- Fox CEO wants US to join France on Internet piracy
- Newspaper circulation may be worse than it looks
- GE, Vivendi talks over NBC Universal stretch on
- B&N Nook sells out, too late for holiday orders
- Dell's profit, stock drop on weak quarterly report
- AOL offers buyouts to over a third of work force
- Google's Chrome OS to be ready for 2010 holidays
- Google adding automatic captions to YouTube videos
MOST SHARED
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- Why Amazon Rules Retail
- Wave of Debt Payments Facing US Government
- China Eastern to Complete Shanghai Air Buy by End '09
- Gold Will Collapse Like Oil Did in 2008: Charts
- Paul: Audit the Fed
- JAL Slides to Record Low on Bankruptcy Jitters
- Nielsen Ratings Coming to Video Games
- Weak Dollar Is Golden for Mining Companies
- Trading Block
- Strong Banks, Weak Credit: Treasury Rethinks TARP
- Weak Dollar Is Golden for Mining Companies
- How Many US Consumers Will Shop this Weekend?
- Tuesday's Heavy Dose of Data to Dictate 'Risk' Behavior
- GE Capital Losses May See Dramatic Fall: JP Morgan
- Galleon's Rajaratnam Denies Inside Trading Charges
- Hormel Profit Jumps Despite Declining Sales
- Heinz Profit Falls, Raises Full-Year View
- Playboy to Outsource Most Magazine Operations: Report
Text Size 
Following price cuts by its two rivals, Nintendo is expected to reduce the price of its Wii video game system by $50 later this week. The widely expected move could help the company reverse the company’s slowing momentum as it heads into the holiday sales period.
 |
AP Wii |
Numerous leaked retail circulars indicate the Wii’s price will fall to $199. This would be the system’s first price change since it was introduced in 2006.
Three years is an extraordinary stretch for a gaming system to go without a price cut — but the Wii is far from a typical system. Nintendo [NTDOY
Loading...
()
] chose to focus on lapsed- and non-gamers this generation, altering the way games are played rather than markedly improving the graphics and features of the previous cycle of video game machines. As a result, the Wii has dramatically outsold the Xbox 360 and PlayStation 3.
Both Sony [SNE
Loading...
()
] and Microsoft [MSFT
Loading...
()
] have cut the retail price of their systems in the past month. Sony introduced a redesigned, slimmer PS3 for $299—condensing their available systems to a single device. The move resulted in a 72 percent month-over-month increase in hardware sales.
Microsoft still offers two models of the Xbox 360—a $199 entry-level system and a system for core gamers, which recently reduced its retail price by $100 to $299.
While Nintendo is far and away the hardware sales leader in the gaming industry, Wii sales are nearly 10 percent off last year’s pace. And, given Sony’s momentum since its price cut, the company’s hands may be tied.
Software sales for the Wii—and the industry in general—have stagnated this year, due to a lack of blockbuster games and the ongoing economic crisis. Even “Wii Sports Resort,” expected to be one of Nintendo’s best selling games this year, got off to a slower start than the company had hoped.
Like the moves by Sony and Microsoft, Nintendo’s expected announcement has been a poorly kept secret. Retail circulars from Wal-Mart [WMT
Loading...
()
] and Toys R Us that heralded the new price leaked online more than a week ago.
The company had hoped to avoid this action for as long as possible—even going out of its way to squelch industry speculation that it would cut prices.
In June, company president Satoru Iwata noted that while analysts and publishing partners are always pushing for price reductions, the move is not the cure-all many believe it to be.
“People often talk about the price cut as if it’s an almighty weapon,” he said. “The fact of the matter is what a price cut can do is rather limited … At the time of the price cut, we see a momentary spike in sales, but usually that cannot sustain its momentum and [sales] come down to below the price cut level.”
Those momentary spikes can be significant, though. The NPD Group, which tracks game and gaming hardware sales, says that historically, price cuts result in a month-over-month sales increase of anywhere from 40-60 percent.
Even if, as expected, the expected Wii price cuts result in a sales surge, it may not be enough to turn the year around for the gaming industry. Barring a 14 percent increase in sales every month for the rest of the year, 2009 will be the first year since 2004 to fail to post a year-over-year sales increase.
- A diet high in fat and sugar might actually be good for your portfolio.
- Warren Buffett and Bill Gates discuss the economy and other subjects with CNBC's Becky Quick.
- From the AIG&T to the Merrill Lychee, Jane Wells lists this year's fashionable holiday cocktails.
- One shopper explains why – aside from the prices – he gets up at 3am on the day after Thanksgiving to go shopping every year.
- Congressman Ron Paul explains to Squawk Box why he’s pushing legislation to audit the Federal Reserve.
- …you'll want to be prepared. Tips for getting the most out of the post-Thanksgiving shopping frenzy.
Data is a real-time snapshot *Data is delayed at least 15 minutes