Does the Wii need a price cut?

Speculation has intensified of an impending Wii price cut, but is it really necessary? Worldwide sales have slowed, but are now typical of a console leader rather than record breaking. The holiday lineup is also looking strong, and 2010’s software looks even better. Yet on the other hand the 360 and PS3 increasingly look better value for the money, and even have their own motion controllers on the way. TVGB takes a look at whether Nintendo should drop the price of the Wii.

– NO –

Software lineup is strong and improving. With games like Wii Sports Resort, WiiFit Plus and New Super Mario Bros. Wii and a varied lineup of games from third parties, it’s difficult to see the Wii having any problems maintaining its sales momentum heading into the holidays. While traditional gamers may feel the absence of Zelda and even a game from Retro studios, the range of software that’s on offer overall this winter (especially when compared to the 2008 holiday period) is some of the strongest and most varied since launch, and only looks to be getting better in 2010. Lessons appear to have been learned from the 2008 duds: Animal Crossing City Folk and Wii Music, games that didn’t come close to meeting Nintendo’s or gamers’ expectations.

Worldwide sales are still high. The Wii has set the bar for success astonishingly high. So much so that when the console fails to outsell the PS3 and 360 combined worldwide, talk of interest drying up and a price cut begin to crop up. The recession and a recent weak lineup of games do appear to have had an effect on sales, but rather than reducing the price of an already affordable console, will a better software lineup and an improving economy have the same effect? Afterall, the Wii is now selling at the same rate as the PS2 at the same point in its lifespan. While these two factors take hold, Nintendo may just have to content themselves with outperforming its competitors rather than completely obliterating them.

The Wii is already affordable, it’s the peripherals that are expensive. As any Wii owner knows, it’s not the console that’s expensive, it’s the peripherals. For a machine that is so centered around social gaming, getting the required Wii Remotes, Motion Pluses and Balance Boards actually makes the Wii quite expensive. While reducing the price of the Wii would make a small difference overall, a real price drop would have to include reducing the price of Wii’s peripherals, or simply including more peripherals in the box. In fact the most attractive price drop would be if the Wii Remote included MotionPlus as standard.

– YES –

Archaic hardware. Back when the Wii was released, even then the console seemed overpriced with its lack of HD output and limited processing power. While Sony and Microsoft have continually reduced the price of their own consoles as manufacturing costs have decreased, Nintendo have left the price of the Wii unchanged despite the fact that making a Wii today is likely even more cost effective than it was almost three years ago. While the expanded audience perceives the Wii’s value differently from traditional gamers, there is no doubt that for the amount of technology you get in the box, the Wii is poorest value of the three on offer.

Competitors are reducing prices. When Nintendo were deciding on the Wii’s price point, they found that $250 was the sweet spot where the console was seen as being good value by being cheaper than its rivals while offering new technology in the form of motion control. Microsoft have since made the 360 available for $200 and the PS3 is now also very close at $300. The price advantage that Nintendo long enjoyed has since evaporated, and in order to continue to compete effectively with their rivals, it makes sense that Nintendo should capitalize on their cheaper manufacturing costs and undercut their rivals once again.

The competition will also have motion control. Both Microsoft and Sony are preparing to compete with Nintendo for the expanded gaming audience with their own motion controllers. The thing that once made the Wii unique will now be present on the other consoles, and their competitive advantage has come into question. The biggest question marks hovering over Microsoft’s Natal and Sony’s wand are about price. It is likely that both devices will significantly push up the total price of the PS3 and especially the 360, making them appear expensive to the expanded audience. Nintendo could capitalize on this offering motion controlled gaming for almost half the price of its competitors.