Console makers don't make much money off of the hardware themselves. Here's a few examples:

Switch: ~$40 profit[1]

PS4: ~$18 profit[2]

Xbox One: ~$30 profit[3]

As for software, a Forbes estimate from 2006 put the console manufacturer cut at around 11.5%, however that could be different nowadays.

This also changes with exclusivity deals in which the fee is presumably waived. I believe Sony would gain a little extra from licensing the Blu-ray technology on top of that.

But yeah, you're right. Much like printers and ink cartridges, the money is in the contents, not the device.

Disclaimer: I'm not in any way a part of the industry, just an interested fan of the medium so take this with a grain of salt and feel free to provide any knowledge you might have

[1]: https://www.polygon.com/2017/4/5/15195638/nintendo-switch-co... [2]: http://allthingsd.com/20131119/teardown-shows-sonys-playstat... [3]: http://allthingsd.com/20131126/microsofts-xbox-one-cost-90-m... [4]: https://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_...

Your numbers are ancient, 2013 for both the PS4 and the XB1. I'm sure they've become way cheaper/profitable to produce since then, they're not cutting edge tech any more.

They've also lowered the price significantly since then. Entry-level units can be had for $199, much less than the $399/$499 launch prices of the PS4 and Xbox One, respectively.

That's a good point, didn't think about that.

This is the part that both amazed and confuses me about Nintendo.

They refuse to do proper sales on the Switch hardware, and yet all they have to do is have a decently discounted sale and if they sell 1 game per console they're already back in the black.

All their profit comes from the games, whereas the choice of buying a console for the consumer is high% the price of the console and only low% the price of games.

The Switch is fairly new, it's also selling very very well at full price. So what's the incentive for a sale? Not to mention consoles, especially successful, popular ones, don't see much in the way of discounted price early on.

So I guess I'm not sure what the source of the confusion is. It's not like anything weird or unusual is going on compared to the rest of Nintendo's 35 years in the console market, or compared with the console market in general.

It's possible that a smaller install base would lead to less software being developed though (even if the games would sell for use on emulators, that's harder to predict), so hardware sales induce software profits to some extent.

Btw (sorry for double comment, I can't edit my previous one anymore), all of this makes me think one thing: maybe console companies could build emulators themselves? There are guys like me who won't ever buy a console anyway. I use steam linux, and I've add a few custom launchers to it to play otherwise non-available retro games through emulators. I wouldn't bother paying for an official emulator if it allowed me to buy games that are exclusive to consoles (as in, games that are not on Steam).

This would also be an opportunity to generate revenue on retro gaming: if they make it easy to use, people will buy it. They could make an emulator for steam which then includes its own marketplace "in game". Despite the large availability of retro roms, I keep buying old final fantasy games for about 15€ each on android just because it's easy and requires no configuration.

Good point. I guess it would be only fair that emulators publish download numbers :)

> Have an upvote. I don't agree with you, but those group downvoting are really mass bullying, to me.

Why? This is literaly lying FUD which is perpetuated by the companies who try to deny you law-given rights.