I've heard analysts say that the recession is hurting the Wii more because they rely mainly on a casual market. Casual gamers are less likely to spend money on games in a weak economy. It seems like a reasonable explanation.
And of course the hardcore audience is a bit disgusted with Nintendo, as they should be.
Now, of course, they are getting pricing pressure from Sony and Microsoft. Plus they didn't release any first-party games within the first half of the year. Punch-out!! was their biggest release and it underperformed. Wii Music and Animal Crossing also underperformed last fall.
So all these things add up and that's what were seeing as of now. Nintendo is still hoping that WSR and NSMBWii will push hardware sales up this holiday season, and it might happen.
Nintendo definitely has some options, and they will likely announce something (price cut, bundles, and/or colors, etc.) at the Fall conference in October.
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