UPDATED:Do you think the Wii U will get a price cut this year?

[Scisca]

sc94597 said:

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. 

1. Basing on the previous consoles obviously. You are right that PS4/Xbone aren't as close substitutes for a Wii U as they are for each other, as they have a much higher perceived value. Wii U can become the secondary console at best, but the price has to reflect the value the product has and that particular role it plays. In this case - it has to be much lower. $50 isn't much, really. As you said, the equilibrium price changes over time. In this case it goes down. Let me remind you that $299 is the launch price of the Wii U! The market showed that this price was too high back then, so it is highly unlikely that in the 3rd year $249 is the equilibrium price. $229 is closer to it, looks much better on the shelf - when people compare it to Xbone it's not just a simple $100 cheaper, it's more than $100 cheaper! (most people probably won't calculate, just note that it's over $100 cheaper) And as you said in previous post, most people don't analyze whether it's a full game less or not. It's about the impression. This $20 difference can go a long way when compared to the competition. Moreover, N should do its utmost to get Wii U to the "gift range". So that it's just at the right price to be a gift for a kid (especially not for your own kid). Personally, I think this price would put Wii U somewhere in this area. It would be a bold move, unlike a $50 drop, but at the same time wouldn't be as much of a hit as $100 would. Personally I think that $199 is the sweetspot now, but $229 could be "close enough" and is worth exploring, especially considering the 3DS experience. I mean, Nintendo remained passive for so long, they could finally make one semi-brave move.

2. It is. If you believe in your product, you are willing to invest in it and to compete. If you no longer believe in it, you cut the investments and try to ride it out getting as much low-risk profit as possible. Sony believed in PS3, MS believes in Xbone, Sony doesn't believe in Vita and so far N does look as if it didn't believe in Wii U. We have only two patterns in this industry.
Your example of games that do not benefit from larger userbase is totally flawed, as the mentioned game doesn't even exist on Wii U (Zelda - I'm not counting a remake), while the games that do exist are the staples and industry's liders when it comes to adoption ratio and dependance on the userbase. You have two 2D Marios, a "3D" Mario, MK, SSB, DK and some casual party games. Wii U has games that benefit the most from a large userbase. These games are N's 1st party titles. No point arguing this and theorizing.

In fact, I get this impression the whole time that you're just trying to look smart quoting a basic economy book, ignoring what the Wii U reality is and refusing to apply the knowledge to its current situation. I'm trying to give some answers and possible solutions for Wii U, while you only raise obvious questions and state general facts. Give a proper analysis, apply the theory, share your thoughts and results, don't just try to look smart, cause theory left in a void is worthless

 

Oh, and by the way, just a general thought. If you launch a piece of electronics for $299 and in the 3rd year aren't capable of cutting the price price by $70 (let alone $100) without incurring serious loses, then I'm very sorry, but you are incompetent and should leave making hardware to someone else. I have no idea how Nintendo managed to mess up this bad. It's rather sad