Nintendo has made two critical mistakes :
1) N64 used cartridges instead of CDs
2) Nintendo grossly overestimated the Wii sales potential --> Iwata: Wii could beat PS2's sales record (Feb 2009) (coincidentally, Xbox 360 will overtake the Wii in the US over the coming weeks)
-the Company's agreement with Nintendo for N64 products requires prepayment of costly cartridge-based inventory, minimum orders and no rights of return.
-Under the terms of the N64 Agreement, the Company engages Nintendo to manufacture its N64 cartridges for distribution by the Company. Accordingly, the Company has little ability to control its supply of N64 cartridges or the timing of their delivery. A shortage of microchips or other factors outside the control of the Company could impair the Company's ability to obtain an adequate supply of cartridges.
-In connection with the Company's purchases of N64 cartridges for distribution in North America, Nintendo requires the Company to provide irrevocable letters of credit prior to Nintendo's acceptance of purchase orders from the Company for purchases of these cartridges. For purchases of N64 cartridges for distribution in Japan and Europe, Nintendo requires the Company to make cash deposits. Furthermore, Nintendo maintains a policy of not accepting returns of N64 cartidges.
-Because of these and other factors, the carrying of an inventory of cartridges entails significant capital and risk
Wow. Just looking at what EA said is enough to make me say FU to Nintendo(from a development standpoint) but they were the big game at that time. The 'no right to return' is complete BS, though.
It's like Nintendo was more interested in having their cake and eating it. Charge money via cartridges to those who make the games and get royalties off sales (I'm assuming they did). The industry probably wouldn't have moved forward as fast as it did if we still have the cartridge based gaming system.