feature like multimedia). Once the hardware is bought, customers tend to buy other games which offset any losses from the bundled hardware.
Nintendo went so far to sell the 3DS at a loss. Iwata said this was important to drive the install base in order for the platform to thrive with software sales down the road. Will this be successful?
The casual observers are saying this is successful because of the sales charts. But sales charts do not ultimately determine success, the company’s financial statement does. You can sell every product and still go out of business. At the moment, the 3DS is helping to cause Nintendo’s financial statement to bleed red. If the 3DS causes this to reverse, as well as make up for the prior losses, only then can we call Iwata’s strategy a success.
While Iwata’s strategy has risk, it would be even riskier to continue the original 3DS strategy of relying on the 3d output to ‘wow’ and sell the system.
As for the third party bundles, the third party is most definitely making money off of it. Capcom is making money when people buy a Monster Hunter portable. Absolutely.