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[MercuryLS]

I know what you're thinking, I'm not saying they should. I just want to explore the possibility. I'd imagine what holds them back from entertaining the idea of doing this:

1) Giving up profit in the form of royalties to Sony/MS
2) Giving up some more profit on game manufacturing (I'd imagine this is marked up by Sony/MS)
3) Giving up 3rd party royalties on their consoles

So for 1) couldn't they manage to get a sweetheart licensing deal from either Sony or MS if they chose to go exclusive with one of them? I'd imagine both companies giving them crazy favorable terms to lock up their content for 5-10 years. For 2) I'd imagine this isn't a significant enough amount to be a barrier (few dollars per disc). 3) Based on how the Wii U is doing, they aren't really giving up much 3rd party royalty revenue. Also by not having to R&D, distribute and market their own console, that saves them a lot of money and effort they could just put into games and peripheral development.

So from an economics perspective, is there anything holding them back from doing this for consoles? For the portable market there's still an argument that they can make that work with their own hardware, but with consoles I don't see why they wouldn't go 3rd party. They literally have so much to gain with a small trade off of paying a small royalty on their titles to either Sony or MS.

 

[casiopao]

I know what you're thinking, I'm not saying they should. I just want to explore the possibility. I'd imagine what holds them back from entertaining the idea of doing this:

1) Giving up profit in the form of royalties to Sony/MS
2) Giving up some more profit on game manufacturing (I'd imagine this is marked up by Sony/MS)
3) Giving up 3rd party royalties on their consoles

So for 1) couldn't they manage to get a sweetheart licensing deal from either Sony or MS if they chose to go exclusive with one of them? I'd imagine both companies giving them crazy favorable terms to lock up their content for 5-10 years. For 2) I'd imagine this isn't a significant enough amount to be a barrier (few dollars per disc). 3) Based on how the Wii U is doing, they aren't really giving up much 3rd party royalty revenue. Also by not having to R&D, distribute and market their own console, that saves them a lot of money and effort they could just put into games and peripheral development.

So from an economics perspective, is there anything holding them back from doing this for consoles? For the portable market there's still an argument that they can make that work with their own hardware, but with consoles I don't see why they wouldn't go 3rd party. They literally have so much to gain with a small trade off of paying a small royalty on their titles to either Sony or MS.

How about their hardware income which consist of 60% of their income?

 

[John Harker]

I fail to see the benefit of it?
The company as it is couldn't exist, so their would take massive restructuring first.

They'd have to change their mission, staff, tools, company size, talent...

It's not like flipping a switch, we are talking a 100+ year old company with a philosophy that is incredibly different than the other two businesses you're referencing.

Pretty much would be bad for most people/industry in the long run. Probably better off just selling off their IP or becoming a liscensing company (like what Lucas arts now does) and manage from a branding perspective like an estate if you want them out of the business so badly

 

[Riki]

So from an economics perspective, is there anything holding them back from doing this for consoles? For the portable market there's still an argument that they can make that work with their own hardware, but with consoles I don't see why they wouldn't go 3rd party.

Because then it becomes a game of "I'll just wait for their game on system X" thus destroying their handheld business (ask Sony about this one).
It's either all or nothing. And right now, they have no need to go third party. From any perspective.

 

[MercuryLS]

How about their hardware income which consist of 60% of their income?

They're losing money on the Wii U hardware.

I fail to see the benefit of it?

Access to a massive pool of customers to sell their games to? Nintendo's greatest asset is their software and franchises. They live and die by the number of software units they can sell, it makes more sense to put their games on a platform that has highest penetration. Even though I put Sony and MS in the OP, I think they're best bet would be to partner with Sony and get a favorable royalty deal as Sony's PS brand has worldwide appeal.

 

[davepoobond]

How about their hardware income which consist of 60% of their income?

Not anymore!

They don't need to make hardware anymore since they are 3rd party.

 

[Chindogg]

How bout let's not since this thread will turn into a cesspool within two pages.

 

[ReBurn]

Is Nintendo doomed again? I can't keep up.

 

[Riki]

Is Nintendo doomed again? I can't keep up.

http://isdoomed.vooks.net/

 

[Father_Brain]

How about their hardware income which consist of 60% of their income?

Revenue. Not net income.

 

[ReBurn]

http://isdoomed.vooks.net/

Thanks. I'm all caught up now.

 

[Atomski]

Is Nintendo doomed again? I can't keep up.

Im not sure the Wii U will recover at this point.. but I believe they are doing fine with the handheld department. I still think Nintendo will come out with some sort of handheld/miniconsole hybrid before they go 3rd party.

 

[MercuryLS]

How bout let's not since this thread will turn into a cesspool within two pages.

I was hoping to have a lively debate based on numbers rather than Nintendoo...

Is Nintendo doomed again? I can't keep up.

:/

 

[entremet]

If people complain about Mario games now, watch out if Nintendo goes 3rd party. That will be all they do.

 

[JordanN]

Nintendo going third party wouldn't have to be the end of their consoles.

Their home consoles could go because every generation they gimp them which leads to bad sales (i.e no cd's, no horsepower). Their handhelds can stay though because they tend to be cheap and actually have a game library (although 3DS is starting to weaken this perception).

They would definitely see more success in a PS4/XBO/PC ecosystem then just holding themselves back with Wii U and whatever successor they have planned (PS4 outsold it right? And look how new it is). Sadly, the idea wont ever be entertained as long as Iwata and friends are running Nintendo.

 

[cafemomo]

Nintendo software will only thrive on Sony hardware.

MS hasn't cultivated a userbase that will allow games like Mario to flourish. At least with Sony they have attempted with Pupeteer, Tearaway, Ratchet, etc

 

[entremet]

Nintendo software will only thrive on Sony hardware.

MS hasn't cultivated a userbase that will allow games like Mario to flourish. At least with Sony they have attempted with Pupeteer, Tearaway, Ratchet, etc

Both bombed massively, though.

 

[Riki]

Nintendo software will only thrive on Sony hardware.

MS hasn't cultivated a userbase that will allow games like Mario to flourish. At least with Sony they have attempted with Pupeteer, Tearaway, Ratchet, etc

Which don't even do a fraction of what Mario games do...

 

[chaosblade]

I still think if Nintendo went "third party" they would transition to something more like Steam Machines than just jump on Sony and Microsoft's platforms, for all the same reasons you mention.

They could also likely make some profitable hardware using more simple, custom components than what is in traditional PCs (eliminate the modularity and some features not necessary for a gaming system, i.e., not having a dozen USB and SATA ports, etc. Basically think laptops) while adhering to the standards necessary to support compatibility with existing OSes and software.

 

[Aquamarine]

Nintendo revenue breakdown (April 1st, 2012 - March 31st, 2013):

635.422 billion JPY - Net Sales

227.224 billion JPY (35.8%) - DS + 3DS Hardware sales - Revenue stream lost from going third party
136.852 billion JPY (21.5%) - Wii + Wii U Hardware sales - Revenue stream lost from going third party
32.270 billion JPY (5.1%) - Other Hardware sales - Revenue stream lost from going third party

Total amount of revenue streams lost by going third party:
396.347 billion JPY (62.4%)


144.588 billion JPY (22.8%) - DS + 3DS Software sales - Revenue stream modified from going third party
77.156 billion JPY (12.1%) - Wii + Wii U Software sales - Revenue stream modified from going third party
15.793 billion JPY (2.5%) - Content Income / Other Software sales - Revenue stream modified from going third party
1.535 billion JPY (0.2%) - Playing cards, Karuta, Misc. Income

Cost of sales: 495.068 billion JPY (77.9%)
Gross Profit (less SG&A): 140.354 billion JPY

Yeah that revenue could be partially made up through mobile...third-party exclusivity deals...stuff like that. But the question is whether that would be enough to offset the loss in revenue streams / whether the modified and new revenue streams would lead to greater profitability.

 

[Hyperactivity]

Nintendo software will only thrive on Sony hardware.

MS hasn't cultivated a userbase that will allow games like Mario to flourish. At least with Sony they have attempted with Pupeteer, Tearaway, Ratchet, etc

Real high sellers right there. I think Ratchet mightve even got decent sales. Mario will love hanging out with this group of best sellers

Snark aside, look at your list. And be a little realistic. Even a game like X wouldnt appeal to the playstation main audience, maybe once upon a time, but not post ps3

 

[Riki]

Nintendo revenue breakdown (April 1st, 2012 - March 31st, 2013):

635.422 billion JPY - Net Sales

227.224 billion JPY (35.8%) - DS + 3DS Hardware sales - Revenue stream lost from going third party
136.852 billion JPY (21.5%) - Wii + Wii U Hardware sales - Revenue stream lost from going third party
32.270 billion JPY (5.1%) - Other Hardware sales - Revenue stream lost from going third party

Total amount of revenue streams lost by going third party:
396.347 billion JPY (62.4%)


144.588 billion JPY (22.8%) - DS + 3DS Software sales - Revenue stream modified from going third party
77.156 billion JPY (12.1%) - Wii + Wii U Software sales - Revenue stream modified from going third party
15.793 billion JPY (2.5%) - Content Income / Other Software sales - Revenue stream modified from going third party
1.535 billion JPY (0.2%) - Playing cards, Karuta, Misc. Income


Yeah that revenue could be partially made up through mobile...third-party exclusivity deals...stuff like that. But the question is whether that would be enough to offset the loss in revenue streams / whether the modified and new revenue streams would lead to greater profitability.

And so the topic ends once again, thanks to: AQUAMARINE!

 

[AniHawk]

So for 1) couldn't they manage to get a sweetheart licensing deal from either Sony or MS if they chose to go exclusive with one of them? I'd imagine both companies giving them crazy favorable terms to lock up their content for 5-10 years. For 2) I'd imagine this isn't a significant enough amount to be a barrier (few dollars per disc). 3) Based on how the Wii U is doing, they aren't really giving up much 3rd party royalty revenue. Also by not having to R&D, distribute and market their own console, that saves them a lot of money and effort they could just put into games and peripheral development.

a lot of this hinges on hypothetical statements to reach a definite conclusion. you're also ignoring the manpower it would take to learn and work within the architecture provided by microsoft and sony, and the additional time cost in the submission process (and things like fixing bugs isn't as simple as releasing a patch on your own- even that would have to go through a foreign submission process). it's a heavy cost.

the reason people like nintendo games tends to be their polish. that doesn't come with everything. it's part of the package deal of having a familiar architecture and creative freedom. their current situation is what affords them the ability to make something like xenoblade or fire emblem awakening. if they were forced to make less money on fewer products, that hurts their brand and reputation.

So from an economics perspective, is there anything holding them back from doing this for consoles? For the portable market there's still an argument that they can make that work with their own hardware, but with consoles I don't see why they wouldn't go 3rd party. They literally have so much to gain with a small trade off of paying a small royalty on their titles to either Sony or MS.

it's all or nothing. i'm sorry, but i've never seen a good reason why nintendo would focus tons of resources and give up so much freedom so they could make games for other companies, when they could focus all of that talent on the hardware they do have reasonable success with. i can understand expecting a third-party nintendo, or not, but the third-party nintendo on consoles/first-party nintendo on handhelds comes across as wishful thinking at best, like 'well i'll get the games i want and that's all that matters because handhelds don't really count anyway.' it really doesn't sound like it's something that's been thought the whole way through. i don't mean to be harsh, but i have seen it come up again and again and i don't understand it.

 

[Platy]

Without the console profits to hold then they would have to became RIDICULOUSLY smaller than they are today.

Also without the profits they would stop taking risks, so less development teams and less risks means fuck you Metroid, F-Zero and every other franchise not named Mario, Zelda, Pokemon and maybe Kirby (with a random Fire Emblem/WiiFit/Nintendogs here and there)

Also should be noticed that it is somehow visible how much the average user of PS4 and XB1 HATES colorfull and fun platformers, specialy considering the sales of games like Tearaway, Banjo Kazooie Nuts and Bolts and other games.

"But they would have Nintendo fans ...." scattered through all the platforms, maybe even going handheld only since this is the only place certain that Nintendo would make games.

Less nintendo fans, need to make not exclusive games (not focusing on the strenghts of the hardware which is one of the Nintendo's strenghts) and probably needing to go dark and edgy.

Also Metroid would be certainly DEAD.

Looks fun =P

So from an economics perspective, is there anything holding them back from doing this for consoles? For the portable market there's still an argument that they can make that work with their own hardware, but with consoles I don't see why they wouldn't go 3rd party. They literally have so much to gain with a small trade off of paying a small royalty on their titles to either Sony or MS.

They just had what was probably the most profitable console ever made and suddenly they "can't make that work" anymore ? =P

 

[MercuryLS]

Nintendo revenue breakdown (April 1st, 2012 - March 31st, 2013):

635.422 billion JPY - Net Sales

227.224 billion JPY (35.8%) - DS + 3DS Hardware sales - Revenue stream lost from going third party
136.852 billion JPY (21.5%) - Wii + Wii U Hardware sales - Revenue stream lost from going third party
32.270 billion JPY (5.1%) - Other Hardware sales - Revenue stream lost from going third party

Total amount of revenue streams lost by going third party:
396.347 billion JPY (62.4%)


144.588 billion JPY (22.8%) - DS + 3DS Software sales - Revenue stream modified from going third party
77.156 billion JPY (12.1%) - Wii + Wii U Software sales - Revenue stream modified from going third party
15.793 billion JPY (2.5%) - Content Income / Other Software sales - Revenue stream modified from going third party
1.535 billion JPY (0.2%) - Playing cards, Karuta, Misc. Income


Yeah that revenue could be partially made up through mobile...third-party exclusivity deals...stuff like that. But the question is whether that would be enough to offset the loss in revenue streams / whether the modified and new revenue streams would lead to greater profitability.

I was waiting for your post. The hardware sales revenue, I wonder how much of that is profit? They're most probably making a small profit on 3DS and it's variants as well as Wii but Wii U is a loss leader. Their own software sales on Wii U are soft (for Nintendo's standards on their more successful machines) and the profit margins on games is massive. Wouldn't there be a possibility that the increase in software sales on a console with a large user base like PS4 (in the future, based on current sales projections) would offset giving up the hardware revenue (on which they make a small profit), even if they had to give up a few bucks in royalties to a company like Sony?

 

[casiopao]

Nintendo software will only thrive on Sony hardware.

MS hasn't cultivated a userbase that will allow games like Mario to flourish. At least with Sony they have attempted with Pupeteer, Tearaway, Ratchet, etc

All of those bomba like nuka though.

At MS had Kinect casual fans which will more to accept this kind of games.

 

[EMT0]

If we're talking console-only, I can' t see the Wii U' s royalties being all that big considering most anything noteworthy on there is from Nintendo themselves.

 

[chaosblade]

Also without the profits they would stop taking risks, so less development teams and less risks means fuck you Metroid, F-Zero and every other franchise not named Mario, Zelda, Pokemon and maybe Kirby (with a random Fire Emblem/WiiFit/Nintendogs here and there)

Also Metroid would be certainly DEAD.

Also should be noticed that it is somehow visible how much the average user of PS4 and XB1 HATES colorfull and fun platformers, specialy considering the sales of games like Tearaway, Banjo Kazooie Nuts and Bolts and other games.

Don't disagree with your overall point, but you're kind of contradicting yourself here. Nintendo wouldn't try to leverage one of their biggest IPs that could appeal to an audience on a platform that doesn't buy what makes up a lot of Nintendo's other notable IPs? And instead just make those other games they don't traditionally buy? Makes no sense.

 

[AniHawk]

I was waiting for your post. The hardware sales revenue, I wonder how much of that is profit? They're most probably making a small profit on 3DS and it's variants as well as Wii but Wii U is a loss leader. Their own software sales on Wii U are soft (for Nintendo's standards on their more successful machines) and the profit margins on games is massive. Wouldn't there be a possibility that the increase in software sales on a console with a large user base like PS4 (in the future, based on current sales projections) would offset giving up the hardware revenue (on which they make a small profit), even if they had to give up a few bucks in royalties to a company like Sony?

i'm curious- would you also be for a third-party sony when it comes to handhelds? like a sort of gentleman's agreement where nintendo makes x and the legend of zelda for ps4 and sony makes tearaway and cute colorful games for 3ds?

 

[Riki]

I was waiting for your post. The hardware sales revenue, I wonder how much of that is profit? They're most probably making a small profit on 3DS and it's variants as well as Wii but Wii U is a loss leader. Their own software sales on Wii U are soft (for Nintendo's standards on their more successful machines) and the profit margins on games is massive. Wouldn't there be a possibility that the increase in software sales on a console with a large user base like PS4 (in the future, based on current sales projections) would offset giving up the hardware revenue (on which they make a small profit), even if they had to give up a few bucks in royalties to a company like Sony?

How many games on the PS3 reached Nintendo's games on the Wii? Then you factor in that they would be paying more in royalties for those sales. Plus they haven't cultivated a userbase on PS4 or any platform but their own.
There is no realistic scenario in which Nintendo sells enough software on the PS4 or One that would offset the losses they would be taking from being third party.

 

[IdreamofHIME]

I think you would kiss goodbye to stuff like Fire Emblem...and maybe even Metroid.
They would become like SEGA, only stuff like Mario, Zelda and Pokemon would be used as they would be guaranteed to sell.

 

[MercuryLS]

i'm curious- would you also be for a third-party sony when it comes to handhelds? like a sort of gentleman's agreement where nintendo makes x and the legend of zelda for ps4 and sony makes tearaway and cute colorful games for 3ds?

I think Sony needs to put a bullet in Vita and never try to make another handheld again. They should stick to consoles exclusively, it fits them better.

 

[MisterHero]

Nintendo will make money by dropping hardware income and forcing them onto platforms where the only competitive games are more expensive to make. That's before giving a cut to platform holders.

So no hardware money and take a bigger hit on software. Great idea.

 

[AniHawk]

I think Sony needs to put a bullet in Vita and never try to make another handheld again. They should stick to consoles exclusively, it fits them better.

i don't see how that makes sense for sony when nintendo should have to focus much more in the way of resources to develop for ps4 as well as their own platform.

 

[emag]

Nintendo needs to have its own platform to control its own destiny. But it doesn't have to be a hardware platform.

Nintendo taking a cue from the platform/premium app store model could work.

1. Drop the focus on 1st party hardware and instead present a cross-device Nintendo eShop, a la Steam/Origin/UPlay/AmazonAppStore that runs on PC, Wii U, 3DS, and Android, wherein 100% of the profit goes to Nintendo.

2. Set minimum hardware requirements and sell accessories/gamepads (something akin to the Steambox model).

3. Make the NintendoShop the only place to get Nintendo software, both current and past (expand the store to bring in 3rd party games when it makes sense to do so).

There's no profit in hardware and little room for innovation. Take the Nintendo brand, take the properties, and take the programming talents and move to the platform model, instead of the hardware model, while the time is still ripe.

The goal here is to keep the Nintendo brand strong, to maintain profitable pricing, and to continue to develop top-tier games, while expanding the market. Neither streaming solutions nor competing on other publisher's App Stores with F2P apps preserve those elements, and Nintendo-only hardware has proven to be underperforming. Nintendo tying its fortunes to Microsoft or Sony would be absurd, as MS/Sony would merely exploit Nintendo and then use the control of the platform to force Nintendo into becoming a typical 2nd/3rd party.

 

[ArcaneFreeze]

I thought people were tired of Mario and Zelda and wanted Nintendo to make new ips? They go third party Mario and Zelda is all anyone will get. And you can rest assured the quality will go down with it. At least now we still get the likes of Fire Emblem, Pikmin, Kid Icarus, etc.

 

[March of the Crabs]

Anyone with any basic knowledge of how Nintendo works/makes money, as well as any basic knowledge about how a business operates knows Nintendo going third party is a terrible idea.

 

[213372bu]

I think Sony needs to put a bullet in Vita and never try to make another handheld again. They should stick to consoles exclusively, it fits them better.

Watch your back, SmokyDave is coming for you.

All jokes aside, if Sony had put much emphasis and marketing on the vita, I don't think it would be in the situation it is today. The Vita is a good piece if tech, so it isn't like they don't know how exactly to make handhelds.

Anyone with any basic knowledge of how Nintendo works/makes money, as well as any basic knowledge about how a business operates knows Nintendo going third party is a terrible idea.

Agree with this. Hopefully, Nintendo can make a

Spoiler

better

, more popular system the next go around.

 

[cafemomo]

Snark aside, look at your list. And be a little realistic. Even a game like X wouldnt appeal to the playstation main audience, maybe once upon a time, but not post ps3

While of course the demographics have changed with Sony (and what a damn shame that it happened) A game like X would certainly do decent on Sony hardware. They have the jRPG audience. But in a scenario that if X were to transfer over to Sony hardware, that thing ain't gonna be on the PS4. It's gonna be on the PS3.

 

[Apophis2036]

So from an economics perspective, is there anything holding them back from doing this for consoles?

There is always the chance however slim that they hit the goldmine again like they did with Wii.

If their next console sells like WiiU or even Gamecube then I think they should start to seriously think about just making games for other peoples home consoles. After all, making games is what their best at.

 

[ArcaneFreeze]

Watch your back, SmokyDave is coming for you.

All jokes aside, if Sony had put much emphasis and marketing on the vita, I don't think it would be in the situation it is today. The Vita is a good piece if tech, so it isn't like they don't know how exactly to make handhelds.

Its not the tech that's hurting the Vita. Despite its home for indies and several quality titles like p4g, gravity rush, and tearaway the amount of games that actually matter or are wanted by consumers on the Vita are far and few between. For core gamers its a dam good device but console sales aren't made up by majority of core gamers and where the Vita fails is in attracting the rest of those consumers.

 

[JordanN]

I think you would kiss goodbye to stuff like Fire Emblem...and maybe even Metroid.
They would become like SEGA, only stuff like Mario, Zelda and Pokemon would be used as they would be guaranteed to sell.

I always hear these types of comments but how frequently does Nintendo make those non Mario/Zelda/Pokemon games?

There's only been 1 Fire Emblem so far and 1 metroid (that was years ago). It doesn't seem like there's any difference, third party or not. On the contrary, maybe certain franchises could perform better outside their own hardware.

 

[AniHawk]

I always hear these types of comments but how frequently does Nintendo make those non Mario/Zelda/Pokemon games?

why don't you go look it up yourself.

 

[Cuyejo]

Take Pokemon to mobile and charge for stuff, e.g. 5 dollars for a Master Ball, that kind of thing, that'll be like selling their souls to the devil but I'm sure it will make for a nice source of income.

 

[213372bu]

Snark aside, look at your list. And be a little realistic. Even a game like X wouldnt appeal to the playstation main audience, maybe once upon a time, but not post ps3

Err... I think you have it backwards. Nintendo's platform is/has been more family oriented.

I think a game like X would sell megatons more than it will on the Wii U platform. And to expand on that, I think X in general will sell horribly on the system. I think GAF is having way too high of expectations on this really niche game.

Spoiler

It still might outsell W101 however.

 

[JordanN]

why don't you go look it up yourself.

Well the rate they've been making them definitely slowed down.
Gamecube had 2 Pikmins and 2 Starfox. The Wii had none of either and they were still hardware makers...

 

[BLACK AMERICAN PSYCHO]

I fail to see the benefit of it?
The company as it is couldn't exist, so their would take massive restructuring first.

They'd have to change their mission, staff, tools, company size, talent...

It's not like flipping a switch, we are talking a 100+ year old company with a philosophy that is incredibly different than the other two businesses you're referencing.

Pretty much would be bad for most people/industry in the long run. Probably better off just selling off their IP or becoming a liscensing company (like what Lucas arts now does) and manage from a branding perspective like an estate if you want them out of the business so badly

/thread

 

[MercuryLS]

There is always the chance however slim that they hit the goldmine again like they did with Wii.

If their next console sells like WiiU or even Gamecube then I think they should start to seriously think about just making games for other peoples home consoles. After all, making games is what their best at.

I agree. There is a chance that they can make another super successful console again. Like you said, they should probably try again with their next machine and if it's like the Wii U or Gamecube sales wise, then start looking at their options.

I'm actually concerned for their next handheld, 3DS is already trending lower in hardware and software sales in comparison to DS and phones and tablets are becoming more and more ubiquitous. Could their next handheld face Wii U-like troubles? It's possible as it seems to be getting harder to sell dedicated handheld hardware and software at $30-40.

 

[terrisus]

If we're talking console-only, I can' t see the Wii U' s royalties being all that big considering most anything noteworthy on there is from Nintendo themselves.

And if they go 3rd-party, they now have to pay royalties to Sony/Microsoft/Apple/whoever on all of their software, as opposed to keeping that all for themselves.

 

[Platy]

I was waiting for your post. The hardware sales revenue, I wonder how much of that is profit? They're most probably making a small profit on 3DS and it's variants as well as Wii but Wii U is a loss leader. Their own software sales on Wii U are soft (for Nintendo's standards on their more successful machines) and the profit margins on games is massive. Wouldn't there be a possibility that the increase in software sales on a console with a large user base like PS4 (in the future, based on current sales projections) would offset giving up the hardware revenue (on which they make a small profit), even if they had to give up a few bucks in royalties to a company like Sony?

The wii was profitable since DAY ONE.

Right now nintendo is probably profiting 95% at each wii sold, specialy the mini versions that don't have ANYTHING =P

Don't disagree with your overall point, but you're kind of contradicting yourself here. Nintendo wouldn't try to leverage one of their biggest IPs that could appeal to an audience on a platform that doesn't buy what makes up a lot of Nintendo's other notable IPs? And instead just make those other games they don't traditionally buy? Makes no sense.

And GIVE UP ON MARIO AND ZELDA ?

Easier to see a "makes Twilight Princess looks like wind waker" Darker Zelda than a Metroid game.