TOKYO - Nintendo admitted Thursday that its hit Wii video game console was going through its toughest time yet in the competitive Japanese market, but it said there was no plan to cut the price.

"The Wii is in the most unhealthy condition since it hit the Japanese market," Nintendo Co. president Satoru Iwata said. "The current condition in the Japanese market is not the one we want." But a price war with rivals was not the answer as Nintendo is already the market leader, he said. "A price cut in a difficult economy cannot really excite the market and drive up sales. As of now I really don't think that a price cut is a good option for us," he told a news conference.

Industry figures showed this week that the rival Sony PlayStation 3 had outsold the Wii in Japan for the first time in 16 months, with sales of the Nintendo console dropping almost two-thirds from a year earlier. Japanese sales of the PS3 surged 80 percent in the five weeks to March 29 from a year earlier to 146,948 consoles, while demand for the Wii plunged almost 63 percent to 99,335, publishing firm Enterbrain Inc said.

Iwata said the Wii had flown off the shelves after its launch in 2006 thanks to the popularity of a few games. Nintendo has sold more than eight million Wii machines in Japan, but demand is now flagging. "The speed with which people get tired of any new entertainment is faster in Japan than in overseas markets," Iwata said. T

he video game titan is pinning its hopes on new games and software such as Wii Sports Resort -- a sequel to the popular Wii Sports that will go on sale in Japan in June -- to energise sales of the console, he said. Nintendo has enjoyed immense worldwide success with the family-friendly Wii, which has appealed to people buying a video-game machine for the first time. While Sony put the emphasis on chip power and ultra-realistic graphics for its PlayStation 3, Nintendo opted to develop a cheaper, easy-to-use console that would appeal to a wider audience.

The success of the Wii has rewarded Nintendo with surging profits in recent years. More than 10 million Wii machines were sold in the United States in 2008, setting a new industry record.

as of 04/09/2009 2:51 PM

http://www.abs-cbnnews.com/technology/04/09/09/nintendo-says-wii-losing-luster-no-price-cut

The current slump seems to be a result of the Wii software drought in Japan. They're smart not to drop prices yet, they should wait until the upcoming software has been launched, and then think about new bundles or colors before price cuts.

If he really means that the competition is the big factor, then he means a price cut will not matter because the console above it is selling at 75% higher price.

I don't think that's what he means. Look at the sentence closely:

But a price war with rivals was not the answer as Nintendo is already the market leader, he said.

He doesn't expect the market leader to need a big price advantage to sell more. Other advantages should come into play such as a better software catalog (which will improve a lot in the coming months in Japan).

Due to foreign exchange rates not much profit is made on every Wii console sold. I believe only $20 profit is made on every Wii console sold, taking into consideration losses made due to high Japanese yen.

More profits are made on software sales than hardware sales.

thats what Iwata said. I'm sure he's responding to a negative with a positive.

In reality what I described is what is happening.
As a N representative, do you admit that? or do you say something like he did?

See, they agree.

Basically, that is why Wii sales have fallen off in Japan, and they are buying more PS3s.  They became tired of Wii Sports, etc, and wanted more core games like the PS3 has been offering.

Now, in the West, you don't see this drop off because most consumers see the Wii as a console for kids.  However,that is also why you don't see many good core games on Wii like Mad World or No More Heroes passing 1 million sold or even 500,000.

People say the new Monster Hunter and DQX when released will kickstart Wii sales again.

What you described is what is happening, but you're focusing too much on the price. There are more important factors such as software releases, and I think that's what he said.

The market leader should have more advantages than a big price difference, otherwise it's not a healthy situation for the platform (since the competition can also cut prices).

They should bundle Wii Sports Resort with the Wii in Japan when it comes out.

The reason?

JP Wii sales, week of the 28th: 18,319
Wii Sports sales, week of the 28th: 4,483

Attach rate: Only 24.5%

People aren't being introduced to what Wii can do like what Wii Sports does in the other territories. This dampens word-of-mouth marketing and leads to reduced Wii sales in a downward spiral...

well it sucks that there aren't any games atm. I agree it is smarter to just leave the price as it is, because then what would you do when games come out? Raise the price?
I also agree that they will make more money by keeping price up.
However, they do realize that a price drop would not help.