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What has Nintendo's massive R&D budget over the years gone into?


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#1 parallaxscroll

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Posted 01 October 2012 - 08:47 PM

Here's a very interesting article from 4 years ago, from September 2008.

New Wii due by 2011
By John - September 30, 2008

What They Play has heard from multiple sources in the game development and publishing community that Nintendo is currently showing early presentations of its next home console hardware. Apparently set to hit the market “by 2011” the new device is said to be the true “next generation” Nintendo console, and far more than a simple refresh of the current hardware. Unlike previous console transitions from Nintendo, the new system will be presented as a true successor to the Wii, and is being dubbed by those that have seen the presentation as “Wii HD.” There is no indication if this will be its eventual name, but the nature of the transition has been characterized as similar to “the shift from Game Boy to Game Boy Advance,” where familiar, key elements were left intact while the core hardware was made more powerful. It is expected by all those that we have spoken to on the subject that the new device will retain the Wii name in part.

While our sources are reluctant to be too specific about “Wii HD,” they have been able to divulge some (albeit predictable) generalizations. High definition visuals are assured, as is a greater emphasis on digitally distributed and backwardly compatible content, indicating that the new system will feature some form of local storage medium such as a hard drive or large flash memory solution. It has also been indicated that Nintendo’s emphasis is again on what the consumer will hold in their hands and interact with, rather than the “console” itself.


Nintendo has proven it can be extremely successful by leveraging processor technology that is not on the bleeding edge, and be more profitable and more innovative as a result. In a 2006 interview with Business Week, Nintendo visionary Shigeru Miyamoto stated, “The consensus [at Nintendo] was that power isn't everything for a console. Too many powerful consoles can't coexist. It's like having only ferocious dinosaurs. They might fight and hasten their own extinction.” Based on our conversations about “Wii HD” this attitude would seem to still prevail.

But why should you believe this? Everything stated so far could easily have been the result of educated guesswork or speculation. While a Nintendo representative provided the expected response that, “Nintendo does not comment on speculation or rumor,” there is additional evidence, outside this commentary, to suggest that something is going on.

In 2003, Nintendo declared that $34 million was spent on R&D. This figure steadily climbed to $103 million in 2006 and the following year bumped dramatically to $370 million.


Based on figures from Nintendo’s annual financial reports, the company is currently spending more than ten times as much on research and development as it was five years ago, and since the Wii was launched in 2006, R&D spending has more than tripled. While this could be attributed to any number of additional projects, the level of spending suggests that a large project is in the works. In 2003, Nintendo declared that $34 million was spent on R&D. This figure steadily climbed to $103 million in 2006 (the year that the Wii launched) and the following year bumped dramatically to $370 million. When asked to explain the escalated spending, Nintendo representatives were unable to provide comment.


The current Wii hardware is based upon processors and graphics technology supplied by IBM and AMD. These two companies have a joint development agreement together, which is described by AMD as being focused “on delivering a range of integrated platforms to serve key markets, including … gaming and media computing.”


The joint development agreement between IBM and AMD expires on December 31, 2011 but “may be extended further by the mutual agreement of the parties.” This suggests that Nintendo will be leveraging research and development from the partnership in time to ensure that it’s new hardware will be compatible with the Wii’s current “Hollywood” and “Broadway” processors. As Microsoft learned in the transition from Xbox to Xbox 360, switching hardware vendors can make running older games on a new system a much more difficult proposition.

The dramatic bump in spending at Nintendo may also be reflective of Nintendo’s work on a rumored new DS, said to feature a camera and music player. Iterating on the DS in 2009 would certainly shake up the market, though given the incredible monthly sales of the device it hardly needs reinvigorating for the time being. When the Nintendo DS was launched in 2004, the worldwide installed base of the Game Boy Advance was 53 million (on top of the Game Boy’s incredibly huge 118 million.) So far, 80 million Nintendo DS units have been sold worldwide, and demand shows no sign of slowing.

It is unlikely that any official acknowledgement of Nintendo’s new hardware will come until at least 2009, however company president Satoru Iwata will be delivering his annual fall presentation this Wednesday.



http://forums.anandt...p/t-222838.html



So now that its 2012 and we know all about the Wii U and its early games, where do you think all of that R&D money has gone?
Into the hardware? Into the games? Or Both? Have we yet to see it with games like 3D Mario, Metroid, Smash Bros, Zelda, etc.
Or are we now seeing the fruits of this massive R&D budget?

Edited by parallaxscroll, 01 October 2012 - 08:53 PM.


#2 Socalmuscle

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Posted 01 October 2012 - 10:15 PM

That money has gone into the wii u hardware itself, which has exceeded the original idea of simply a wii hd and has been developed into a true next generation machine.

It has also gone into the gamepad concepting, trial and error with hardware, costing, etc.

Also the miiverss, tvii, and various software and networking capabilities had to have been heavily developed over a long time to be so seamless as they are now. This was a long project and would have required tons of money. It greatly exceeds any ideas the 360 or ps3 have going on and even beats what has been leaked about the 720.

That stuff costs money. R&D money goes to employee payroll, purchasing various hardware components (tons and tons of stuff to "mess with"), the copious man-hours writing software, paying people to test it. Etc.

So much is involved in r&d for both hardware and software and then more into perfecting the user experience. It gets expensive in a hurry if your project is ambitious. As we have seen with wii u, it's beyond ambitious. It's a revolution. And somewhere along the way, they've figured out a business model that lets them offer a superior online experience to the co
Letitia's withou the added cost that Microsoft requires. Wow.

Then there was also that small matter of one of the first mass produced, glasses free 3d entertainment devices in the 3DS. That in itself was costly.

But the lions share went to the wii u and it's myriad hardware configurations over the years, finding the most powerful hardware combo for a given price point. Then exceeding that at the last minute. So part of the funds went into development of a very powerful console.

Another significant amount went into gamepad development, allowing for a second screen which seamlessly and responsively interacts with the larger screen, plays on its own, or works as a remote.

And yet another giant scoop of money went into software development. This was probably where most of it went. The wii u infrastructure is beyond impressive. It's easily the most high tech system ever put into a console. No one thought Nintendo would or even could do this. But they put their money where it counted. And sent the competition scrambling.

So actually, considering what Nintendo has revealed to the public, it's no surprise at all that they spent the money they did. It makes sense now. They were prepping to drop a bomb. And they did.

The impact of which will only be felt in greater measure in the year plus to come.

Edited by Socalmuscle, 01 October 2012 - 10:21 PM.


#3 parallaxscroll

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Posted 01 October 2012 - 10:36 PM

Socalmuscle, thanks for your reply, I think you covered it all! :)

#4 3Dude

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Posted 02 October 2012 - 03:27 AM

Nintendo also developed contracts and front end hardware integrated wii u services with various media companies including amazon video, hulu, netflix, abc, tivo, countless service providers, allowing wii u to access cable box data, and replace the cable interface, and undoubtedly many, many, many more just not shown on demo units, and more to be added.

I cant emphasize enough the impact Nintendo tvii is going to make.

And with something like this, being first to market is imperative. I know microsoft is planning something similar, though likely nowhere near as extensive since nintendo already secured so many licensed contracts...

But even if microsofts nextbox service is superior in some ways.... It wont make any difference after ntvii has entrenched itself for a year or longer. Just look at zune.

Wii used wii sports to get the console in the hands of customers who didnt play games.

Nintendo land is not wii u's wii sports. Its decieving like that. Had me fooled for a bit too.

Its nintendos packaged killer app that is going to expand the wii u in even places the wii couldnt go....

And nobodys going to see it coming.

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#5 Desert Punk

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Posted 02 October 2012 - 04:13 AM

Not forgetting revisions of existing hardware. The wii has gone through many revisions with the pcb changing to reduce costs but each time its re-designed it costs money but that money is clearly paid back by the reduced manufacturing costs. Same with the wii dvd drive and other portable revisions. It's likely a huge chunk of R&D has gone on its portables plus of course many R&D projects are never actually released. Sometimes it turns out there isn't a market for a prototype product. It doesn't mean the money is wasted though as such R&D may lead onto future projects that will benefit from earlier R&D. Some R&D projects are forced on them when certain components stop being produced and so an existing product has to be modified to allow use of a new improved single component.

#6 Auzzie Wingman

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Posted 02 October 2012 - 04:15 AM

Don't forget the Miyamoto ninjas.

They've been gradually asking for pay raises in large hikes for continued service, and as it turns out, they are members of the R&D department.

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#7 Tricky Sonic

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Posted 02 October 2012 - 04:55 AM

Don't forget the Miyamoto ninjas.

They've been gradually asking for pay raises in large hikes for continued service, and as it turns out, they are members of the R&D department.


Not to be confused with Miyamoto's Ninja's...his R&D team that stalks Sony and Microsoft in the shadows....
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#8 dagwood dang

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Posted 02 October 2012 - 08:21 AM

10,000 pts to Socalmuscle.

#9 Rubix87

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Posted 03 October 2012 - 09:38 AM

I don't usually comment on threads, but this one was interesting. I am big on the research and development aspects of the big N myself, and it is interesting to see the manifestations of their labor. When the Wii U was first unveiled back in 2011 there was a lot of head scratching going on. The biggest reason was because the implementation of the screen in the controller was not new, but it was being heralded back to the forefront of gaming. When the Dream Cast came out with the screen controller, it was simply bad timing. Sega was financially strapped, and it was their last ditch effort to stay relevant in the console business. When they went under, the idea was essentially scrapped. However, the big N knew there was potential in that technology, much like they realized the potential for two screens with the Gamecube and the Gameboy advance.

The Wii acted as a two fold catalyst: 1) it provided a disruption of the market and 2) it provided the big N with the monetary revenue needed to see this revolutionary idea come to a completion. Make no mistake it is a revolution. The only reason Sega was not able to see the fruits of their was bad timing, and inflated production costs. Now that times have changed, the revenue stream has filled its till, Nintendo wants to come out with a one two punch, and why not? It's good for competition, and forces the gaming industry to move forward. They can no longer be stuck in the stifling quagmire of noxious, uninspired, muted pallets of so called button smashing 'hardcore-ness,' and are going to be forced to think outside of the proverbial box. The industry needs innovation; tech specs are only part of the picture. So many threads turn into a fight over specs, when that is only half the issue. If specs truly ruled the innovation equation, then the superior console would have dominated every generation. In any such case, it hasn't. In the SNES/SEGA era SNES 'won.' In the N64/PS1 era PS1 'won.' In the Xbox/PS2/Gamecube era PS2 'won.' In the Xbox360/PS3/Wii era the Wii 'won.' Anyway, my whole point is the article was an interesting read; thank you for posting it. And Socalmuscle you brought out some very interesting insights with your rubric of R&D, thank you for sharing them.

Edited by Rubix87, 03 October 2012 - 09:42 AM.


#10 Bunkei

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Posted 03 October 2012 - 01:40 PM

I think that Nintendo got a massive wake up call with the Wii. If you look at the sheer volume of Wii's sold, it certainly look like Nintendo 'won' by a landslide. However upon closer examination, while they may have sold more consoles, Sony and Microsoft sold way way more games. Nintendo realizes that the mainstream/hardcore audience has been neglected, and looks to right the ship with the Wii U. It seems as if Nintendo extended an olive branch to 3rd party developers to 'woo' them back in. Then there's the Wii U itself. I think it's a jewel of a console. Very powerful, and probably the most powerful console you can possibly build at that price point. There's the Gamepad. While there's a quite of us (including myself) who say that the Nunchuk/wiimote was a bit of a gimmick compared to past innovations, there's certainly no such thing with the Gamepad. Nintendo simply applied the successes of the dual screen from the DS and expanded it to console.

With a year headstart on Sony/Microsoft with the "next-gen" console race, Nintendo is hoping that the gamepad's unique advantage with the 2nd screen combined with very efficient hardware, will give them a big boost both in hardware AND software sales and becomes the preferred platform of choice. Not only that, but Nintendo's biggest surprise is the partnerships they have forged to offer consumers more than just games. Nintendo TVii will definitely be useful in just about every household, and offers a one-stop solution for managing TV and movie content (Netflix, Amazon, Comcast, DirecTV, etc).

I have a feeling that this is just only the beginning. Sony and Microsoft may be a little concerned because Nintendo is no longer just making consoles for gaming; but making consoles that will make it easier to access social media. This is an area sorely neglected by the current crop of systems.

Let the wars begin!!

#11 3Dude

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Posted 04 October 2012 - 05:46 AM

I think that Nintendo got a massive wake up call with the Wii. If you look at the sheer volume of Wii's sold, it certainly look like Nintendo 'won' by a landslide. However upon closer examination, while they may have sold more consoles, Sony and Microsoft sold way way more games. Nintendo realizes that the mainstream/hardcore audience has been neglected, and looks to right the ship with the Wii U. It seems as if Nintendo extended an olive branch to 3rd party developers to 'woo' them back in. Then there's the Wii U itself. I think it's a jewel of a console. Very powerful, and probably the most powerful console you can possibly build at that price point. There's the Gamepad. While there's a quite of us (including myself) who say that the Nunchuk/wiimote was a bit of a gimmick compared to past innovations, there's certainly no such thing with the Gamepad. Nintendo simply applied the successes of the dual screen from the DS and expanded it to console.

With a year headstart on Sony/Microsoft with the "next-gen" console race, Nintendo is hoping that the gamepad's unique advantage with the 2nd screen combined with very efficient hardware, will give them a big boost both in hardware AND software sales and becomes the preferred platform of choice. Not only that, but Nintendo's biggest surprise is the partnerships they have forged to offer consumers more than just games. Nintendo TVii will definitely be useful in just about every household, and offers a one-stop solution for managing TV and movie content (Netflix, Amazon, Comcast, DirecTV, etc).

I have a feeling that this is just only the beginning. Sony and Microsoft may be a little concerned because Nintendo is no longer just making consoles for gaming; but making consoles that will make it easier to access social media. This is an area sorely neglected by the current crop of systems.

Let the wars begin!!


This is actually a myth propagated by the gaming media, using attach rates to lie with statistics, giving a misleading impression to those who don't understand how things like tie in ratios work.

Total Xbox 360 games sold as of March 31, 2012: 618.24 million.

Total Wii games sold as of June 30, 2012: 826.93 million.[54]

Total PlayStation 3 games sold as of March 31, 2012: 595 million.[172]

yeah. Tie in/attachment ratio is a measurement of the variety of games bought, not a measurement of the number of games bought.

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#12 Rubix87

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Posted 04 October 2012 - 11:03 AM

This is actually a myth propagated by the gaming media, using attach rates to lie with statistics, giving a misleading impression to those who don't understand how things like tie in ratios work.

Total Xbox 360 games sold as of March 31, 2012: 618.24 million.

Total Wii games sold as of June 30, 2012: 826.93 million.[54]

Total PlayStation 3 games sold as of March 31, 2012: 595 million.[172]

yeah. Tie in/attachment ratio is a measurement of the variety of games bought, not a measurement of the number of games bought.


This lol! Thank you for clearing this up! That is the biggest misconception in gaming. Most people seem to think that just because the general gaming media is biased towards Nintendo, that they have sold the least amount of games. The facts are the facts, thank you for sticking with those.

Edited by Rubix87, 04 October 2012 - 11:06 AM.





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