Nintendo's Wii Price Cut A Temporary Fix At Best


As news of the $50 price cut made the rounds -- $249.99 to $199.99, and Nintendo's first since the Wii was introduced in November 2006 -- a number of observers said they see an uphill battle for Nintendo in the new year, even if it does have a winning holiday season.

Lazard Capital Markets analyst Colin Sebastian told Gamasutra that despite the "necessary" price cuts ahead of the holiday season, Nintendo was hardly out of the woods.

"While we believe the Wii price reduction is a necessary outcome from fast-declining unit sales trends, we suspect there is an ongoing risk to Nintendo's full-year Wii shipment targets," Sebastian said.

Elsewhere, Yusuke Tsunoda, an analyst with Tokai Tokyo Securities, told Bloomberg that Nintendo should be focusing its efforts on software development, "as title sales have been flagging."

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"The price cut will probably help the company to some extent, but it won't be significant enough to impact earnings," Tsunoda said.

Meanwhile, Jesse Divnich, director of analyst services at EEDAR, told gaming magazine Edge Online that Nintendo's price cut is a "pre-emptive strategic decision" to try to box out Microsoft's XBox 360 and Sony's PlayStation 3 before either console maker's motion capture device arrives.

The background there is that both Microsoft and Sony unveiled motion capture devices at the E3 conference this summer, Project Natal and the PS3 Motion Controller, respectively. While both are so far catching up to Nintendo and the Wii's motion sensor technology -- Nintendo legend Shigeru Miyamoto at the time scoffed at any thought that the announcements should worry him -- they're closing the gap pretty quickly.

Even if Nintendo can manage to stay ahead of its rivals in the short term, in other words, it will still face an uphill battle next year when Microsoft and Sony attempt to level the playing field, Divnich suggested.

"The most commonly rumoured upgrade would be to deliver a new hardware device that supports high definition video," said Divnich of a talked about Nintendo hardware upgrade. "While EEDAR believes this remains a possibility, we are skeptical on how an upgrade for the Wii focused on visual aesthetics can effectively compete with the significantly more comprehensive hardware offerings from the PlayStation 3 and Xbox 360 when their motion devices are launched in 2010.

Reggie Fils-Aime, Nintendo of America president, still isn't worried, however -- not about the price cuts, or the competition.

He told USA Today that the Wii console price cut was necessary to buoy sales of two key title launches, seeing as Wii Fit Plus hits the streets on Oct. 4, and New Super Mario Bros Wii arrives Nov. 15.

"It's the overall benefit you get for what you pay and certainly we believe that the Wii, which includes Wii Sports at $199, is a tremendous value," he said.