In 1996, when the Nintendo (T:) 64 was released in the United States, it sold 1.6 million units (worth $200 each) in its first quarter. Its closest competitor for the holiday season was a $30 Tickle Me Elmo doll, which sold about a million units in the same window. More than 20 years later, when the $300 Nintendo Switch sold 1.5 million units in its first week, there was a lot more competition, and not just for the holiday season.
The gaming business has changed drastically since its inception. From basic monetization through the sale of physical and digital copies of games to in-game monetization through microtransactions, the widespread adoption of the Internet has brought about a pronounced change in the gaming landscape. While video game studios of the previous millennium relied on revenue from the sale of games and gaming hardware, today’s goliaths don’t expect you to buy their games at all.
The Nintendo game business is a relatively rare example of a major video game studio that hasn’t ventured too far into the microtransaction waters. Fortnite earns Epic Games about $5 billion a year, and with numbers like this, I’m sure most video game companies are at least investigating the free-to-play model. However, this shift in consumer mindset from deep rejection to moderate acceptance of microtransactions has been a long and arduous process.
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