Asriel said:
Screamapillar said:
Asriel said:
Nintendo have more room to move on price now than they did two years ago because the yen is much weaker, and their 3DS business is increasingly profitable.
The problems have already been pointed out concisely and accurately by several users. Lowering the Wii U's price will not widen the appeal of the device in the long-term enough to justify such a move in the short-term. The appeal of Wii U will come from compelling software, which the system currently lacks. If Nintendo can get compelling software out, and a consistent software schedule planned, then cutting the price might be a more effective move, particularly in light of rival consoles launching later this year, but the software has to come first.
It's that one little thing many like to forget: people buy a games console to play games. |
The Wii U wasn't out two years ago, so that really doesn't matter. I do agree about your last two paragraphs. Price drop without 3D Mario or Zelda would do nothing past the first few weeks after the cut, then sales would drop again. It is also entirely true that people buy the system to play the software. Without software, consoles are merely expensive paper weights.
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What I'm saying is that a price cut on Wii U in the near term would be less painful than a cut on 3DS was in 2011; that price cut pushed Nintendo's operational business into the red, excarbating net losses caused by a strong yen. Nintendo's operations have been running at a loss, but a small net profit due to a weak yen, which also increases the value of Nintendo's cash pile and assets, means a price cut for Wii U would be less painful for Nintendo's bottom line, especially now that 3DS is building momentum in Western markets, selling at a profit, and harbouring a fast growing digital business. The problem is, any Wii U cut in the immediate term would likely impact on Nintendo's ability to reach next year's operating profit target, so Nintendo will have to wait, see how 3DS does in the West, see where the yen stabilises (if it does at all), and bring down Wii U manufacturing costs as much as they can.
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The difference though, is the when 3DS was originally released, it was sold at a high margin, and Nintendo was making a profit on each unit sold. Wii U is currently sold below cost, and Nintendo is losing money on each system sold. You can't do a price cut on a system that is already sold below cost. Luckily for NIntendo, at the time when they decided to do a markdown on 3DS, they could afford to do so, because the intial cost was so high. They never would have done it if it was already sold below cost.
If the reality ever turned out to be that Nintendo consoles only sell well if they're sold below cost, then I think that is the end of their business model.
