PSP World

What the Wii Price Drop Means for the Industry

Nintendo recently announced that it will drop the price of its Wii console from $249 USD to $199. Nintendo's move comes on the coattails of two other important price drops by Sony and Microsoft, which bring the price of their flagship home consoles to $299 USD. Despite its somewhat weaker technical specifications, the Wii has been a profit powerhouse for Nintendo, and easily leads the race to total units sold in the current hardware generation. Its motion controller, once derided as gimmicky, has become a new gaming standard that Microsoft and Sony are both rushing to embrace. So, what does the price drop for the Wii signify, and how will it affect the fortunes of the two other major console manufacturers going forward?

Nintendo probably could have continued charging $249 for its console and experienced strong sales. While the numbers have begun to trail off in recent months, The Nintendo Wii continues to outsell both the Xbox 360 and Playstation 3 by a healthy margin each month. The new price could energize sales even more, although it is unclear who the target demographic will be with this cheaper machine. For its part, Nintendo believes that there are roughly 50 million US residents sitting on the fence and ready to buy the Wii at this lower price:

"The Wii has reached more video game players than any game system before because it attracts everyone--both men and women, and people of all ages," said Cammie Dunaway, executive vice president of Sales & Marketing. "Our research shows there are 50 million Americans thinking about becoming gamers, and this more affordable price point and our vast array of new software mean many of them can now make the leap and find experiences that appeal to them, whatever their tastes or level of gaming experience."

It is unlikely that the new Wii price point will pose any major problems for Sony, at least in the short term. The attractively-priced PS3 Slim benefits from enough primo technology to differentiate itself from the Wii. There are also a number of Sony exclusive software titles like Uncharted 2 and Gran Turismo 5 to drive hardware sales though the holiday season. Nintendo will be offering an exclusive new multiplayer Mario Bros. title but little else to attract more mature gamers this holiday.

Going forward, however, a cheaper Nintendo console offers some stiff competition for both Sony and Microsoft as they unveil their own motion-control devices. Nitnendo has at least 6 months of console sales ahead of them before Microsoft or Sony are able to get their respective motion cotrnol solutions to market.

Meanwhile, there are more than 53 million Nintendo Wii units in the world, and that means third-party developers are unlikely to neglect the platform with any future motion-sensing software release. So-called 'casual' gamers will therefore have little incentive to upgrade to a new Xbox 360 or Playstation 3 as long as the same games are available for the Wii. Sony will have to walk a fine line between aligning itself with third-party development plans and adding enough value to motion-sensing games to make them better on the PS3 console. Enhanced graphics and sound should so some of the way toward differentiating the PS3. Accurate controls will be even better.

An overall positive effect of a cheaper Nintendo Wii is that even more casual consumers will become introduced to video games. Some of those will eventually want to expand their gaming libraries and will naturally be curious about what Sony and Microsoft are up to. Chances are that a cheaper Wii console will end up benefitting everyone.

The $199 Wii will come with the standard console, one motion controller and one nunchuck attachment, as well as Wii Sports.