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Is a Price Drop in the Nintendo Wii’s Future?

Price drops, consumers love them and I’m guessing that companies have a love/hate relationship with them. They drive up sales but what many fail to realize is how much a financial hit a price drop can come with. Microsoft and Sony are already losing money on hardware sales, so without knowing production costs they could stand to lose even more. On the flip side, the more hardware you sale the more accessories and software you sale which does does have a positive markup.

Earlier this week, the PS3 Slim released and with it a new price range for Sony’s console – $299.99. Not to be outdone, Microsoft announced a new pricing structure of their own. This of course now leaves us with Nintendo. They’ve denied for awhile now any plans for a price slashing, but with these new announcements I’m sure the financial team at the Big House of N is having a look see. As consumers we can always speculate as to if and when a price drop will occur. Let’s face it, what’s more fun than speculating?Nintendo Wii logo

The first and quite possibly biggest factor of whether or not an impending price drop looms is that Nintendo actually makes money on hardware. While Microsoft and Sony scramble to turn a profit through accessories and games, Nintendo actually profits from every hardware sell. Then couple in all of the Wii remotes, and MotionPlus(es), and we’re talking some serious money here. Also, I think it’s safe to assume that during the Wii’s life cycle the production costs have lowered. If Nintendo can afford it, why wouldn’t they drop prices for their console?

Im sure if we inquired Nintendo their response would be, ‘Why should we drop the Wii’s price?’ Looking at hardware sales from last week, you can see why Nintendo might not be interested in a price drop at this time. They sold 200,865 units, and it’s actually a -16% decline. However, they still nearly doubled the total sales of the Xbox 360 and more than doubled PS3′s figures. Another way to look at it is would you drive your horse harder and risk an injury if you were already so far ahead in the race?

So far in the discussion I’ve mentioned reasons Nintendo might not want to drop the price of their console. There are a couple of factors that could easily sway them in the other direction. I mentioned before that Nintendo’s hardware sales declined 16%, and percentage wise was the sharpest fall of the week. A couple of weeks ago, the console saw a drastic -25% decline while the other companies saw only a marginal decrease. Looking at the data and how it’s trending, Nintendo should have the foresight to see darkness might hang in the distance.

Finally, a key reason Nintendo could be looking into a price drop is how close the competition is getting to their price point. When all three consoles first released, the Nintendo Wii was heralded as the console everyone could afford. The Xbox 360 and PS3 tried to meet consumer demands with upgraded hardware, while Nintendo went for cheaper production and smaller price. Up until now that strategy has worked, but could be in danger with Microsoft and Sony’s new price. Microsoft’s Xbox 360 Pro package is now $249.99. Then Sony’s new Slim PS3, with an upgraded hard drive is now only $299.99. So, what factors of the Nintendo Wii do they have to entice customer’s now? They still have their brand name, and engaging games everyone can play but how long will that keep their domination going?

What are your thoughts on a price drop? Do you think we’ll see one before the holidays, or will it be a moot point because Nintendo Wiis are going to sale like crazy anyway?

37 Comments

  • 1
    lightarrow
    August 28, 2009 - 11:38 am | Permalink

    I would like to see what happens this Christmas without a price drop. Even if the Wii stoped selling completely, it would still take at least 2 years for the ps3 to catch up. Both hd systems are following the Wii in add-ons, marketing and price. Nintendo needs to stay proactive not reactive.

  • 2
    dragon
    August 28, 2009 - 3:32 pm | Permalink

    i would so want to see nitendo wii price drop. For a while since it came out, Nitendo havent really touched the price of wii. Now that 360 is the same price offering more than nitendo…. they goin to lose alot if they dont do smething about it…

  • 3
    anne
    August 30, 2009 - 2:36 pm | Permalink

    Hi! I know you’ll believe that it’s all fake and so on…but next week it’s my birthday, so I just checked around the WII prices and if there was some competition. So I found out xpango and I googled to get more info as I thought that 19 credits were low and there was something to pay. I also checked youtube and I found this as the new one: http://www.youtube.com/watch?v=BO-UNDd0V-w I thought it was fake but I sent a pm and first I received a screenshot of the admin page but everyone can use photoshop, right? After another 2 emails he wrote me to try it out and after 5 minutes I signed in, I refreshed the page and OMG there was 20 credits!!! I e-mail asking if I can do it again with my brother’s name and he did it again! I couldn’t believe that but I regularly get the Wii and the game pack sent O.o So I told my best friend to do it and after 5 minutes he wrote me asking me if she was my friend with her right name. I can’t believe it, do you think I will be fooled in some way? I don’t know if being extremely happy or afraid!

  • 4
    Martin S
    September 5, 2009 - 5:37 pm | Permalink

    I think we might see some kind of “hidden price drop”. Meaning they could include a MotionPlus for the same price, or after some time maybe even the complete sports resort package. I don’t know if they sold enough of sports resort by christmas so include it already or if they should wait some more.

    Btw. you forgot to mention the wii fit / balance board as extra hardware sales. No idea how many they sold, but should be millions.

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