| Scisca said:
@Bolded - 1. It needs to enter the impulse purchase territory, where not only people that actively want it buy it, but also people who think "hmm, actually why not" pick it up. $249 is close to it, it's almost there, but not quite there. $199 looks much, much sexier, but such a drop comes at a hefty price for the company. On the other hand a $70 drop is financially quite close to a $50 drop. It only costs them a few $ more, considering they don't take the whole $20 of the difference on themselves (only the majority of it 2. @Italics - I already referred to this in my previous post. Nintendo will cut the price more only if they believe in the system. Cause the system needs a bigger price cut - objectively speaking. The only reason to limit themselves to $249 is because they no longer care and consider Wii U dead. The pricing policy is gonna tell us a lot about their attitude towards the console and its future. They can either follow MS - MS believes in Xbone, they are actively trying to get it better - or they can follow Sony, which declared Vita dead and is not pushing it at all going for the easy profit-maximizing route and not taking any risks. The thing that puzzles me is that N is so unwilling to cut the price despite the fact, that their consoles sell pretty much only their own exclusives, which in turn almost never fall in price. It really makes the most sense for Nintendo out of all three companies to cut the price and get as many adopters as possible, as they earn more money on games than the competition. |
), as a part goes on the retailer and another part is taxes. On the other hand $229 is a very good price that looks very good when compared to $349 of the competition. It allows the retailers to further cut it to $199 if they plan a crazy sale down the road (BF?). Moreover, Nintendo is the pioneer of such cuts (with the 3DS one) and it's proven to be very beneficial for them in the past, so why not repeat it? You're not risking that much more money than in the case of a $50 cut and get a stronger positive effect.1. How do you determine that $229 is "impulse-buying territory" and $249 is not? Again we don't know the demand curve of the Wii U, and we don't know how certain prices will affect the willingess to pay of hundreds of millions of different consumers. We can guess, but guesses are tough things. You'd have a point if XBO/PS4 were close subsitutes for a Wii U, but they really aren't. It's like saying the price cut of the apple isn't enough because I can buy oranges for a close price. There is a point where I will say, "I just want a fruit and the apple's are too expensive for what I will pay knowing their usual price so I will get an orange instead", but after a certain point I will say, "I really want an apple, so I am going to get an apple. Oranges were subsitutes when I wanted a fruit, but now I want an apple specifically" At that point the consumer end of the market is relatively inelastic (doesn't respond to price changes quickly.) So then we must consider the values of said individuals and how they might change. But we have no idea how the values of individuals in the market might change. Maybe people will be saturated with XBO/PS4's and want a system that gives alternative games to complement their first console. Maybe people are truly not interested in the Wii U at any reasonable price. Marginal value is always time-dependent. Therefore demand is time dependent. And then equllibrium prices are time-dependent. Because of this, it is really hard to pinpoint what this, "impulse-buying territory" is. For me personally, $250 is not much different from $230. It's not even a game's worth of savings. Neither of which are close to "impulse-buying territory." For somebody not interested in any games on the Wii U their willingness to pay might be less than $100. For that reason, it is very possible that no price will save the Wii U, similar to how $99 didn't save the Gamecube, which was a much closer console to its competition.
2. This isn't a binary thing. Nintendo could still care about the Wii U, support it, and making money from its sales without taking a loss on its hardware, but at the cost of marketshare. If they think they can sell a lot more software then they will probably make that cost-benefit-risk analysis when they formulate any price-cut decisions and predict future sales. However, a lot of titles don't seem to benefit from a larger userbase. An example is The Legend of Zelda. It's a game that has its best and worst selling titles on the same platforms, and some of its best selling titles on Nintendo's average selling platforms. On the otherhand a game like Mario Kart could gain a lot of sales from a larger userbase. However, the safest thing for Nintendo to do is to not abandon the Wii U by leaving a huge drought at the end of the generation (like they had done with Wii) while still planning for expanding their marketshare with their next platform(s) and maximizing software sales on said platform(s.)
I do think a price of $199 will greatly benefit sales, especially in markets like Japan, but that isn't always necessarily a good thing. Profit maximization always comes first.
