NES Era: A Tough Road to Profit for Developers
Yoshiki Okamoto, a renowned former producer at Capcom known for his work on games like Street Fighter II, recently shed light on the financial realities faced by game developers during the Famicom (NES) era in the 1980s. Speaking on his YouTube channel, Okamoto detailed why third-party studios struggled to make significant profits and how the industry dynamic drastically shifted with the advent of the PlayStation.
Despite Capcom achieving considerable success on the Famicom with popular series like Mega Man, profitability remained surprisingly modest. According to Okamoto, from a cartridge's retail price of approximately 10,000 yen, a developer would only receive around 4,000 yen. Nintendo, as the platform holder, would claim about 3,000 yen, with the remaining portion going to retailers. A key difference was that Nintendo received their payment in advance, guaranteeing their profit regardless of sales performance and effectively insulating them from the financial risks their partners faced.
The challenges didn't end there for developers. Once cartridges were shipped to stores, payment to the developers was delayed by a lengthy 90 days. This delay, coupled with production costs, marketing expenses, and accumulating interest on loans, meant that any potential profit often dwindled to almost nothing. One particularly painful issue was overproduction; developers were still liable to pay Nintendo 3,000 yen per unsold cartridge. This forced companies like Capcom, along with other third-party studios, to take out bank loans just to cover their production costs, creating a precarious financial situation.
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