Originally published on Nintendo Castle.
If you’ve been following gaming news at all recently, you’re probably familiar with the NES Classic. For those who aren’t, Nintendo put out a miniature version of the NES that came preloaded with 30 classic games, including most of Nintendo’s biggest hits, and a controller in late 2016. The whole package retailed for $59.99. While you’ve probably heard of it, there’s a good chance that you don’t currently own one, even if you were willing to buy it. Well, the Big N is at it again, this time with the SNES Classic.
Very similar to its NES counterpart, the Super Nintendo mini will come preloaded with some excellent classic games and launch this holiday season. If you haven’t yet heard of it, you can check out an article with more details here. Nintendo has also confirmed that, like the NES Classic, the SNES Classic will only be available for a limited time. They don’t intend to continue production after the 2017 holiday season.
That’s where the controversy starts. There was a huge demand for the NES Classic, probably because you got an HDMI ready console, a controller, and 30 great games for the price of a single AAA game today. This demand was seriously underestimated by Nintendo. Pre-orders were sold out in minutes and scalpers had a field day. If you still want to pick one up, don’t expect to pay less than $200 on eBay. Because of this unexpected demand, Nintendo continued to produce the console into the early months of 2017, but they still only scratched the surface of meeting demand.
Then, well before everyone who wanted one was able to pick one up, Nintendo revealed that they had ceased production and would no longer be stocking shelves with NES Classic Editions. As you might expect, people were outraged. They couldn’t believe that Nintendo would stop producing a money-printing machine in the midst of its popularity. How could they be so stupid?
Well, here’s the thing. The NES Classic was only ever going to be a limited edition holiday product. I’ll admit that this might not have been as clear as it could have been when announced, but it was never going to be a long-term member of Nintendo’s console lineup. I think it’s reasonable to suggest that Nintendo should have at least continued production until they stopped selling out the moment they restocked, but there’s something else you’ve got to realize: Nintendo really couldn’t have made that much money from the NES Classic.
Think about it for a minute. The whole package sold for $59.99. It included a console, a controller, an HDMI cable, and 30 games. If we just take into account the price of the games, then they are effectively priced at $2 a piece. Nintendo almost never charges less than $6 for NES games on Virtual Console, meaning they made far less than they would if they sold each of the 30 games individually on the Virtual Console.
Now, they probably wouldn’t be able to sell each of those 30 games for $6 to everyone that bought an NES Classic. But the price of the NES Classic didn’t just get you the games, it also got you the console, which of course is much more expensive to produce than the NES games that have been available for 30 years now.
Between the console, controller, and HDMI cable, Nintendo couldn’t have been making much of a profit. If we lowball an estimate for producing the electronics at $20, and we assume they are being sold to retailers for $55, Nintendo only nets $35 per unit. This is ignoring other costs, like packaging, taxes, and shipping physical units. We’ve also got to consider that the 30 included games on the NES Classic were not all first party. This means that there are licensing fees associated with re-releasing third party games, which could be quite significant. There are also research and development costs before production that must be considered.
We don’t really know the exact profit margins or all of the hidden costs with the NES Classic, so I’ll stop attempting to guess at them. We can however, considering the many associated costs with the mini console, conclude that Nintendo wasn’t really printing money with the system. I highly doubt they took a loss and I’m sure they even got a nice boost in revenue. But let’s not pretend like the console was raking in the dough.
Consider this: Nintendo can make significantly more profit, probably nearly double, by selling a single Wii U or Switch game. So then I ask: why would they continue to focus their time and resources on the less profitable NES Classic after holiday season?
It was not coincidental that the cease of production on the NES Classic was so close to the release of the Switch. Nintendo released a great system in the NES Classic, and it far exceeded their expectations. It was a great product to raise awareness about Nintendo games prior to the release of their new console. Now that Switch has been released, the company has bigger fish to fry.
If Nintendo were to continue producing NES Classics after the release of the Switch, they would be competing with themselves for time and resources. We’ve got to remember that this company is producing and shipping millions of units in a very short period of time. It might seem easy to suggest that Nintendo just tell the manufactures to “make more”, but it often isn’t that easy. We’ve recently heard that Nintendo is even competing with Apple to even get materials to produce the Switch.
Considering the scarcity of the Switch, I’m quite happy that the company didn’t try to juggle both. Now that they’ve put out a new console, all their efforts should be focused on providing a smooth experience for that. When they sell a Switch, they are selling a system that will continue to bring in far greater revenue for years to come. When they sell an NES Classic, they make a one-and-done small profit.
Now, I’m not going to pretend that Nintendo is a perfect company. I just like playing their video games. I’m not afraid to call them out when they do silly things, which they do plenty of. I think they should have been more prepared for the launch of the NES Classic. They have a history of scarcity at launch that is beyond frustrating and needs to be resolved. Considering the data they have from the NES Classic, Switch, amiibo, and all the many collector’s editions that sell out immediately, Nintendo have no excuse not to be prepared for the launch of the SNES Classic. I sincerely hope that they are prepared.
But when they decide not to produce any more SNES Classic after the end of 2017, which they’ve already confirmed is the plan, then I won’t complain. They’ve advertised this as a limited time item (another thing they could have been a little more clear about with the NES Classic). It doesn’t make sense to continue to produce the console when they’ve already put out their latest generation console that deserves their full attention.
Now, please excuse me. I need to mash F5 until September if I want any chance at beating those nasty scalpers to my SNES Classic.
